Why CSR is Obsolete: The Rise of Corporate Social Entrepreneurship

In recent years, several articles in renowned online magazines like Forbes and The Guardian have declared CSR obsolete. They highlight reasons why it doesn’t work.

With the rise of Social Enterprises whose main purpose is social impact, and profits are the only tool for keeping up the good work, the focus of business has started to shift. These organizations use innovative business models to address societal problems. They also explore new markets and find opportunities where traditional businesses do not.

This has made us realize two things: First, how frivolous Corporate Social Responsibility is. Second, businesses are now expected to play a larger role in solving societal problems and taking responsibility for people.

CSR is about minimising the negative impact, trying to qualify as “a good corporate citizen” and responding to legal requirements. CSE (Corporate Social Entrepreneurship) benefits society at large. It excites and attracts both employees and customers. Additionally, it explores new, viable business niches.

No wonder CSR seems now like an old version of something new and exciting that we all find it tremendously important. And no wonder CSR as we know it is being viewed as obsolete these days.

The way I see it, CSR is:

Superficial

With the Internet and globalisation, customers are more informed than ever. They are also more socially and environmentally concerned and engaged than before. Thus, for many people, it has become obvious that large corporate donations don’t indicate large social concern but more often than not a large-scale PR exercise. Thus, people have raised their expectations and now they want to see genuine social engagement from businesses. The general public expects businesses to get actively involved and make a difference. Ineffective CSR efforts are frowned upon and they reflect badly on a company’s reputation.

Not engaging

CSR is often limited to small initiatives, like printing less paper, reducing energy waste, or participating in charity events. These efforts are important but not engaging enough. They fail to make a significant impact. While these are all admirable initiatives, some of which may even reduce your overheads, they don’t create a sense of community among employees.

Some of the great organisations out there like Google, Apple, IBM, etc. are businesses that employees are proud to be a part of.  What employees today actively seek in a workplace is the opportunity to feel like their work is meaningful and that they make a difference. Social engagement and activism are to a great extent what people believe in and what they want to have a chance to do as part of their jobs. CSR just doesn’t do that as it is not embedded into the DNA of a business but it’s traditionally been more of a sideline obligation or a marketing tool.

Not effective

In the non-profit sector, which focuses on social change and receives corporate donations, strategy and discipline are essential. Without them, progress is limited, just as in any for-profit business. Non-profit organizations often lack the resources to maintain consistent activity and quality. They also struggle to hire well-prepared specialists. This leads to sporadic efforts which may alleviate a situation temporarily but doesn’t solve the problem. Non-profits often lack the resources and vision to address the root causes of social or environmental problems. Instead, they focus on treating the symptoms.

Unsustainable

CSR is not typically integrated into a business’s model or operations. As a result, businesses often need to allocate resources to create a separate department for CSR efforts. Or there may be a committee comprised of different employees every year that looks after CSR. When business declines, CSR resources are typically cut. Similarly, during busy periods, committees often lack time for CSR activities. Thus, in the long term, it is unsustainable to maintain a consistent level of engagement which brings us back to ineffectiveness.

In his article for Forbes called “Is CSR as we know it Obsolete?”, Paul Klein who is the founder of Impakt, says:

I no longer believe that CSR is the best way to capture the relationship between business and society or an effective approach for addressing complex social issues.

His words resonate with a number of CEOs of large multinational organisations that have expressed similar views on CSR and have taken action to redefine CSR within their organisations.

If you feel your CSR efforts are ineffective and wasting resources, consider a different approach. Try integrating social impact into the core of your organization.