CSR is dead. What comes next?

This article originally appeared at 2degrees.

Corporate Social Responsibility is, at best, only a partial solution — one which can be misused to create an illusion of responsibility.

CSR is dead. It’s over!

So declared Peter Bakker, president of the World Business Council for Sustainable Development, at the recent Sustainability Science Congress in Copenhagen.

Bakker’s key argument is that leading companies already are going way beyond CSR by integrating sustainability into everything they do in recognition that business cannot succeed if society fails. He urges us to innovate — to align with facts, to redesign what we mean by good performance and to get inspired by new definitions of success.

In concrete terms, Bakker calls for a revolution in capitalism — led by carbon pricing, and he means a real price of $100-plus per ton — to reflect true costs to people, society and planet, and to drive real business progress.

“Carbon pricing is inevitable,” Bakker said. “Learn to love it.”

This provocative message is all the more compelling when we remember that Bakker represents 200 of the largest corporations in the world. The scale of influence is impressive, but the real point here is that these organizations rank among the chief beneficiaries of the old economy and, as such, they almost might be excused for working to preserve the status quo. Bakker is clearly not content to sit back or to hide behind glossy reports. He means business.

But is he right; is CSR actually over?

Scratching the surface

Reports on the early demise of CSR yet may prove to be somewhat exaggerated.

There is, of course, much CSR thinking and practice still going on. More companies are reporting on CSR performance, in tandem with a burgeoning number of conferences, events and media traffic.

While there is more noise than ever, there is a huge question mark over how much of this translates into meaningful action: What is the impact of CSR, and the extent and depth of real change for the better?

The latest research reveals little meaningful progress across a range of metrics in business. And keeping an eye toward the weather, global greenhouse gas emissions have grown nearly twice as fast over the past decade when compared with the previous 30 years, despite the global economic slowdown.

Meanwhile, we are extracting 50 percent more natural resources (PDF) than was the case only 30 years ago, or around 60 billion tons of raw materials each year. We clearly are not living within our planetary limits. We already need 1.5 planets, and rising, to provide for our insatiable demands.

And let’s be clear, this is not just an environmental lament; our failing ecosystems and dwindling supplies of natural resources ultimately will mean economic decline with severe financial consequences for all.

CSR is barely scratching the surface.

Of course, the failure to generate a real impact cannot be pinned to CSR alone. It is a very complex world, after all, and many a good idea can stall, especially if badly deployed.

But we have to ask ourselves: Are we serious about making the necessary transformation in our businesses and economies, or are we simply motivated by trying to enhance our corporate image?

The emerging evidence doesn’t look good. According to a new analysis of 40,000 CSR reports, from around the world developed by the Technical University of Denmark, less than 5 percent of organizations made references to planetary or ecological limits. Only 31 organizations actually have engaged with these limits by defining science-based performance targets and strategies designed to inspire changes in product portfolios or business models.

Could it be that at least 95 percent of CSR efforts are merely exercises in window-dressing?

Perhaps we should not be too surprised by the lack of transformative impact. There is a fundamental problem with the philosophy underpinning CSR as a business methodology.

On the money

In virtually all cases, CSR is founded on an assurance-based, tick-sheet model with the aim of reporting year-on-year incremental improvements. Those improvements fall pretty much within the current framing of the business, which still has profit maximization as its overriding goal.

Two key challenges are behind this model and framing. Firstly, if we carry on with our business-as-usual mindset, we are highly unlikely to come anywhere near the necessary radical shifts required in business or in sustainability performance. Incremental change is not only slow, it also is not allowing us to penetrate deeply enough into the real issues at hand. That includes the sustainability of our purpose in business and the efficacy of our business models. I’m sure we’re all tired of seeing the latest, inauthentic glossy representation of an inherently unsustainable business model.

Secondly, if maximizing profit is our primary purpose, then everything else will be subservient to this aim. We can, perhaps, seek to optimize the returns we make while delivering a balanced range of environmental and societal impacts, but it is highly unlikely we can aim to maximize profits at the same time. We cannot serve two masters. In this framing, CSR only ever can be an adjunct to the main purpose of the business. This might also explain why so many business leaders have tended to struggle with the business case.

If we accept that we need to go beyond simple incremental improvements and that we need to genuinely transform what we do in support of a genuinely sustainable future, then we need to go much further. An assurance-based format can be appropriate when all parameters are fully known and are stable: integrating sustainability into the heart of business, within a highly volatile context, requires our strategies (and thinking) to be much more dynamic.

Bakker’s call for integrated sustainable business is, therefore, right on the money. There cannot be two models for doing business, going forward — or even two sets of metrics — based on business as usual, with a bolt-on CSR strategy. There can be only one integrated model.

Powerful insights such as this led Unilever, one of the most progressive business organizations in the world today, to effectively close down its CSR department and to seek to integrate sustainability principles into everything it does. Sustainability responsibilities are now integrated within everyone’s role, not annexed as a separate, under-resourced department.

Make it count

In reality, Bakker’s declaration is probably more of an insightful prediction. CSR is not dead, yet — although it probably will be, quite soon.

CSR is, at best, only a partial solution, which can be misused to create an illusion of responsibility while delivering very little real change. There is a (sustainable) world of difference between reporting and looking good, as compared with the more earnest, but necessary, task of transforming our businesses and economies.

This is not to dismiss CSR as a total failure. Far from it. We just need to stand back and see its role within a bigger picture of transition — in helping raise our consciousness and understanding, and in providing a valuable step toward what might come next.

CSR has served a purpose in creating a staging post for where we are now, but it is not, and never could be, the end game. For all the reasons we have discussed, we never should expect CSR to provide all the answers. Building a good staging post is arguably a good result.

The real value in Bakker’s provocation is that he shakes up our perceptions of what good looks like. He also helps us to see beyond our current and short-term horizons, rather than accepting today’s model as a statement of fact. Of course, this has major implications for all businesses everywhere.

If CSR is on the way out, then what next? Where will the real debate be this year?