King's Debate:  Is CSR dead?

Do businesses now need to do something more radical to have a positive impact on society?

Protesters after the 2013 Rana Plaza disasterProtesters after the 2013 Rana Plaza disaster

[This article is from the Autumn/Winter 2018 issue of InTouch, your alumni magazine]

King’s vision is simple – to make the world a better place. This vision is embodied in the teaching and practice of the newly-opened King’s Business School, whose aim is to educate responsible leaders, creating positive, sustainable change in society.

But can traditional corporate social responsibility (CSR) do that? Or do we need something more far-reaching for business to become a force for good?

In this article, we ask two King’s academics to debate whether corporate social responsibility is the best way for business to have a positive impact on society.

Juliane Reinecke

Juliane Reinecke is Professor of International Management & Sustainability and Associate Dean of Impact & Innovation at King’s Business School.

Professor Reinecke believes that CSR can be a positive tool when it involves collaboration among companies, as well as with bodies such as trade unions and civil society. To be truly effective, the sustainable management of resources must be integral, as well as involving constructive industrial relations throughout the supply chain.

‘Supply chains make up 80 per cent of global trade. Therefore, any large organisation needs to consider the social and environmental impacts of supply chains in their CSR programme. Many companies have also realised that, unless they take CSR seriously, and in particular supply chains, their businesses may be in danger.

‘King’s has an important stake in this for a number of reasons. The first is the Business School’s role in educating future leaders, especially in terms of the environment, wages and workers’ conditions. The second is our research into business practices. Much of my work in recent years has centred around what needs to be done to improve the entire supply chain.

‘For example, Ghana supplies about 20 per cent of the world’s cocoa. However, deforestation has led to carbon emissions, resulting in reduced rainfall and severe droughts. Farmers are not able to grow as much cocoa and can’t make a livelihood from their crop. They feel forced to expand into new forests. Initiatives such as Fair Trade help to make cocoa more sustainable. They do this by supporting farmers to diversify their incomes and invest in education, infrastructure or healthcare.

‘Tackling inequalities in the supply chain requires paying cocoa farmers a higher price, to improve livelihoods, and make cocoa farming sustainable.

‘Large supply chains, when they are sustainable, can have a significant positive impact. When the H&M group, as the biggest garment buyer from Bangladesh, signed the Bangladesh Accord for Fire and Building Safety in the aftermath of the 2013 Rana Plaza disaster, it encouraged other brands to follow. Eventually, over 200 firms pooled their purchasing power; this collective action made the Bangladesh garment supply chain much safer. Trade unions have also been critical, signing up to the Bangladesh Accord alongside global brands and retailers to build a safe and healthy garment industry.

‘But it’s not always easy – especially for large and complex organisations. Figuring out how to make business operate more ethically, yet satisfy stakeholder profitability demands, is a tough challenge. For this reason, we need ‘pre-competitive collaboration’, which involves removing elements of social, environmental sustainability and health and safety from corporate competition.

‘CSR can make a positive impact on society when it involves collective action across the supply chain to achieve systemic change. And to be accountable, non-corporate interests such as trade unions must be involved. While there are undoubtedly challenges, when large businesses are willing to work together and be held accountable, the impact can be transformational.’

Robyn Klingler-Vidra is a lecturer in the Department of International Development at King’s.

Robyn Klingler-Vidra believes that CSR is not the best way to make a positive impact on society. Businesses should be set up with strong social foundations from the outset.

‘The world is changing very fast and innovation is key. There is a trend towards more entrepreneurship and businesses that make “profit with purpose”. CSR, as an add-on, doesn’t work. Social purpose needs to be at the core of what businesses do.

‘I believe that the way businesses are structured and financed matters. Venture capitalists are beginning to invest in small, high-growth start-ups that are trying to do things differently. They look for those that are innovative, developing disruptive technology, and that increasingly, bring social value.

‘One way that this emphasis is taking root in the investment community is through reporting. Companies are not only reporting their economic outcomes but also their “external return” – the social and environmental impact of the business. This means reporting on jobs created, waste produced and energy used, alongside taxes paid and profits earned. Danone, a multi-national food company, became the world’s largest certified “B Corporation” in April 2018. This means it assumes a legal duty to its shareholders to report, and achieve, social and financial aims.

‘At a more strategic level, there are frameworks for reporting social impact, such as the UN Principles for Responsible Investment. In 2016, a group of investors also began the “Impact Management Project” to standardise reporting on social impact.

‘It is only when boards, and investors, demand reports on social impact that it will become a priority for companies. As part of King’s Service Strategy, launched in December 2017, we are developing our own approach to measuring social impact, or “external rate of return”.

‘In summary, positive capitalism works when it is not just philanthropy on the fringe. While CSR has its place, innovation and entrepreneurialism, with positive social impact at its heart, is the way for capitalism to become a force for good.’


Abbie Morris and James Omisakin at the launch of their company, Compare Ethics

King’s alumna Abbie Morris (MA Conflict, Security & Development, 2014) is co-founder of Compare Ethics, a company that aims to be the ‘Compare the Market’ for ethical fashion. She talks to us about her new ethical venture.

Abbie’s journey began at King’s, where she took an MA in Conflict, Security & Development. Connecting with fellow King’s alumni helped drive her ideas. When Abbie and her partner James Omisakin set up Compare Ethics, they did so in order to create a link between ethical fashion brands and consumers wanting to buy ethically.

Abbie explained ‘It started with James wanting a new pair of jeans, but he wanted to buy from a company that was doing the right thing by the environment, the people they employed and wildlife. It took hours to find what he wanted, which is a ridiculous amount of time for a pair of jeans.

‘We have set up a one-stop-shop for those who want to buy ethically, knowing that we have done the research on the brand so they don’t have to. It’s essentially a Compare the Market-type tool for the ethical standards that are important to you.

‘We are creating a movement of people who can use their purchasing power to improve the world,’ she said.

Conclusion

While CSR programmes continue across the globe, the important thing is that they are truly holistic. This can be a challenge for big corporates, but when it works it can create transformational change. As the trend for start-ups and social enterprise develops, embedding that social purpose within them is key. What is clear is that the notion of corporate social responsibility is now far removed from 1970, when the economist Milton Friedman wrote: ‘The social responsibility of business is to increase its profits.’