Practising philanthropy in the pursuit of CSR
View(s):Sri Lankan companies mistake philanthropy for Corporate Social Responsibility (CSR) in their work with local communities and the environment, says a US-based expert.
“There are major differences between philanthropy and CSR and many organisations and individuals here (and in many parts of the world) are not clear about either,” noted Colleen Fletcher, who has had wide experience in Europe, Africa and the US on CSR issues, told the Business Times in an interview recently.
Colleen Fletcher
“One of the problems is that there is no universal definition of CSR and in this context, there are all kinds of interpretations (of CSR),” she said, adding that “Europe defines CSR as the responsibility of enterprises in their impact on society, environment, human rights and consumer concerns and how they bring this into the business strategy of the organization”.
Ms. Fletcher was responding to a question on whether a finance company donating a science lab to a school or an insurance company funding a school football team is CSR or something else.
Philanthropy, she stressed, is the act of donating goods and services to society and the community which has no direct link to one’s business. CSR, on the other hand, is linked to the business strategy of an organization and means that whatever a company does, its strategy and production model is built on the needs or preservation of the environment and the community.
In the interview she dealt with a range of issues on the differences between philanthropy and CSR; that many companies were moving towards a CSR-linked business model and the need for companies to reduce waste and recycle their products.
Act of giving
She said philanthropy is the act of giving and has a major role to play in filling gaps in the development of a country in areas where the state is absent. “The private sector does a lot of philanthropy because of a lack of activity (in some areas) by the public sector,” she added.
Explaining further about CSR, Ms. Fletcher said, “Properly-practiced CSR means understanding the impact on society and the limited resource base on earth when extracting resources like iron or gold from the ground. As an organization, do we think about waste and where it is going? Do we think before cutting trees for the paper and pulp industry? Are we conscious of the limited bio diversity resources that we have on earth? Are we thinking about what the consequences of a business operation is on the environment, the community?” she asked.
The US-based specialist said real CSR doesn’t happen overnight in an organisation but comes through an evolution, a journey. It has a lot of business sense if companies are able to understand the long-term benefits of a business model built on CSR.
” For example there is a cost saving benefit in building products that use less water and is better for the environment. Consumers start trusting these companies and end up buying more of their products,” she said.
Education on CSR
For a better understanding to emerge on CSR, there is a need to change mindsets through education, building awareness in universities, classrooms and teaching the right corporate social responsibility definition. This needs to be included in the curriculum of business schools which is important because these institutions create business leaders of the future, she added.
Another issue, she discussed, was the linear economic model which is based on production, consumption and disposal and the newer, emerging, environmentally-friendly circular economy.
Under the second model, people don’t own products but rent products like cars for example, reducing the level of extraction of the earth’s resources and using a product to the maximum before it completely wears out.
Another model of CSR is the social entrepreneurship structure where individuals and organisations, concerned about the environment and social needs, create an organisation that is not only profit focused.
“This is happening in a big way in the US, in Europe. It’s a business model where you take into consideration the way we consume, the way we live and how we exist on this planet,” she added.Ms. Fletcher said one of the biggest challenges not only in Sri Lanka but across the world is that most economies are run by SMEs which find it costly to move to a CSR-led business model.
“As a SME business, you don’t have the time, the ‘luxury’ to always remember to be conscious of the environment because you are heavily involved in the business of survival and have no time or money for anything else.”
Referring to the need for a serious change in consumption patterns, she said consumerism has enveloped the world with little or no consumer resistance.
People ask questions, only when a crisis erupts. “Are you for instance aware from where your food comes from; Are you are aware of the quantity of chemicals in your food? If you find something wrong, do you care enough to do something about it?”
| Few companies do practise ‘real’ CSR
A growing number of companies are acquiring a business model that puts the environment and the community first in whatever they do. Shoe manufacturer Timberland is one such company where CSR has developed into a serious business model. The company is recycling worn out shoes by extracting the usable parts and fitting them into a new pair of shoes, thereby reducing its usage of the environment. Germany-based, sportswear maker Puma has created the world’s first bio degradable clothing line titled ‘Incycle’ where the product could be disposed sans any impact on the environment or using water in washing. Another company that has successfully changed the way it does business is Unilever which has blended CSR and profit in what it calls the ‘Sustainable Living Plan’, using one integrated strategy. Green-washing Many companies practice ‘green washing’ where a product claims to be eco-friendly. CSR specialist Colleen Fletcher talks about this ‘devious’ marketing tool: Take for example a consumer goods company that wants to market a new detergent which it promotes as being eco-friendly because it needs less water. The water benefit however is diluted by the increased use of harmful chemicals to make the product require less water. Companies claim to sell green products but if they fall within the strategy used as seen in the example given, then this is misleading consumers.
|
Follow @timesonlinelk
comments powered by Disqus