CSR Belongs at the Very Core of Business

The Age

By Katie Lahey
Chief Executive
Business Council of Australia

We can’t sustain a first-rate economy with a second-rate community, writes Katie Lahey.

Corporate social responsibility continues to be seen or spoken of as a sort of extended apology for the corporation. The business community can and should be more confident and assertive about the competencies and value of the corporation.

Only by making it consistently clear that CSR is a natural and vital extension of these competencies and core values – not an offset or an apology for them – will business, and the community, reap a sustainable return from its CSR investment.

The core competency of business is the organisation of large amounts of capital and expertise to achieve clearly defined and measurable outcomes, namely adding value and spreading prosperity.

Its capacity for good deeds is immense – not in spite of these competencies but because of them.

Now I’m not arguing that the Milton Friedman the “business of business is business” approach is the best way to conceptualise or communicate CSR. What I’m arguing for is for business to do a better job of framing the dialogue about the role of the corporation in society on its own terms, particularly around CSR.

First, let’s be clear about what CSR is and isn’t. It’s not about pulling every business lever to fix every social or community ill.

It’s not about corporations saying they want to minimise their footprint as if to give weight to the view we really do have two left feet.

It's about business doing exactly what it does best:

  • Marshalling resources and expertise.
  • Defining clear, achievable objectives.
  • Investing in programs and activities in a strategic and sustainable way.
  • Measuring the outcomes.

It’s about recognising that through its role, its footprint is deeply and indelibly embedded in the community.

It’s about making sure that through all its activities and objectives this footprint enhances the alignment between business and community in all its forms – economic, social and environmental – and brings sustainable benefits to both.

CSR needs to be framed within a clear and concise credo – that as businesses, we can’t sustain a first-rate economy with a second-rate community.

I would go so far as to say business needs a more defined, if not a new language to frame CSR – a language that is unambiguously and unashamedly based on doing business better – potentially with terms such as community value-adding or investing in sustainable community growth.

On that note, why shouldn’t corporations frame their corporate tax payments as part of their overall CSR efforts. Business tax has now grown to such an extent that it was sufficient to pay for all the personal tax benefits in the last budget.

Part and parcel to this approach is getting away from the obsession that business reputation is about being liked – and that CSR is the vehicle to enhance likeability.

We live in an age in which likeability can be determined by a five-second sound bite or whether the interviewee is colour co-ordinated. We also live in an age of spin. And the wages of spin are inherent and deep levels of distrust in the community.

So when CSR is articulated or thought about in fuzzy language or framed in terms of moral or even quasi-religious concepts, is it any wonder the community is so mistrustful of it?

Business should be striving to be scrutinised and respected for the things it does well – if it simply seeks to be liked on the basis of what others want it to be, it will inevitably fall short.

It cannot, for example, substitute the role of governments in social welfare, but it can make a significant difference by selectively using its resources, people and skills in adding value to community organisations. Rigour is needed in making these choices.

One final note: it’s not only business that sets the tone for the debate around CSR and corporate behaviour. Politicians, the media and NGOs can also play a role. We know that in the wake of any high-profile scandal involving an individual corporation, it’s always tempting to portray all corporations in the same light.

At the BCA, we have argued the recent explosion in business red tape – particularly in the wake of HIH and Enron – can be seen as an extension of the old mindset that business needs to be on a very tight leash and requires constant vigilance.

The most recent parliamentary inquiries into CSR were an extension of that mindset.

As the BCA argued in its submissions to these inquiries, the relative absence of regulation in this area has in fact allowed many companies to pursue highly innovative means to build sustainable and value-adding partnerships with the community.

But ultimately the challenge lies with business. We need to communicate what CSR is and why it is central to both business and the community.

With this new more sophisticated appreciation of business comes the need to better explain CSR.

We need to move away from woolly notions of licences to operate and righting the wrongs of the world.

And, finally, business needs to be proud of its contribution and find ways to communicate this to the non-business world.

Katie Lahey is chief executive of the Business Council of Australia. This is an edited version of a speech she gave yesterday to the Australian Centre for Corporate Social Responsibility Turning Point Conference.