C.B. Bhattacharya Defines Good vs. Bad Corporate Social Responsibility

C.B. Bhattacharya is the foremost scholar in corporate social responsibility (CSR). He defines CSR is "a commitment by a company to maximize society or environmental well-being through business practices, policies and resources".

In other words, CSR is related as much to how one operates the company as it is to the programs one chooses to invest in.

C.B. notes that there is a process that consumers or stakeholders use in judging CSR. It involves three criteria:
1. Understanding: Many companies invest in CSR but do not do enough to make people aware of what they are doing.
2. Usefulness: The CSR program must be seen by stakeholders as being of benefit to them. Companies spend a lot of time talking about the money they spend in CSR. Stakeholders care about the usefulness, not the amount.
3. Unity: the CSR program must be integrated with the strategy of the company.

C.B. has said that philanthropy is not CSR and I completely agree with him. Philanthropy is giving away money or in-kind services to something of importance to society without regard for the value it creates for the company. CSR, on the other hand is not only related to doing good, but also to doing well. It should build the company's value as it builds value for others. It is symbiotic.

When companies contemplate CSR, they must make it part of their overall brand or reputation strategy. It is part of it, not an add-on program. If companies can relate the program to the needs and interests of the stakeholder the program is intended to serve, it will have a greater chance of success. Consider, for example, the great success of the J&J "Campaign for America's Nursing Future", and investment of J&J resources to build the image and attract people to the nursing profession--one of the key customer groups of J&J. The company did well by doing good. On the other hand, consider many of the pharmaceutical companies that report spending $25M on CSR, yet cannot build their reputations because the programs are often not related to the overall strategy of the company, they are not of importance to stakeholders, and few people know about the particular programs. The amount spent might as well be written off as philanthropy--all well and good, but do not expect anything in return.

A Proposal to Change Corporate Social Responsibility to Corporate Engagement

The entire aspect of corporate social responsibility (CSR) has always troubled me. I believe firmly that companies should do good as well as doing well. However, CSR has always been treated as a tactic rather than as part of the overall strategy of the firm. As such, it is more akin to philanthropy rather than a program that is part of the overall brand or reputation management of the company.

With the advent of social media, stakeholder engagement is becoming more prevalent. Stakeholders are gaining more and more knowledge which used to be contained only at the center of the corporation. This is changing the way we talk with, market to and interact with our employees, customers and others.

I think it is time that we change the name of CSR to Corporate Engagement or Stakeholder Engagement. This is not just a name change, but a reflection of what I would hope would be a different mindset. CSR is still about a company doing something to someone else--a community. Engagement is much more active. To engage, we must listen, respect and have a dialog with others. Engagement is a change of mindset and a better reflection, I believe, of where we should be with stakeholders.

I know that some companies think that they are making progress by calling CSR Corporate Citizenship. I still do not like that term. Citizenship is a term that is designed to make a company feel good. Citizens vote. They do not need to be involved in politics. Similarly, corporate citizenship is no more involving than CSR. Engagement, on the other hand suggests that the CEO and others must think about the outside and bring it in. They must be involved. They need to work with others, not do things to or for others.