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GrowZA celebrates 2 years of CSR 2.0 implementation


GrowZA is founded on the principle of connecting development opportunities to resources in order to accelerate social progress. Traditional Corporate Social Responsibility programming, while commendable, often falls short of delivering authentic impact. Our partners and clients have joined us on the progressive social investment platform underpinned by the CSR 2.0 movement.


The transition


To compare the original form of Corporate Social Responsibility (CSR) to the new potential for the space a set of principles is needed against which to test the practice of CSR.


These went through a few iterations, but Wayne Visser from the Antwerp Management School eventually settled on five, which form a kind of mnemonic for CSR 2.0:

  1. Creativity (C)

  2. Scalability (S)

  3. Responsiveness (R)

  4. Glocality (2)

  5. Circularity (0)

These principles can be described briefly as follows:


Principle 1: Creativity (C)


In order to succeed in the CSR revolution, we will need innovation and creativity. We know from Thomas Kuhn’s work on The Structure of Scientific Revolutions that step-change only happens when we can re-perceive our world, when we can find a genuinely new paradigm, or pattern of thinking. This process of ‘creative destruction’ is today a well-accepted theory of societal change, first introduced by German sociologist Werner Sombart and elaborated and popularised by Austrian economist Joseph Schumpeter. We cannot, to a paraphrase Einstein, solve today’s problems with yesterday’s thinking. Business is naturally creative and innovative.


What is different about the Age of Responsibility is that business creativity needs to be directed to solving the world’s social and environmental problems. Apple, for example, is highly creative, but their iPhone does little to tackle our most pressing societal needs.


By contrast, Vodafone’s M-PESA innovation by Safaricom in Kenya, which allows money to be transferred by text, has empowered a nation in which 80% of the population have no bank account and where more money flows into the country through international remittances than foreign aid. Or consider Freeplay’s innovation, using battery-free wind-up technology for torches, radios and laptops in Africa, thereby giving millions of people access to products and services in areas that are off the electricity grid.


All of these are part of the exciting trend towards social enterprise or social business that is sweeping the globe, supported by the likes of American Swiss entrepreneur Stephen Schmidheiny, Ashoka’s Bill Drayton, e-Bay’s Jeff Skoll, the World Economic Forum’s Klaus Schwabb, Grameen Bank’s Muhammad Yunus and Volans Venture’s John Elkington.


It is not a panacea, but for some products and services, directing the creativity of business towards the most pressing needs of society is the most rapid, scalable way to usher in the Age of Responsibility.


Principle 2: Scalability (S)


The CSR literature is liberally sprinkled with charming case studies of truly responsible and sustainable projects and a few pioneering companies. The problem is that so few of them ever go to scale. It is almost as if, once the sound-bites and PR-plaudits have been achieved, no further action is required. They become shining pilot projects and best practice examples, tarnished only by the fact that they are endlessly repeated on the CSR conference circuits of the world, without any vision for how they might transform the core business of their progenitors.


The sustainability problems we face, be they climate change or poverty, are at such a massive scale, and are so urgent, that any CSR solutions that cannot match that scale and urgency are red herrings at best and evil diversions at worst.


How long have we been tinkering away with ethical consumerism (organic, fairtrade and the like), with hardly any impact on the world’s major corporations or supply chains? And yet, when Wal-Mart’s former CEO, Lee Scott, had his post-Hurricane Katrina Damascus experience and decided that all cotton products in Wal-Mart will be organic and all fish MSC-certified in future, then we started seeing CSR 2.0-type scalability.


In financial services, there have always been charitable loans for the world’s poor and destitute. But when Muhammad Yunus (1999), in the aftermath of a devastating famine in Bangladesh, set up the Grameen Bank and it went from one $74 loan in 1974 to a $2.5 billion enterprise, spawning more than 3,000 similar microcredit institutions in 50 countries reaching over 133 million clients, that is a lesson in scalability.


Or contrast Toyota’s laudable but premium-priced hybrid Prius for the rich and eco-conscious with Tata’s $2,500 Nano, a cheap and eco-friendly car for the masses.


The one is an incremental solution with long term potential; the other is scalable solution with immediate impact.


Principle 3: Responsiveness (R)


Business has a long track record of responsiveness to community needs – witness generations of philanthropy and heart-warming generosity following disasters like 9/11 or the Sichuan Earthquake.


But this is responsiveness on their own terms, responsiveness when giving is easy and cheque-writing does nothing to upset their commercial applecart. The severity of the global problems we face demands that companies go much further.


CSR 2.0 requires uncomfortable, transformative responsiveness, which questions whether the industry or the business model itself is part of the solution or part of the problem.


When it became clear that climate change posed a serious challenge to the sustainability of the fossil fuel industry, all the major oil companies formed the Global Climate Coalition, a lobby group explicitly designed to discredit and deny the science of climate change and undermine the main international policy response, the Kyoto Protocol.


In typical CSR 1.0 style, these same companies were simultaneously making hollow claims about their CSR credentials.


By contrast, the Prince of Wales’s Corporate Leaders Group on Climate Change has, since 2005, been lobbying for bolder UK, EU and international legislation on climate change, accepting that carbon emission reductions of between 50-85% will be needed by 2050.


CSR 2.0 responsiveness also means greater transparency, not only through reporting mechanisms like the Global Reporting Initiative and Carbon Disclosure Project, but also by sharing critical intellectual resources.


The Eco-Patent Commons, set up by WBCSD to make technology patents available, without royalty, to help reduce waste, pollution, global warming and energy demands, is one such step in the right direction.


Another is the donor exchange platforms that have begun to proliferate, allowing individual and corporate donors to connect directly with beneficiaries via the web, thereby tapping ‘the long tail of CSR’ (Visser, 2008).


Principle 4: Glocality (2)


The term glocalization comes from the Japanese word dochakuka, which simply means global localization.


Originally referring to a way of adapting farming techniques to local conditions, dochakuka evolved into a marketing strategy when Japanese businessmen adopted it in the 1980s.


It was subsequently introduced and popularised in the West in the 1990s by Manfred Lange, Roland Robertson, Keith Hampton, Barry Wellman and Zygmunt Bauman.


In a CSR context, the idea of ‘think global, act local’ recognises that most CSR issues manifest as dilemmas, rather than easy choices. In a complex, interconnected CSR 2.0 world, companies (and their critics) will have to become far more sophisticated in understanding local contexts and finding the appropriate local solutions they demand, without forsaking universal principles.


For example, a few years ago, BHP Billiton was vexed by their relatively poor performance on the (then) Business in the Environment (BiE) Index, run by UK charity Business in the Community. Further analysis showed that the company had been marked down for their high energy use and relative energy inefficiency. Fair enough. Or was it? Most of BHP Billiton’s operations were, at that time, based in southern Africa, home to some of the world’s cheapest electricity. No wonder this was not a high priority. What was a priority, however, was controlling malaria in the community, where they had made a huge positive impact. But the BiE Index didn’t have any rating questions on malaria, so this was ignored. Instead, it demonstrated a typical, Western-driven, one-size-fits-all CSR 1.0 approach.


Hence, CSR 2.0 replaces ‘either/or’ with ‘both/and’ thinking. Both premium branded and cheap generic drugs have a place in the solution to global health issues.


CSR 2.0 is a search for the Chinese concept of a harmonious society, which implies a dynamic yet productive tension of opposites – a Tai Chi of CSR, balancing yin and yang.


Principle 5: Circularity (0)


The reason CSR 1.0 has failed is not through lack of good intent, nor even through lack of effort. The old CSR has failed because our global economic system is based on a fundamentally flawed design.


For all the miraculous energy unleashed by Adam Smith’s ‘invisible hand’ of the free market, our modern capitalist system is faulty at its very core. Simply put, it is conceived as an abstract system without limits. As far back as the 1960s, pioneering economist, Kenneth Boulding, called this a ‘cowboy economy’, where endless frontiers imply no limits on resource consumption or waste disposal.


By contrast, he argued, we need to design a ‘spaceship economy’, where there is no ‘away’; everything is engineered to constantly recycle. In the 1990s, in The Ecology of Commerce (1994), Paul Hawken translated these ideas into three basic rules for sustainability: waste equals food; nature runs off current solar income; and nature depends on diversity.


He also proposed replacing our product-sales economy with a service-lease model, famously using the example of Interface ‘Evergreen’ carpets that are leased and constantly replaced and recycled. William McDonough and Michael Braungart have extended this thinking in their Cradle to Cradle (2002) industrial model. Cradle to cradle is not only about closing the loop on production, but about designing for ‘good’, rather than the CSR 1.0 modus operandi of ‘less bad’.


Hence, CSR 2.0 circularity would, according to cradle-to-cradle aspirations, create buildings that, like trees, produce more energy than they consume and purify their own waste water; or factories that produce drinking water as effluent; or products that decompose and become food and nutrients; or materials that can feed into industrial cycles as high quality raw materials for new products.


Circularity needn’t only apply to the environment. Business should be constantly feeding and replenishing its social and human capital, not only through education and training, but also by nourishing community and employee wellbeing.


CSR 2.0 raises the importance of meaning in work and life to equal status alongside ecological integrity and financial viability.


Shifting from CSR 1.0 to CSR 2.0


These principles are the acid test for future CSR practices. If they are applied, what kind of shifts will we see? In Wayne's view, the shifts will happen at two levels.


At a meta-level, there will be a change in CSR’s ontological assumptions or ways of seeing the world.


At a micro-level, there will be a change in CSR’s methodological practices or ways of being in the world.


The meta-level changes can be described as follows: Paternalistic relationships between companies and the community based on philanthropy will give way to more equal partnerships. Defensive, minimalist responses to social and environmental issues will be replaced by proactive strategies and investment in growing responsibility markets, such as clean technology. Reputation-conscious public-relations approaches to CSR will no longer be credible and so companies will be judged on actual social, environmental and ethical performance, i.e. are things getting better on the ground in absolute, cumulative terms?


Although CSR specialists still have a role to play, each dimension of CSR 2.0 performance will be embedded and integrated into the core operations of companies.


Standardised approaches will remain useful as guides to consensus, but CSR will find diversified expression and implementation at very local levels. CSR solutions, including responsible products and services, will go from niche ‘nice-to-haves’ to mass-market ‘must-haves’. And the whole concept of CSR will lose its Western conceptual and operational dominance, giving way to a more culturally diverse and internationally applied concept.


These shifts are summarised in the table below:

CSR 1.0

CSR 2.0

Philanthropic

Collaborative

Risk-based

Performance-driven

Image-driven

Integrated

Specialised

Diversified

Marginal

Scalable

Western

Global

Supporting these meta-level changes, the anticipated micro-level changes can be described as follows: CSR will no longer manifest as luxury products and services (as with current green and fairtrade options), but as affordable solutions for those who most need quality of life improvements. Investment in self-sustaining social enterprises will be favoured over cheque-book charity.


CSR indexes, which rank the same large companies over and over (often revealing contradictions between indexes) will make way for CSR rating systems, which turn social, environmental, ethical and economic performance into corporate scores (A+, B-, etc., not dissimilar to credit ratings) and which analysts and others can usefully employ in their decision making.


Reliance on CSR departments will disappear or disperse, as performance across responsibility and sustainability dimensions are increasingly built into corporate performance appraisal and market incentive systems.


Self-selecting ethical consumers will become irrelevant, as CSR 2.0 companies begin to choice-edit, i.e. cease offering implicitly ‘less ethical’ product ranges, thus allowing guilt-free shopping.


Post-use liability for products will become obsolete, as the service-lease and take-back economy goes mainstream.


Annual CSR reporting will be replaced by online, real-time CSR performance data flows.


Feeding into these live communications will be Web 2.0 connected social networks that allow ‘crowdsourcing’, instead of periodic meetings with rather cumbersome stakeholder panels.


And typical CSR 1.0 management systems standards like ISO 14001 will be less credible than new performance standards, such as those emerging in climate change that set absolute limits and thresholds.


These practical shifts are summarised below:

CSR 1.0

CSR 2.0

CSR premium

Base of the pyramid

Charity projects

Social enterprise

CSR indexes

CSR ratings

CSR departments

CSR incentives

Product liability

Choice editing

Ethical consumerism

Service agreements

CSR reporting cycles

CSR data streams

Stakeholder groups

Social Networks

Process standards

Performance standards

Drop us a line at grow@growza.co.za or call our office on +27 11 282 0658 if you would like your CSR strategy reviewed or aligned to CSR 2.0 principles.


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Download the full paper by Wayne Visser - The age of responsibility CSR2.0 and the new DNA of business below.

GrowZA Social Investment Agency - The age of responsibility article download - www.growza
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