Growth and Leadership Through Corporate Social Responsibility

Originally published in the Fall 2010 Overseas Report.

For business leaders worldwide, these are truly challenging times. We are forced to look beyond economic pressures, and take into account political uncertainties and societal expectations. We must maintain competitiveness while we focus on corporate governance and corporate citizenship.  At the same time, the bottom line continues to be a top priority: we must deliver shareholder value and profits. Our focus on operational efficiency, cost effectiveness, productivity, customer service, and innovation must be relentless.

Companies are asked to deliver wider societal value within the context of doing business. As a result, corporate social responsibility (CSR) has become a major defining role of business leadership in today’s society.

Consumer demand often precipitates a company’s adoption of corporate social responsibility and sustainability programs, which can be a “prerequisite” for profitable growth. Consumer awareness of and demand for information about product origin and working conditions have grown. As a result, they are often willing to pay more for goods produced by well-paid workers in safe working environments. Non-governmental organizations work in many ways to ensure that economic development in emerging economies can be accomplished in ways that protect human rights and conserve the environment, and that a company operates in a manner that improves the communities in which it works.

But in a tough competitive landscape that holds business owners and chief executives responsible for both sustainable practices and stellar growth, how do companies take that step towards CSR leadership? Established CSR leaders like GE, Timberland, Coca-Cola, and IBM have expanded a risk-management perspective to embrace sustainability as a platform for profitable growth.  They provide a structure for managing sustainability challenges and impacts and put responsible practices at the core of their business planning. They make the business case for sustainability, given industry and company priorities, thereby supporting the allocation of resources to implement a CSR strategy and provide justification to investors.

A strong CSR strategy starts at the top. CEOs are accountable for business strategies that identify the material issues that maximize opportunities and minimize risks. These include accountability, environmental impact assessment, governance, stakeholder engagement, social community commitments, ethics, and transparency.

In the midst of debates over global warming and the environmental effects of fuel-hungry economies, our interconnected world requires strong business leadership to strengthen governance, instill ethics and integrity into business decision-making, harness economic potential, alleviate global poverty, improve human conditions, and address unique community needs. This is why a vibrant CSR strategy should be at the core of every business, whether a small enterprise or global corporation.

As a member of the CIPE Board of Directors, I am proud of the work CIPE undertakes with its partners to improve governance processes and institutions while integrating best practices for ethics standards with local experience and context.  This is critical to attract investment and develop a stronger private sector economy in emerging democracies around the world. Good corporate governance, ethics, and social responsibility can help firms establish transparent relationships, ensure confidence in workers and consumers, and meet demanding societal needs.