Companies took ‘road less traveled by’ well before they could name the route

By John Davies

Corporate social responsibility (CSR)—the term used to describe a company’s societal duties to a wide range of stakeholders—suffers from a lack of imagination. Those who view it as a defensive strategy with little or no impact on the bottom line create arguments that try to compartmentalize the topic and ignore the broader context of the changes taking place in corporations.

On the other hand, those who promote CSR are characterized as ideological zealots focused on a singular aspect of a company’s actions.

Both of these views get caught up in the incomplete language used to discuss the issues at hand. Throughout history, poets have provided the lens to interpret events. Perhaps we need a new set of poets to help us understand how corporate responsibility has evolved.

Shakespeare’s Juliet points to part of the problem when she laments, “What's in a name? That which we call a rose by any other name would smell as sweet.” AMR Research recently convened representatives from a wide range of industries to establish a sustainability peer forum to share best practices and strategies.

At first, we discussed defining terms like sustainability and corporate responsibility. However, much like Supreme Court Justice Potter Stewart, the group sidestepped hours of definitional wrangling because “they knew it when they saw it.” And there’s the rub. In the wake of Enron’s practices and other corporate criminal activity, we end up debating the name of the rose in technical terms rather than business results.

In recent presentations by Wal-Mart, the company goes out of its way to deny that it should be labeled as “green” or any phrase other than “low price leader.” General Electric’s CEO has publicly trumpeted that he is not a tree-hugger. And yet, what do we make of the last two years, during which these companies have embarked on an aggressive range of sustainability initiatives?

In “Thirteen Ways of Looking at a Blackbird,” the poet Wallace Stevens writes of how multiple perspectives must be accounted for, even when observing something as common as a blackbird. What often gets lost in debates about corporate responsibility is the need to balance multiple perspectives around a single issue.

For Wal-Mart, it has been widely documented in the press that its adoption of a “green” strategy has also provided opportunities for growth as well as extensive cost savings. This has forced many in the activist community to reconsider how they view the company, and should force many companies to change how they view CSR.

The big question is why CR detractors feel a need to isolate corporate responsibility from the balance sheet of the modern corporation. At the turn of the 20th century, many of the most successful corporations were comprised of vertically integrated supply chains, controlling resources as well as the means of production and distribution.

But today’s extended supply chains and global markets dictate that companies no longer have singular control of their destiny. They depend upon a vast network of partners to achieve successful growth. Dealing effectively with suppliers and customers requires alignment and transparency that exceeds the table stakes of regulatory compliance.

Achieving competitive advantage increasingly requires looking beyond traditional roles to tap into expertise that exists outside of the corporation. Previously confrontational nongovernmental organizations are now supplying scientific assistance to help companies improve their operations. Competitors are banding together to address social and environmental issues with initiatives such as the Electronic Industry Code of Conduct (EICC).

By consolidating and standardizing compliance, audit and reporting efforts, EICC members benefit from shared efficiencies and best practices while fostering a culture of social responsibility throughout the global electronics supply chain. Similar initiatives have succeeded with cocoa and other supply bases.

The fallacy of viewing CSR as a defensive strategy is that it ignores how integral the results delivered are within the context of the modern corporation. The way in which we talk about it is newly evolving, but there are examples of successful strategies that have been less visible because they haven’t worried about the name as much as the results.

Companies as diverse as Interface, SC Johnson and IBM have demonstrated how their actions have contributed to their bottom line long before the words to describe them became the center of the debate. Perhaps they have led by taking the road “less traveled by,” but they also provide an example for other companies to follow. Their example provides us a set of case studies to discuss how CR contributes to the bottom line. And that, to paraphrase Robert Frost, makes all the difference.

John Davies is Vice President of AMR Research’s Sustainability Forum, where he launched the Green Technology Research service focused on technology and supply chain management.