This post was written by Nicolette Zalesky - Research Fellow at Nyenrode Business Universiteit, Outreach Contractor at Net Impact.
In the last decade, there has been a huge shift in demand from important corporate stakeholders - More consumers mandate products that are made sustainably and responsibly. The Sustainable Development Goals are one example of governments taking a stance towards more socially responsible policies. Even some investors are pushing for higher sustainability performance in corporations; since there is evidence that shows corporations with embed sustainable practices generate higher profits. As a result, corporations have started to take CSR as a serious aspect in their business. Initiatives such as corporate care days are now essentially highlighted on corporate websites and responsibility plans. As great of initiative, this generates the question: Is CSR a publicity ploy that corporations are using to appease the demand of their stakeholders? Or do they actually practice what they preach?
Academia theory states there are two main forms of CSR in organizations – Stewardship vs Instrumental. The Stewardship approach to CSR, supported by Ed Freeman, states that corporations should make decisions with purpose, focus, truth, standards and a long-term vision. The Stewardship approach means that CSR is embedded into the organization at every level and members of the organization truly believe in the company’s mission, values and vision. Instrumental approach is backed by Milton Friedman claims that a corporation’s only duty to society is to maximize their profits. Instrumental organizations apply CSR in order to increase their public image and the wealth of their shareholders. On opposing ends of the spectrum, the theories are black and white - however as we know, reality is more of a greyish blend.
As corporations are today, there are many great examples striving for Stewardship orientation – one example being Method Products’ who strives to make the world ‘cleaner and greener.’ They have taken social responsibility and are embedding these aspects at all levels of their organization. They also understand that being Stewardship oriented means they are contributing to society, and the environment, where it is relevant and where they can make the greatest impact. Equally there are many corporations that hold profits as their highest priority. More and more though we are witnessing organizations in this grey spectrum – creating efforts to become more Stewardship oriented. Example of these efforts are companies such as H&M and Urban Outfitters - who have launched ‘Conscious’ clothing line made from recycled clothing. Another is Pernod Ricard with their consumer protection initiatives to educate and develop more responsible drinking among consumers.
Organizations are not perfect, but they should be held to a Stewardship approach standard; striving to maximize their triple bottom line in order to achieve long-term sustainability and extend the lifespan of their organization. In my next post I’ll develop CSR as a strategy for organizations and a few indicators of a company's strategic approach to CSR!
