Articles

MONTHLY FEATURE

January 2008

CSR UPDATE: Where are we and where are we going in 2008?

By

Michael Hopkins, Director, MHC International Ltd.

Abstract: MHCi's annual look at where CSR has been, health how did our own predictions make out and where do we think CSR is going this year

A. Introduction

My in-tray tells me that CSR has gone off the boil.The environmental aspects of company and institutional offerings have jumped to the fore. Corporate Sustainability are the watchwords, it would appear.It is not surprising that the word ‘sustainability’ would be preferred by CEOs: who would not like to see their company exist forever? I covered the issue of CSR and CSu seven years ago and my view today remains the same[1].

Terminology - CSR, CR, Citizenship or Sustainability?

Corporate social responsibility

33%

Corporate responsibility

25%

Sustainability

17%

Corporate citizenship

6%

It doesn't matter, it's all the same thing

18%

Source: Ethical Corporation Poll as of 9/25/07

The poll by Ethical Corporation – never one to favour the phrase CSR – shows that its readers still prefer to use CSR.I have always believed that throwing out the word ‘social’ and leaving ‘corporate responsibility’ weakens the notion of business in society.I have discussed this elsewhere[2] –- where I re-state the definition I have used for some years and mean social to include economic (business case issues) and environmental (including sustainability).I also emphasise that CSR means treating key stakeholders both within the company and outside in a fair and ethical manner[3].

I am, however,realistic enough to accept that the word ‘social’ throws many company executives.Eventually, I believe that just about all companies (and institutions) will accept the main tenets of CSR and behave well to stakeholders, simply as a survival strategy.A company cannot be sustained without treating its stakeholders well – i.e. ethically and socially responsibly. What is wrong, for example, in treating stakeholders well – consumers for instance?I have also often said that a CSR exit strategy is obvious since CSR itself is obvious[4]

B. Review of CSR Update last year

Last year at this time, based also upon our December CSR Update Executive Forum, we concluded that there were six main issues:

1. On the question of CSR we said ‘CSR is still the preferred term among commentators, the Government and NGOs although companies hesitate and prefer the term CR’. This year we would substitute CR with Corporate Sustainability (CSu).

2. CSR is becoming greener, and this trend has continued throughout 2007. 2008 will also see companies struggling with the effects of the credit crisis of last year and the worries of recession.Bank credit will be difficult to obtain and that will dampen investment and down-the-line profits.Issues of CSR will still be important but will not be as important a driver for company policy as has been seen in the past two years.

3. We noted in 2006 that large companies took CSR seriously although there was much suspicion that companies were playing a PR game.This year, CSR as PR may still be on the agenda as economic problems dominate.The SME sector, on the other hand, is much more aware of CSR issues than in the past and, in Europe, probably in spite of rather than as a result of, the EU focus on CSR for SMEs.

4. Stakeholder dialogue was getting more complicated and this trend has continued to the extent that this year we could expect far fewer company and consumer wide ‘stakeholder dialogues’.Companies will argue that they know what their stakeholders want and will, therefore, in their opinion continue to serve them well.

5. Performance indicators were confusing.We said last year that companies had ‘moved away from excessive worries about the business case, feeling it had been either proven or that consumer pressure was now so overwhelming that CSR issues could not be ignored even if they negatively affected their bottom line, in the short-term at least.’ Nevertheless, it appears that many new rankings of companies have appeared, and this time more directed to specific sectors such as the luxury goods industries – see WWF and Lifeworth’s new index for instance[5].

6. We predicted (not rocket science this one!) that the next big issue in CSR would be, and is, global warming and what companies could do about it. This has proved to be true as companies are increasingly worried about their environmental footprint.Another issue we mentioned was how to deal with human rights in global operations. Discussions have continued with the UN Global Compact and the UN Human Right’s body by companies and some progress has been made.

C. CSR Review in 2007

In their review of CSR published in Sept 2007, EIRIS' (a think tank on socially responsible investment)[6] main conclusions were:

  • Over the past 25 years CSR has evolved from a mainly philanthropic activity to a more mainstream approach that integrates responsible business principles into core business activities.
  • Responsible business practices are increasingly being adopted by companies worldwide though there are significant differences between regions.
  • European companies have well developed responsible business practices across a broad range of issues. This is due to a sophisticated responsible investment market, NGO pressure and a strong regulatory environment.
  • Japanese companies demonstrate strong performance on environmental issues, although need to make progress on other areas to match European levels.
  • Beyond a core of companies which have adopted responsible business practices, North American companies significantly lag behind their European counterparts across all the areas researched.
  • Large companies are more likely to adopt responsible business practices than smaller companies.
  • Larger companies by market capitalisation are more likely to adopt human rights policies and demonstrate environmental performance improvements.

These trends back up MHCi’s own appreciation of the international situation as reflected in our own feature articles over the past seven years or so.Will these trends continue into 2008?

D. CSR in 2008

This year will be dominated by three key concerns.

First the rise of oil prices and the rapid substitution of food crops for bio-fuel production.This, in turn, will lead to sharp rises in food and consumer price inflation.

Second, the sub-prime credit crisis will feed more and more into the real economy as banks become tighter in their ability to lend even as interest rates fall.This will lead to a fall in investment and lower output and employment.

Third, the gradual trend toward authoritarianism coupled with rising instability caused by poverty as often written about in The Observer by Henry Porter, will lead to ever increasing restrictions on freedom and human rights.

These three global trends, depressing as they are, cannot be ignored by proponents of CSR since companies and institutions will be forced to grapple with these global issues and act accordingly.It will mean that respect for human rights and concerns about supply chain exploitation will be put on the back burner.The rise of, and concerns about, China will not be affected as it tries through massive PR to show a new face, at least temporarily, as Beijing hosts the summer Olympics.Companies will also have to face some restructuring as unemployment starts to rise to cope with falling economies which may, or may not, experience a global recession.Will companies restructure in a socially responsible manner?There is not much evidence that companies will follow such a route as argued, for instance, by luminaries such as George Starcher.Certainly, companies in the West will respect national labour laws on redundancies but even these are under attack – sometimes justifiably as in Sarkozy’s new France.

The move from CSR departments, and their clones, to mainstreaming CSR issues throughout companies and institutions will falter as the above concerns dominate company policy this year.So a difficult year ahead for the CSR community is in prospect, especially those whose main focus is not the environment.Therefore, by year’s end, we shall see the term ‘sustainability’ used so much that, like CSR, it may also be the subject of questioning and eventual sidestep.

E. Next steps

MHCi Forums on CSR past and present have developed so much interest that we shall, again, organize another CSR Update in December 2008. We shall also develop the points raised in future Monthly Features during the year.

We would also be very interested in any comments or suggestions on this article – please write to us on This e-mail address is being protected from spambots. You need JavaScript enabled to view it. and we shall publish the results on our site.

[Copyright © Michael Hopkins with comments by Ivor Hopkins and Julian Roche]


[1] see http://www.mhcinternational.com/articles/sustainability.htm

[2] see http://www.mhcinternational.com/articles/ft.htm

[3] Interested readers can read a longer discussion of this in the second chapter of my book CSR and International Development: Is Business the Solution (Earthscan, London, 2006).

[4] http://www.mhcinternational.com/articles/exit.htm

[5] http://www.lifeworth.com/deeper-luxury-info.pdf

[6] http://www.eiris.org/files/research%20publications/stateofespbusinessexecsumsep07.pdf)

Michael Hopkins is Professor of Corporate and Social Research at Middlesex University Business School, and Managing Director of the CSR advisory company and think-tank MHC International Ltd. His books include The Planetary Bargain: Corporate Social Responsibility Matters (Earthscan,2003) and Corporate Social Responsibility and International Development: Is Business the Solution? (Earthscan, 2006).

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