'Good' business is good business

I was recently asked about my thoughts on the relationship between CSR  and reputation in banking.

My initial reaction (true for other sectors too, I think) is that a CSR programme that exists simply to tick a box is never going to wash with today's savvy, connected consumers and may even further damage reputation.

However, CSR initiatives that genuinely inform better business practice and strive to provide solutions for stakeholders can build brand and improve reputation, providing the long-term benefits associated with this (loyalty, stability, profits, etc).

My caveat however is that in industries where reputation has been seriously damaged (such as banking), CSR initiatives, no matter how well-intentioned or how deeply integrated into an improved business model, might be cause for some short-term consumer cynicism.

Brands in these industries need to deliver on promises before they can positively affect their reputation.

Nothing earth-shattering here but it got me thinking a bit more deeply about the issue of corporate CSR and how it relates to social business.

CSR and social business

Traditionally, CSR has been limited to supporting worthy causes (which is not a bad thing in itself).  CSR has rarely been able to extend its remit to impact business practices and optimise core operations to benefit wider communities and stakeholders.

Consider how CSR is often siloed off from the main business operation.  Business strategy is often implemented separately (and sometimes counter) to the efforts of the CSR team.

This explains why CSR is often regarded with cynicism (by both business and consumers).  It often exists to offset the negative impacts of business.  In extreme cases it acts as a smokescreen to distract from unethical business practice*.

My belief is that effective CSR is not just about throwing money at a cause, it’s about businesses actually doing good (or being better at least).

It’s about operating in a socially responsible way.

Is social responsibility the new ‘green

My perception is that CSR initiatives to counter the environmental impact (as opposed to social impact) of business are starting to become more ingrained in business operations.

This is rather interesting and I think it might be because the impact of business on the environment is now well understood and the green movement has popular momentum (which has led to increased political and regulatory demands). 

In effect there has been a paradigm shift in consumers’ understanding and expectations of the role of business in this area.  The impact of this is that businesses no longer have a choice; they have to make environmental sustainability part of their business behaviour (or at least make it appear that this is the case) to be credible to their customer base.

I’m not claiming that all business is now ‘green’ but being environmentally accountable is certainly taken more seriously by corporates than it was ten, or even five years ago.

I don’t think this has happened yet with CSR.  The public does not demand the business is socially accountable in quite the same way yet.

But awareness is growing that business must undergo a change.

This change is being necessitated by the convergence of a variety of factors (the global financial situation, the rise of social media and the coming of age of generation Y, amongst others) but as yet its relevance for the business world has not tipped over into the collective consciousness.

This change is starting to be shaped and defined under the banner of social business.

CSR becomes the norm?

So what does it mean when CSR is extended and social accountability becomes core to business models?

It means that the business must develop initiatives to support and sustain the social and economic environments in which they operate.

For banking, this might mean creating new business models to ensure that wealth is better shared to maintain a solid customer base.

It might mean investing in research and initiatives to help people to manage their finance better and encourage saving.

It might mean creating and operating peer-to-peer lending programmes or innovating to find new ways to support local businesses.

Unlike traditional CSR, this is not a purely philanthropic exercise designed to boost a flagging reputation.  It’s a new business model in itself and its reward is long term ROI beyond brand equity; forging new markets, creating new services, connecting stakeholders, developing new revenue streams and supporting your customer base so that they can (and will) continue to be customers.

Just give it ten, or even five years…

*For detailed examples of corporate social responsibility activity and business behaviour, I recommend www.mallenbaker.net