Although international businesses are increasingly judged on their Corporate Social Responsibility record, little information is available about the outcomes which CSR delivers to intended beneficiaries. It is far easier to get data on the business impact – on the profitability of CSR initiatives for example.
Professor George Frynas, Professor of Corporate Social Responsibility and Strategic Management at Middlesex University, discussed CSR and its impacts at a debate held at Middlesex’s Hendon campus, north London, in December. Professor Frynas drew on case studies from his book, Beyond Corporate Social Responsibility, which was published in May 2009. Other contributors included Professor Michael Blowfield, Associate Professor at Middlesex University and Research Fellow at Oxford University, and Visiting Professor of Accountability and CSR, Professor Adrian Henriques, a consultant and writer.
Professor Frynas spoke about factors that limit the positive impact of CSR on stakeholders. He focused on the oil and gas sector, which has a big CSR spend, with some quite sophisticated strategies and initiatives.
He explained that there is a big difference in this sector between environmental and social impact. CSR activities initiated by businesses in the oil and gas sector often have more potential to benefit
the environment than the community. The impact of environmental activities is more easily measured and there are clearer business benefits – for example reducing gas flaring or replacing old equipment - will protect both business costs and reputation. He added that CSR programmes can create many additional benefits to business – they give businesses an opportunity to discover new markets and to introduce business innovations.
Professor Frynas’s book focuses on 20 major oil and gas producing companies, 10 based in developed countries and 10 in emerging markets. He said: “It’s encouraging that businesses in the emerging markets, such as Petrobas of Brazil and Sasol of South Africa, have already developed quite sophisticated CSR policies...it shows they are taking CSR seriously”. Petrobas and Sasol both produce regular reports on greenhouse gas emissions, energy use and other environmental criteria.
Professor Frynas then discussed why many CSR initiatives fail in developing countries, pointing out that businesses often operate in difficult situations, where corruption and conflict can dominate the local culture. He said CSR initiatives were often driven by narrow corporate priorities without much regard for the community context. He gave examples of facilities being built which duplicated existing initiatives and therefore were not really needed or where a facility such as a new hospital was not properly supported with funding for adequate access or supplies.
Professor Blowfield then spoke, stressing that in order to assess the true impact of CSR, key measurement criteria should include lasting and significant change, outcomes not outputs, consequences not coincidences. “We need more facts and figures about on-the-ground impact”, he said. CSR is now much more integrated into company processes than in the past, when CSR was often viewed as a mainly philanthropic or charitable activity. This change in attitude has resulted in some positive knock-on effects on business functions – for example many businesses have introduced ‘responsible buyer’ programmes – but there is still a lack of solid information about what CSR initiatives have achieved for the communities they are intended to benefit.
Professor Henriques then spoke about measuring impact. He pointed out that CSR was only one aspect of a company’s whole impact – social, environmental, economic - and suggested approaching CSR reports with caution. “They only reflect that element of the company’s performance, not the whole picture,” he warned.
Professor Frynas said: “I don’t think there’s enough cynicism about CSR reports...there have been many studies on financial performance and CSR but there is a lack of meaningful studies”.
“It’s not really about the money, it’s about how you implement the spend”, he concluded, pointing out that CSR tends to focus on micro-level effects. By paying more attention to macro-level effects such as the impact of economic or political factors, businesses will stand a better chance of creating successful and sustainable CSR programmes.