Navigating Terminology CSR and Corporate Sustainability in the Age of Sustainable Development
Navigating Terminology . . . CSR and Corporate Sustainability in the Age of Sustainable Development
By Robert Steele / Systainability Asia
I have been working in the field of sustainable development for around 8 years now, and more specifically working with the private sector on integrating sustainable development into their core management practices for over 4 years. Working in this field, I am often confronted by clients, and other consultants, with questions and deep discussions regarding the difference between Corporate Social Responsibility, commonly known by its acronym CSR, and Corporate Sustainability (CS). Some consultants tell me that CS is a part of CSR. Others, like myself, think of CSR as one of the critical legs of being a sustainable company. So what is the difference between the two important terms and practices and how do the two relate to each other?
This is an important question, because we who are working to convince companies to change their ‘business as usual’ thinking and management strategy need to be clear on what specifically we are talking about when we say CSR and/or Corporate Sustainability. It is also imperative that we are able to clearly layout how the two practices relate to each other and can be integrated towards the common goal of a having a sustainable society, which means business is both fulfilling its role and responsibility to its shareholders while at the same time fulfilling its role and responsibility to society as a whole.
It is fairly consensus now among decision makers in both government and industry that sustainable development is perhaps the biggest challenge to mankind ever, with climate change being the number one issues on a large list of sustainable development challenges that we face at the beginning of the 21st However, sustainable development will not and cannot be achieved without the buy-in and the sustainable development of companies themselves. Century.
With that said, it is probably good to do a little review of what is meant by the term sustainability. Sustainability in a nutshell, means to be able to continue and flourish indefinitely within the ever changing system conditions that the entity (species, community, company, etc.) exist in. Thus, to be a sustainable corporation means that you are able to create continuous value for your shareholders while at the same time protecting the environment and improving the lives of the stakeholders in society with whom you interact (either as customers, employees, or in more indirect ways). A sustainable business operates so that its business interests and the interests of the environment and society intersect so that all three sectors – economy, environment and society- prosper not just for a few years, but for generations to come.
Sustainable organizations and societies generate and live off interest rather than depleting their capital. Capital, in this context includes all natural resources that they depend on such as water, air, sources of energy and raw materials, and food stuffs. It also includes human and social assets such as employee commitment to community support, in addition to economic resources such as a license to operate, a receptive marketplace and legal and economic infrastructure. A business can of course spend down its capital for a while, like when we use our credit care too much, but of course this cannot go on for very long. Collapse, or bankruptcy is inevitable. On the other hand, a firm that honors the principles of sustainability is built to last for a long time to come.
Now back to how to differentiate CSR and Corporate Sustainability so that we are clear on the two terms and practices, but also are clear in understanding that both are required for sustainable development.
According to my understanding, CSR allocates responsibilities to companies to deal with societal issues on a voluntary basis and in collaboration with stakeholders. The term “responsibility” is extended by ethical dimensions as well. Society expects companies to go beyond their Friedman-defined economic responsibilities and legal compliance practices and take a strong ethical responsibility for the greater society by engaging in philanthropic and community development activities to further societal goals.
Corporate sustainability, or CS, on the other hand, is a management structure that aims to manage ecological, economic and social effects in order to both achieve a sustainable development of the organization and the core business, and to also create with its business operations and practices, a positive contribution to sustainable development of the economy and society at large whilst protecting the integrity of the ecological systems which both the company and the society depend on. Corporate sustainability strives for a systemic management approach and coordination of all corporate activities, with integration of its social and environmental management into what is viewed as conventional management (i.e. the two are not separated, but become one in the same).
For corporate sustainable management to be successful, its CSR programmes must be fully embedded into its corporate sustainability and sustainable development strategies and practices. CSR should not be a tangential exercise to the rest of the company’s operations, and not the sole responsibility of the PR or CSR department, but the responsibility of all employees in the firm.
It probably seems from my previous statement that the terms CSR and CS can be used rather interchangeable, as is the case in all colloquial language. However, to be clear in explaining the two terms to our clients, we must clearly understand the differences between CSR and corporate sustainability, and how they relate for achieving sustainable development for the society as a whole (the said company included).
A closer look at the two terms shows substantial difference between the approaches and the way they are implemented in companies. First let’s tackle the issue of “voluntary” or “comprehensive” (voluntary and compulsory) obligations. There is little doubt that only the consideration of issues exceeding economical duties constitutes CSR. CSR refers to voluntary social activities of the company exceeding what it is legally required to do. Sustainability management covers both voluntary environmental and social activities exceeding the core business operations, but also includes the compulsory issues such as the management of legal compliance or the management of issues deriving from stakeholder pressure.
Second, we can look at the way companies respond to issues. Is a company responding as an active recipient or as a proactive developer? CSR focuses on issues addressed by societal groups derived from engaging with external stakeholders. Modern CSR approaches also include anticipation of social issues and acting before society pressures the company to do so. Corporate sustainability and especially sustainable entrepreneurship in its most advanced form, require companies to take structural leadership (i.e. a systemic change in the way business is done from top to bottom). Apart from answering to societal issues, this covers taking the lead in shaping core business practices, markets and market conditions (including legislation) in order to contribute to overall sustainable development. This means that corporate sustainability strives for the creation of new, future oriented economic and social structures by offering sustainability related innovations, even if they are not required by stakeholders at the time, and bring them to mass market success. Philosophically speaking, corporate sustainability actively seeks to demote unsustainable products and markets by creating more sustainable solutions.
A third point of difference relates to accepting responsibility as in CSR, and creating business cases for sustainability. CSR emphasizes the social duties and responsibilities of a company to the outside community that it operates in or with. There is an ethical expectation of altruistic behavior from the company beyond its core business goals. Corporate sustainability, in this regards, places the integration of business and sustainability together into the core focus. The approach is to develop business and the business model in a way that it enhances or creates sustainable development. With the CSR approach, social and environmental management are a business accompanying activity, whereas corporate sustainability management requires that a company to shape its business and its business development to become a driver of sustainable development.
In concluding, the different perspectives and approaches of CSR and Corporate Sustainability complement each other. Their relationship is most apparent when answering the question whether a company as a corporate citizen has developed an approach to implement corporate social responsibility in a way that contributes to overall sustainable development – economically, socially and environmentally. This approach can be classified as “corporate sustainability management” if the answer to the question is “yes”. If your CSR programme is not to be targeted as part of the criticism from some quarters that it is just a another type of PR or marketing exercise, then CSR must be implemented in terms of sustainability management on the basis of economic and corporate principles.
Finally, CSR and corporate sustainability, along with corporate governance, collectively are shaping the identity of organisations and companies around the world, including Asia. All three are increasingly being integrated into the business strategy of successful corporations.
Consequently, the field of responsible business strategy and practice is becoming one of the most dynamic and challenging challenges that corporate leaders are facing today and possibly one of the most important ones for shaping the future of our world. We as consultants in this field will be key to helping business leaders succeed in this challenge. Thus it is imperative that we know how to navigate the language of our trade.
