Question

1. Discuss key trends in Corporate Social Responsibility (CSR), as reviewed in the literature in the past 5 years. (Word limit: approx. 500 – 800 words).

Answer 1

Some of the most popular CSR trends in the area of corporate social responsibility include increased transparency, investment in green technologies, local community and employee engagement, and diversity and inclusion initiatives.

CSR Trend: Increased Transparency

Demands for disclosure for companies to reveal what's under the hood of their businesses have become commonplace among consumers. This CSR trend is partly in response to heightened regulatory oversight such as the European Union's noteworthy General Data Protection Regulation (GDPR). It is also partly a result of ever-increasing availability of almost instantaneous information, and consumer and shareholder demands of once behind-the-scenes information. As part of a business model that embraces corporate social responsibility, companies are sharing more environmental, social and governance disclosures.

Consumers are no longer satisfied with shady business dealings and hidden agendas but are demanding to know more about previously internal matters. For example, even workers at places like Google have openly protested the company's bid on a cloud computing contract with US Customs and Border Protection. Just as nonprofits are subject to rigorous impact reporting, financial transparency, and accountability, increased transparency is a CSR trend that will only grow in coming years.

CSR Trend: Green Technology

Gone are the days of rampant resource usage without any accountability or thought toward replenishment. Climate change continues to drive many conversations in the corporate world, and multiple trends in CSR intersect at this topic. As available natural resources are rapidly depleted and our world reaches a tipping point of a two-degree rise in average temperature, socially responsible companies are investing in green technologies, reducing their reliance on non-renewable resources, and looking to more sustainable inputs to do business.

Whether it's fashion companies looking into alternative fabrics such as eucalyptus or recycled water bottles, producing clean emissions through more rigorous machinery emissions tests, or simply getting certifications like LEED for their buildings, green technology will certainly be a growing trend for businesses looking to enhance their corporate social responsibility.

CSR Trend: Global Companies Acting Locally

Localization is in. Even companies that operate on a global level are recognizing the value of local markets and supply chains. This is not only to reduce carbon emissions that might be associated with transportation or supply chain costs (as creating "greener" businesses is also a rising CSR trend mentioned above), but to tap into local talent and solutions. Many companies that also have charitable arms are also prioritizing nonprofit partners that work with local leaders and local talent, rather than "shipping in" cookie-cutter solutions.

Also, corporate social responsibility initiatives actively attempt to engage in activities that benefit their local communities as well as produce profits for the corporation. Not only are there publicity benefits to be gleaned from getting involved in local communities, it can also boost employee satisfaction. Increasingly, corporations interested in CSR are donating to local nonprofits, funding the construction of things like schools in lower-income neighborhoods, and becoming engaged with civic issues that affect where they do business. Corporate-sanctioned volunteer events, especially during the holidays, is also an emerging CSR trend that allows employees to volunteer their efforts and make positive contributions with minimal time commitments.

CSR Trend: Diversity and Inclusion

As the issue of economic inequality rises to the forefront of many political debates, so does the issue increasingly press upon corporations. Recognition of inequalities in pay and economic burdens of employees is an emerging trend in corporate social responsibility. Pay equity between males and females, measuring the difference in income between the highest-paid and the lowest-paid worker at a company, and making sure that there is a diverse staff base have become key priorities of the best companies in the world.

Corporate social responsibility initiatives such as intentionally recruiting candidates from difficult economic or educational backgrounds ultimately empowers local talent, brings diverse voices to the table, and is a trend that's here to stay.

The concept of creating shared value was further developed by Porter and Kramer (2011) who explained it as a necessary step in the evolution of business and defined it as: “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress” (Porter and Kramer 2011, p. 2).

For Porter and Kramer (2011), the need for Creating Shared Value (CSV) is in part the result of the conventional narrow-viewed business strategies which usually don’t take into account the broad factors that influence their long term success. Notably, Porter and Kramer (2011) place CSR into this category seeing it as an outdated and limited concept that has emerged as a way for improving company’s reputation, and as a consequence, they claim that CSV should replace CSR.

Perhaps Porter and Kramer’s (2011) most relevant contribution comes from the claim that “the purpose of the corporation must be redefined as creating shared value” (p. 2) and by pointing out that the first step to do so is the identification of the societal needs as well as the benefits or harms that the business embodies through its products. Accordingly, Porter and Kramer (2011) established three ways for creating shared value: by reconceiving products and markets, by redefining productivity in the value chain, and by creating supportive industry clusters where the company operates.

Even when Porter and Kramer (2011) did not contribute directly to the concept of CSR, they called for a change in the business strategies which, in their opinion, should now focus on generating shared valued as a main objective. This perspective of the creation of shared value is evident on what Leila Trapp (2012) called the third generation of CSR, which she explained as the moment in which corporations reflect their concerns about social and global issues on their activities, even when some of those concerns might not be directly linked to their core business. Even when this might seem similar to the philanthropic responsibilities of companies, defined as the fourth level of the Pyramid of CSR proposed by Carroll (1991), it is in fact rooted on a different understanding of the roles of corporations within their social context.

For Carroll (1991), companies which engage on activities to improve the social context in which they operate are doing so with a philanthropic perspective that is discretionary and voluntary, and as a result, this perspective is less relevant than the other three categories proposed in the Pyramid of CSR. In contrast, Trapp (2012) built on the historical understanding of CSR proposed by Marrewijk (2003) to explain what she called the third generation of CSR as an outcome of the evolution of the roles and responsibilities of each sector of society in which the private, public and social sectors have become increasingly interdependent. Then, the third generation of CSR proposed by Trapp (2012) can be understood as the result of corporations acknowledging and assuming their new roles and responsibilities towards society.

Trapp (2012) exemplified the third generation of CSR through a case study of Vattenfall, the Swedish state-owned energy company that in 2008 launched a CSR-backed stakeholder engagement campaign focused on climate change mitigation. The case study showed that even when Vattenfall’s campaign addressed clear social and global issues (climate change), it still reflected typical business objectives (in this case creating an interest in the company’s environmental effort and creating a brand image linked to the fight to climate change that would be a first-mover competitive advantage) (Trapp 2012). With this, Trapp (2012) contributed to the concept of CSR by exemplifying the new roles and responsibilities that corporations are willing to take in order to generate shared value.

In the third edition of Chandler and Werther’s book Strategic Corporate Social Responsibility (2013), the authors acknowledged the relevance of creating shared value, a constant in the previous editions, and highlighted its significance by modifying the subtitle of the book from Stakeholders in a Global Environment to the new version Stakeholders, Globalization, and Sustainable Value Creation. In fact, in the third edition of the book Chandler and Werther (2013) claim that SCSR has the potential for generating sustainable value and that the first step to do so is by identifying the social problems for which the company can create a market-based solution in an efficient and socially responsible way.

Later, in the fourth and most recent edition of the book, Chandler (2016) reflects on the evolution of CSR and its growing acceptance as central to the company’s strategic decision making as well as to their day-to-day operations. What is evident from this edition, is that Chandler (2016) understands the generation of sustainable value as one of the main objectives of SCSR. In fact, the subtitle of the fourth edition, Sustainable Value Creation, summarizes Chandler’s (2016) new perspective on SCSR in which “value creation cannot be avoided…[instead] it must be embraced” (p. xxvii). A key aspect to point out is that Chandler (2016) builds from the work of Porter and Kramer (2006) to conclude that “the firm creates the most value when it focuses on what it does best, which is defined by its core operations” (p. 250).

A key contribution from Chandler and Werther (2013) is their definition of SCSR which is the result of their exploration of CSR and their pragmatic approach to its effective implementation. Chandler and Werther (2013) defined SCSR as: “The incorporation of a holistic CSR perspective within a firm’s strategic planning and core operations so that the firm is managed in the interests of a broad set of stakeholders to achieve maximum economic and social value over the medium to long term.” (p. 65). In the fourth edition of the book, Chandler (2016) presents a slightly modified definition which reflects his new perspective on the generation of value: “The incorporation of a holistic CSR perspective within a firm’s strategic planning and core operations so that the firm is managed in the interests of a broad set of stakeholders to optimize value [emphasis added] over the medium to long term” (Chandler 2016, p. 248).

Perhaps Chandler and Werther’s (2006; 2010; 2013) most valuable contribution comes from their particular perspective on the implementation of Strategic CSR, which in the fourth edition of the book written by Chandler (2016) builds from the previous publications to encompass five major components instead of the four proposed in previous editions: first, the complete incorporation of the CSR perspective into the company’s strategic planning process and their corporate culture; second, the understanding that all the company’s actions are directly related to the core operations; third, the belief that companies seek to understand and be responsive to their stakeholders’ needs, which means that the incorporation of a stakeholder perspective is a strategic necessity; fourth, the company passes from a short term perspective to a mid and long term planning and management process of the firm’s resources which is inclusive of its key stakeholders, and; fifth (the new component), firms aim to optimize the value created (Chandler 2016; Chandler and Werther 2013).

The new component of SCSR, the optimization of value, reinforces Chandler’s (2016) updated perspective in which the maximization of profit, or tradeoffs, is no longer an acceptable objective. Instead, companies should aim at optimizing value over the long term by focusing on their areas of expertise and by doing so there would be a reorientation of efforts towards the creation of shared value instead of profit maximization (Chandler 2016). To do so, an essential aspect of SCSR is the integration of the five components into a corporate framework that sets the parameters for the decision making process as well as their integration into the corporate culture with clear guiding values (Chandler 2016). This reflects Chandler’s (2016) belief that SCSR should be part of the day-to-day operations in order for it to be successful, a notion constantly highlighted by him through his articles and books. Then, the explicit call for the full immersion of SCSR into a company’s corporate culture, decision making process, and day-to-day operations is yet another relevant contribution from Chandler and Werther’s work (Chandler 2016; Chandler and Werther 2013).

In 2015, Carroll resumed his work on CSR with an overview of the evolution of the concept which complemented his literature review of 1999 and of 2010 (see: Carroll 1999; Carroll and Shabana 2010), but this time he looked at the competing and complementary concepts that have become part of the modern business vocabulary. Carroll (2015) reviewed the concepts of stakeholder engagement and management, business ethics, corporate citizenship, corporate sustainability, and the creation of shared value and concluded that all of them are interrelated and overlapping. Notably, Carroll (2015) pointed out that all of these concepts have been incorporated into CSR which is the reason why he defines it as the benchmark and central piece of the socially responsible business movement (see: Chandler and Werther 2013; Heslin and Ochoa 2008; Trapp 2012).

The year 2015 can be considered as the most relevant in the decade because the 15 years to follow after it will be marked by the Paris Agreement, the launch of the 2030 Agenda for Sustainable Development, and the adoption of seventeen Sustainable Development Goals (SDGs) which represent a “shared vision of humanity and a social contract between the world’s leaders and the people” (Ban 2015, para. 1). Even when the SDGs do not represent any commitments for the private sector, the countries that adopt them will have to create specific policies and regulations that will translate into pressure for firms to implement new business practices or to improve their current ones. This is particularly relevant considering that the SDGs cover a wide range of areas, from climate change to the eradication poverty and hunger, as well as the fostering of innovation and sustainable consumption. Beyond that, the SDGs are interconnected, which means that addressing one particular goal can involve tackling issues of another one (UNDP 2018).

Considering that the SDGs do not represent any commitments for the private sector, it is relevant to mention that the EU law, through the Directive 2014/95/EU, requires large companies of public interest (listed companies, banks, insurance companies, and other companies designated by national authorities as public-interest entities) to disclose non-financial and diversity information beginning on their 2018 reports and onwards (European Commission 2014b; n.d.). The Directive is of interest to this paper because it derives from the European Parlamient’s acknowledgement of the vital role of the divulgation of non-financial information within the EC’s promotion of CSR and as a result can be expected to have an impact on the expansion of CSR reporting within the EU as well as with the Global Reporting Initiative (GRI).

This context presents an opportunity for CSR and SCSR to continue growing in terms of conceptualization and implementation, mainly because businesses can adopt it as a strategic framework with the objective of creating shared value (see: Chandler 2016). The expansion is particularly notable within the academic literature where it is possible to see that since 2010 the number of academic publications around CSR has increased considerably (see Table 1). As can be seen in Table 1, in the case of Science Direct, the publications more than doubled from 1097 in the year 2010 to 2845 in 2017 (2.59 times) while in Web of Science they almost quadrupled passing from 479 to 1816 in the same years (3.79 times). In the case of ProQuest the publications increased considerably from 2010 to 2016 passing from 5715 to 8188, but decreased to 5670 in 2017. It is also important to notice that the years 2015 and 2016 had the highest amount of publications around CSR this far. It is also relevant to observe that the number of publications declined after 2015 for Science Direct and after 2016 for Proquest, while for Web of Science the amount kept growing.