Innovation + Responsibility

With all this talk of recession swirling about, and companies preparing for what may lie ahead, I am sure there is more than one person wondering what will happen to the corporate responsibility function. Will fears of - or actual - recession force companies to cut back on this area of the business and instead divert these resources into other key functions (or simply tighten the belt altogether)?  I suppose that if this question was being asked 10 or 15 years ago - before mainstream corporate people really understood the top- and bottom-line value CSR can bring to an organization - the answer might be yes. And I bet there are companies today who will cut back on their CSR "department" as a matter of economic necessity.  But my guess is that most companies will not. Because in 2008 companies are (finally) starting to understand that having a credible and productive corporate responsibility function is no longer a nice to have, it's becoming a license to operate.

Before I go on, I want to state a few caveats:

1) I am not sure what a recession will do to corporate philanthropy efforts, even at a company like Google. For a company like Patagonia, which has a corporate policy to donate 1% of sales revenue to environmental causes - philanthropy will be directly tied to sales and not the whim of possibly skiddish executives (although my guess is that at Patagonia this wouldn't be an issue anyway). My hope is that at the companies where recession (or recession fears) does impact philanthropy, the companies use it as an opportunity to get creative about what and how they give.

2) There are still quite a few companies at which CSR (or whatever they happen to call it) is not much more than a marketing program.  I am thinking these companies would reduce their CSR efforts because the companies still don't grasp the business benefits of CSR initiatives.

So why am I writing about this? Well, I think this question presents an interesting opportunity to collect some data that many in the CSR - and frankly anti-CSR - space have long lacked. The question is this:

What is the long-term impact of  CSR  on a company's performance?

I would argue that up until now, there has not been a quorum of credible CSR programs to enable anyone to answer this question. But the last few years we have seen an explosion of CSR initiatives - companies like Sun, GE and Brown-Forman have all formalized their corporate responsibility efforts - on top of a refining of CSR initiatives at early-adopter companies (like Nike, Starbucks, Vodafone, and others).  And many of these companies have embedded CSR so deeply into their operations and their brands, there is no way to let it go in tough economic times.

Here is what I propose:

Why don't  we choose a metric - stock price, revenue, profits - and use it to measure the performance of companies with CSR programs. We can do it over a five or ten year period and track and compare the performance of those companies that continue to use CSR as a key component of their overall business strategy and business operations against those that marginalize or, at worst eliminate, CSR efforts during challenging economic times.  It would be interesting to see if CSR has any measurable impact on a company's performance. I think this is a worthwhile exercise. I know it would not bear results for several years, but it could be an interesting tracking study.  I mean, why stop at five or ten years? We could go on forever. We can name it after me - I've always wanted something named after me! The Marcy Scott Lynn Sustainability Tracking Index. Hm, doesn't exactly roll off the tongue.

I feel pretty confident that the results of the study would show what I believe in my heart - that companies that truly embed corporate responsibility principles into their strategy and operations are better managed companies. Better managed companies do better in the marketplace. Therefore, companies with integrated CSR will do better in the marketplace.  I don't remember much from high school math but I think that's called a syllogism.