The Simple Venn Diagram That Explains Effective CSR
Effective CSR needs to benefit the organisation as much as it benefits society.
That’s because, if firms don’t benefit, they won’t be able to sustain it.
If we want our system to be built on values, we need to ensure that the most responsible firms succeed.
However, that’s often much easier said than done. If firm’s benefit more than society, it comes across as false. However, if society benefits far more that the organisation, it’s probably not sustainable.
Fortunately, most CSR programs ‘fail’ for one of three key reasons, which the following Venn diagram can explain.
Three Characteristics of Effective CSR
Firstly though, it’s worth reflecting on the three characteristics that make up effective CSR in the first place.
As I spoke about in far more detail in my book, the best CSR programmes are all targeted, integrated, and communicated.
Realistically, the most effective CSR examples are where organisations target issues that are relevant to their business. For example, automotive companies should try and tackle emissions. Wood furniture companies should tackle deforestation. Social media platforms should focus on data protection. Don’t get me wrong, they shouldn’t do so exclusively, but they need to identify the issues that they’re the most responsible for.
You get the idea.
Secondly, the ‘best’ firms integrate their CSR into the core of their business. Think Unilever with the sustainable living plan, or M&S with Plan A. They’ve consciously made the effort to ensure their CSR values scale up into organisational values.
In a world where corporate responsibility is in greater demand than before, competitive advantage is starting to be won with integrity. When companies fully integrate their CSR activities, it shows they really care about the issues they’re tackling, and consumers value that.
In many ways, this is where CSR is either won or lost. If firms don’t communicate their efforts, consumers won’t actively choose to buy from them. However, if they ‘over-communicate’, it can come across as mindless PR, which could alienate the very customers their trying to impress.
Effective communication is therefore absolutely crucial, and few companies get it spot on.
Common CSR Failures
When you look at most case studies, you’ll discover that it’s pretty rare for companies to tick all three of the necessary boxes.
As such, the type of failure they endure usually depends on the characteristic that they overlook. The following Venn diagram explains this:
As you can see, effective CSR only exists when all three areas overlap. By missing one out, firms fall victim to either Philanthropy, Resource Inefficiency, or Virtue Signalling.
An increasingly common type of CSR failure, virtue signalling occurs when companies ‘talk the talk’ but fail to ‘walk the walk’. In essence, they might engage with some relevant CSR activities, but they exist as more of an ‘add on’ than a genuine company-wide commitment.
This can have a really negative effect on corporate reputation. Consumers may start to distrust the underlying values of the organisation, which could prevent them from ever viewing the firm favourably in the future.
Perhaps the most frustrating type of CSR failure, resource inefficiency exists when companies focus their resources on irrelevant issues. When this happens, firms can naturally begin to question the value of CSR at all. After all, if their activities aren’t strategic and targeted, it’s unlikely that they’ll deliver a return on investment. When this happens, companies might start to reign in their CSR work, and reevaluate budgets.
While it may not sound like a ‘failure’, philanthropy can sometimes be a big issue for firms. Usually, this is because they don’t realise they’re doing it. As I said right at the start of this post, CSR must benefit both the organisation and wider society. If firm’s don’t communicate their work, consumers will be unable to reward them.
While this may seem admirable, it can have dire consequences. Similar to resource inefficiency, firms may soon struggle to justify their work, and it could be viewed as unsustainable.
Don’t get me wrong, philanthropy should exist in every organisation, but there must be a clear distinction between it and CSR. When companies blur the lines between the two (knowingly or otherwise), society may actually be worse off in the long run.
Ultimately, with CSR continually growing as a concept, it seems likely that organisations will continue to rise up the learning curve.
Hopefully, what this Venn diagram does is highlight some common errors and allows willing organisations to overcome them. By understanding the necessary characteristics of effective CSR, organisations can ensure that their resources are used efficiently, and the balance between societal value and organisational value is successfully struck.
Hi! I’m an author and blogger within the fields of social impact and responsible business. I believe that businesses can be a force for good in the world, and this website contains my thoughts on how that can work.