Are Corporate Social Responsibility & Purpose the Same?
If you’re confused about the difference between Corporate Social Responsibility (CSR) and the concept of purpose, you’re definitely not alone.
After all, doing good in the world through dedicated programs of social responsibility surely equates as having purpose. If that’s the case, is it possible that purpose is simply the new ‘catch phrase’ to describe the natural evolution of CSR programs?
DEFINING CORPORATE SOCIAL RESPONSIBILITY
The concept of CSR is generally understood to mean that corporations have a degree of responsibility not only for the economic consequences of their activities, but also for the social and environmental implications.
Traditionally, this has culminated in programs focussed on charitable or pro bono work that improves people, the planet and profit.
This is sometimes referred to as having a ‘triple bottom line’ a business concept where companies commit to measuring their social and environmental impact in addition to their financial performance, rather than solely focusing on generating profit, or the standard “bottom line.”
PURPOSE REVISITED
In previous articles, we’ve explored and defined the concept of purpose in business.
Put simply, purpose is the core of the company. It is the why - the reason your company exists before it even generates revenue. Purpose is the lens for which all decisions in the company are viewed from.
In short, a purpose-driven company articulates why the company exists and takes a long term view of how it delivers to all multiple stakeholders in society.
There are also a number of key metrics that companies use to measure their return on investment from purpose - which are broader than the ‘triple bottom line’ accounting method. Companies created and driven by purpose hold themselves accountable to meeting their higher goals by measuring their own progress, with purpose metrics and a purpose framework.
ARE CSR AND PURPOSE THE SAME?
Let’s be clear, CSR programs and purpose are different.
While they both may share the intent to improve the planet, people or profit, they are not the same.
While purpose sits at the core of an organisation’s business model and is their reason for existence, CSR has traditionally been seen as compensating for issues created by core business activity, and usually sits in a specific department that works across the company.
Companies that claim they are purpose driven on the back of a CSR program are described by Harvard Business School Professor Ranjay Gulati as having ‘convenient purpose’ or ‘purpose on the periphery’, where purpose is a department or an ‘add on’, not central or core to the business strategy.
CAN PURPOSE BE A NATURAL EVOLUTION OF CSR?
The answer to that question is - it depends on the maturity and direction of the company.
If a company has established CSR activities in place with a focus on ESG metrics, and are looking to further integrate these strategies and goals into a defined purpose, with a supporting purpose framework and broader purpose measurements, this could be considered to be a step towards evolving to a purpose-driven company.
For companies that fall into this category, the company’s stakeholders are likely to seek to understand more about how the company would define and execute its purpose, and it is likely that as a first step a defined purpose would be aligned with the company’s ESG measurement and reporting strategy.
However, if a company has established CSR programs that do not evolve as outlined above, then it could be only viewed in its traditional role and therefore separate to purpose.
References:
https://humanrights.gov.au/our-work/corporate-social-responsibility-human-rights
https://online.hbs.edu/blog/post/what-is-the-triple-bottom-line
https://www.theworddepot.com.au/blog/measuring-purpose-its-actually-a-thing
https://www.theworddepot.com.au/blog/measuring-purpose-its-actually-a-thing
https://www.theworddepot.com.au/blog/the-5ps-of-purpose
https://www.growthbusiness.co.uk/csr-vs-purpose-evolution-different-concept-altogether-2545801/
https://corpgov.law.harvard.edu/2020/08/10/esg-and-corporate-purpose-in-a-disrupted-world/
