Corporate Social Responsibility (CSR) is still understood in different ways: as philanthropy, as a voluntary commitment to social issues, as a "green-washing" tool for multinationals, as a new model for sustainable business, or as an ideological attack on the free market economy. In fact, all these aspects are covered by one of the existing definitions. However, when we analyze the evolution of definitions, we also see a clear trend: over the past few decades, CSR has become a term that not only applies to large companies and their ethical behavior. Rather, it requires new decision-making processes from all organizations to respond to the increasingly recognized complexity of our world.
Considering significant milestones in the development of the current CSR understanding, three phases can be distinguished:
- 1950-2000: Diverse commitment to society and environment
- 2001-2010: Integration of social and environmental concerns in the core business
- 2011-today: Impact management
Each of these phases is represented by several well-known definitions.
Phase 1 (1950-2000):
Diverse commitment to society and environment
The term CSR first appeared in 1953. The first definition comes from Bowen and sounds quite contemporary: „It refers to the obligation of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of objectives and values of our society.”[1]
This alignment with the interests and values of society is similar to today's approach. However, in the past millennium this point of view was pushed aside by other positions. First and foremost through Friedman: „There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.”[2]
These contradictory approaches led to a variety of interpretations that Caroll finally summarized in his "CSR Pyramid": „The total corporate social responsibility of business entails the simultaneous fulfilment of the firm’s economic, legal, ethical, and philanthropic responsibilities.”[3]
Apart from these different perspectives, a central pattern of thinking emerged, that is particularly characteristic of this first phase of CSR. According to the World Business Council for Sustainable Development (WBCSD), the "giving back to the society”-approach became the central feature of CSR, as WBCSD-president Peter Bakker explained: “What CSR used to be: You run the company the way you have always done, and you give back a little to society.”[4]
Phase 2 (2001-2010):
Integration of social and environmental concerns in the core business
On July 18, 2001, the European Commission published a remarkable Green Paper, one of the most significant milestones in the development of CSR. With this document, the Commission also offered a new CSR definition, that was subsequently adopted by numerous organizations: “Corporate social responsibility (is) a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”[5]
This was a crucial step: CSR was no longer an isolated project, somehow linked to the company, but a new requirement for the core business: from then on it was not about how companies spend their money (philanthropy), but how they earn it (responsibility for the core business). Social and environmental concerns should be integrated in their business operations. Interestingly, this step should not primarily serve to restrict the freedom of companies and make additional demands on them. It was more in line with the Lisbon Agenda: Within ten years, the EU should become the most competitive economy in the world. The Green Paper explains: “Thus, it should be treated as an investment, not a cost, much like quality management.”[6]
With this initiative, the EU opposed the philanthropy-oriented Anglo-American CSR practice with the new approach of "strategic CSR". In line with this, Porter and Kramer developed their "shared value concept", forcing the view of CSR as a business case and its contribution to the competitiveness of companies. They recommended: “The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value - that is, a meaningful benefit for society that is also valuable to the business.”[7] In this context, Porter and Kramer also stated: "The most strategic CSR occurs when a company adds a social dimension to its value proposition, making social impact integral to the overall strategy."[8]
Also, the European Parliament focused on the impact of companies in their report on corporate social responsibility: „Corporate Social Responsibility represents business taking more direct responsibility for managing its social and environmental impact, becoming more openly accountable not simply to employees and their trade unions, but also to wider 'stakeholders' including investors, consumers, local communities, environmental and other interest groups.“[9]
With this focus, the Parliament has already prepared for the third phase, the transformation of CSR management to impact management, including the questioning of voluntariness.
Phase 3 (2011-today):
Impact management
Ten years after the Green Paper, the European Commission has published a new CSR strategy, in which it also offers a new CSR definition: “CSR (is) the responsibility of enterprises for their impacts on society.”[10]
In this way, the European Commission has made a major change in comparison with the Green Paper: it is no longer about voluntarily integrating social or environmental concerns into the core business. Now, every organization is responsible for what it does and what it effects. Organizations are required to look more closely at the multiple effects of their activities and optimize their impact in the two classic areas of non-harming and doing good – along the entire value chain. CSR became Impact Management. This changed approach also questioned the voluntariness: Taking responsibility for the impact of your own decisions and activities might not always be a legal but at least a moral obligation. Now, it is not only about responsibility but accountability.
The Commission was obviously aware of the importance and, above all, the complexity of this new requirement for companies. Because she also demanded in her strategy paper: "To fully meet their corporate social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of: maximising the creation of shared value for their owners/shareholders and for their other stakeholders and society at large; identifying, preventing and mitigating their possible adverse impacts.”[11] This was a call for a new management system.
Work on a global standard for CSR started several years ago and was completed by the end of 2010. ISO 26000 is not a management system but a guidance paper on social responsibility with a definition very similar to the EU one: “Social responsibility (is the) responsibility of an organization for the impacts of its decisions and activities on society and the environment, through transparent and ethical behaviour that contributes to sustainable development, including health and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms of behaviour; and is integrated throughout the organization and practised in its relationships”[12]
The special feature of this standard: It is aimed not only at companies, but at all organizations. The ISO does not use the term CSR, but SR. All organizations are called to manage their impact.
However, a lot remains to be done in this third phase to ensure a successful implementation of this approach. Some of the most urgent questions:
- How exactly should the various impacts be measured and evaluated?
- How should stakeholders be involved?
- How can common impacts be managed together?
First approaches to a solution already exist, including the United Nations’ Sustainable Development Goals, but many questions remain open ...
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[1] Bowen, Howard Rothmann: Social Responsibilities of the Businessman, Harper, 1953
[2] Friedman, Milton: The Social Responsibility of Business is to Increase its Profits, in: The New York Times Magazine, September 13, 1970
[3] Carroll, Archie B.: The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders, in: Business Horizons, Juli 1991, p. 43
[4] Interview of Peter Bakker, president and CEO of WBCSD at January 15, 2019: https://www.cnnmoney.ch/shows/international-geneva/videos/peter-bakker-world-business-council-sustainable-development [2019-03-28]
[5] Commission of the European Communities: Green Paper. Promoting a European framework for Corporate Social Responsibility. Brussels, 18.7.2001
[6] ibid, p. 4
[7] M. E. Porter and M. R. Kramer: “Strategy & Society, the Link between Competitive Advantage and Corporate Social Responsibility,” Harvard Business Review, Vol. 84, No. 12, 2006, pp. 78-92. Reprint by FSG Social Impact Advisors, 2006, p. 6
[8] ibid, p. 11
[9] European Parliament, Committee on Employment and Social Affairs: Report on corporate social responsibility. 21.12.2006
[10] European Commission: Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, and the Committee of the Regions. A renewed strategy 2011-14 for Corporate Social Responsibility. Brussels, 25.10.2011
[11] ibid
[12] Austrian Standards Institute: ONR ISO 26000, Guidance on social responsibility (ISO 26000:2010), 2011
