5 Pitfalls that Could Decimate Your Corporate Social Responsibility Efforts

'Doing good' takes more than a few volunteer hours, which is why more businesses are investing time and resources into corporate social responsibility programs.
By: | February 7, 2020

Most of us are no strangers to the world of philanthropy and the concept of “doing good.”

We’ve been asked to lend our time and financial support to various charitable causes. We are often solicited by groups to help combat various diseases, construct new buildings or save the rain forest. And for many causes, commercial insurance professionals are the cornerstone of these efforts — participating in philanthropic initiatives and charitable endeavors.

Business volunteerism, often referred to as corporate social responsibility (CSR), can take many forms and can be a quadruple win.

Everyone involved — the commercial insurance company that provides the employee volunteers, those where employee volunteers help out, the wider community and the employees themselves — has something to gain. Such efforts offer a low-cost, low-risk, high-impact way of making the knowledge, skills and experiences of the business sector accessible to the nonprofit sector while building understanding, employee skill and community goodwill.

Bill Ross, CEO, Insurance Industry Charitable Foundation (IICF), points out that while we are seeing CSR programs evolve to meet employee interests and community needs, the insurance industry has been putting these words into action for years.

“The industry is getting more creative about how it engages employees and contributes to the community, with an increased emphasis on giving back through volunteerism and trending away from monetary contributions only,” Ross said. “This is related to a greater number of millennials in the workforce, many of whom prefer to contribute through volunteering.”

The industry also now has better tools for measuring the reach and impact of charitable giving. For example, IICF recently released a survey and report with McKinsey & Co. on charitable giving within the insurance industry.

“In the survey, we found 41% of the industry respondents were using key performance indicators in 2019 to measure the benefit of charitable giving and volunteerism, up from 26% reported in 2015,” Ross said.

“Further, respondents were more receptive to industry collaboration on initiatives supporting a single cause than they have been in the past. Finally, we learned companies value an even balance of business needs and stakeholder interests with what is needed in their communities.”

That said, because the execution of CSR activities often faces challenges and failures aplenty, it pays to learn about the common pitfalls and how to turn those failures into successes.

Failures to Avoid

According to Suzanne Scatliffe, director of CSR at AXA XL, CSR has been an essential part of many organizations, continuously evolving from traditional philanthropy to building a purposeful role in society.

“Today, leaders in CSR and sustainability — across our industry and more widely — are looking at how CSR can provide business value as well as social and environmental impact,” Scatliffe said.

“CSR programs are being designed to support new market penetration, business innovation and strengthen corporate reputation. Relationships with nonprofits are moving from the role of ‘corporate donor’ to ‘strategic partner.’ And the next generation of talent is seeking an employer that takes CSR as seriously as its bottom line.”

Here are a few things to keep in mind when deciding on CSR ventures.

1) Not a good match.

Employers must ask themselves, “Is this a relevant and appropriate initiative for my company?”

As Scatliffe explained, unfortunately, there have been many well-known brands in multiple industries that haven’t stopped to think whether a nonprofit, or a cause, fits with the nature of their business.

Suzanne Scatliffe, director of CSR, AXA XL

“When companies misalign their CSR efforts, they can appear hypocritical by not taking their social responsibilities seriously or open themselves up to accusations of ‘green washing,’ ” Scatliffe said. And so, well-intentioned CSR efforts quickly become counterproductive and even harmful for the reputation of a company.

“The fact is it’s very easy to get it wrong,” Scatliffe said. “So it’s important to consider where a company can best leverage its expertise and fundamental purpose as a business to make a positive impact.”

2) Not understanding your key stakeholders.

When Scatliffe and her team are looking to turn a project idea into a plan, the first thing they do at AXA XL is map who the company’s stakeholders are — internally and externally — by influence and interest.

“We’ll then consider what their priorities are,” Scatliffe said. “This helps us develop a program that inspires colleagues, addresses any potential roadblocks or concerns, and is in line with wider external expectations.”

According to Robert Bikel, director of the socially, environmentally and ethically responsible (SEER) program at Pepperdine Graziadio Business School, said the Global Reporting Initiative has outlined several principles for companies wishing to report on CSR activities. Chief among which is materiality.

“This is the principle that companies should address issues that are both significant to stakeholders and to company strategy,” Bikel said.

“Giving money to charities is a beneficent act, but oftentimes has little to do with the impacts a company can have through its value chain activities on salient stakeholders. The Global Reporting Initiative is an independent standards organization that helps businesses, governments and other organizations understand and communicate their impacts on issues.”

3) Diving in without defining success.

One of the main reasons that any project fails, CSR-related or otherwise, is because not enough time has been spent defining what success will look like, from the outset of the project.

For example, at AXA XL, the team will spend a significant amount of time developing a set of objectives in close collaboration with the company’s nonprofit partner so both organizations feel the mission they have defined is manageable and the project is of equal value to both entities.

“Those leading CSR efforts should talk to employees, community representatives and local nonprofit leaders as they create the CSR program,” Ross said. “This ensures the program meets the needs of area nonprofits and reflects the ideals of the employees and community.”

4) Thinking about the end of the project, at the end of the project.

It’s critical to measure the impact of any project; but this has to happen at the start, not the end.

“It’s easy to measure outputs at the end of a project — such as how many volunteering hours were donated — but the associated impacts of those hours, essentially what was achieved, may take some advance planning in order to capture this effectively,” Scatliffe said. “And the impacts are the most meaningful data from your entire project.”

There also needs to be some thought given early on as to what happens once the project is done.

What’s Phase II? How is the company going to help the nonprofit partner carry forward the work you have done together?

“It’s a truism among CSR advocates that short-term thinking is the enemy of social responsibility,” Bikel said. “By only focusing on short-term wins, companies can exclude opportunities to develop meaningful long-term strategies that generate significant value for stakeholders.”

5) Not having the space to “fail.”

CSR programs should be the place to test business ideas that may not be immediately viable in the short term but could have social, environmental and economic value in the long term. As Scatliffe explained, this may mean that ambitious programs miss targets, but they’ll still enable progress.

“And we need to appreciate that effective CSR is a marathon, not a sprint,” Scatliffe said.

“Sometimes a company will make a step in the right direction and immediately be criticized by the media or the public for not doing enough,” she continued.

“Occasionally this criticism is fair; often its not. We need to applaud genuine efforts to tackle pieces of complex social and environmental puzzles and recognize that taking a small step is always better than standing still.”

On the Horizon

So are CSR programs here to stay?

Indeed, they are, say the experts.

“Businesses are increasingly recognizing that company performance, and the prosperity of wider society, are mutually dependent,” Scatliffe said. “There are many studies that cite that sustainability policies reduce risk — particularly relevant to our industry — and promote faster growth.”

Social and environmental risks tend to manifest themselves over a longer term and are typically outside a business’s control, which means that all companies need to build capacity and adaptive strategies now to be future-fit.

“Ultimately, CSR is about building a truly sustainable business,” Scatliffe said. “And so, CSR as we know it now won’t exist, because it will be intrinsic to every function of the company and a key part of the core business strategy.”

And Ross points out that new talent coming into the insurance industry wants to make a difference through both work and community service. And he believes that trend will continue.

“Again, in the future, the CSR program will, over time, become a company value and long-term commitment,” Ross said.

“We are already seeing CSR take a seat alongside shareholder value. Simply being a profitable company is no longer enough. How a company runs its business and how employees are engaged in the values of the company is the new measurement of success.” &

Based in Minneapolis, Minnesota, Maura Keller is a writer, editor and published book author with more than 20 years of experience. She has written about business, design, marketing, health care, and a wealth of other topics for dozens of regional and national publications. She can be reached at [email protected]

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