Do the Math on CSR

CSR Simply Works Better Is there such a thing as a ‘Typical CSR Practitioner’ ? When we think of such a role do we imagine someone with significant ‘on the ground’ experience with expertise in Environmental Management or Community Relations or are we imagining an individual with a several years of financial management experience and a CPA?

Chances are most of us would imagine the former, a highly passionate advocate of responsible business often with significant NGO experience.

This is probably not too far from the truth, most CSR practitioners cannot boast of a highly developed understanding of financial metrics, the difference between return on assets (ROA) and return on equity (ROE) for example.

These metrics are key however as they are the language of the accountants, those with financial expertise and often express real concerns that the financial impact of CSR activities are acutely difficult if not impossible to definitively measure.

More important, these metrics are the language of the boards, where strategic decisions regarding CSR are made.

CSR has however been effectively correlated with several metrics that boards do understand.

– Price Premiums with Consumers (see: Doing Good Trumps Design and Innovation)

– Greater Employee Satisfaction

– Favour with Regulators

For more firms to move beyond elementary CSR decisions, such as implementing energy efficient light bulbs because they represent direct future savings in energy expenses, a greater number of metrics which ‘speak the language’ of accountants and boards needs to be developed.

Business schools are a key catalyst towards the development of these metrics via 2 actions:

– Training Individuals with Financial Experience in the fields of Sustainability and Stakeholder Relations

– Training Individuals with NGO & Community Relations Experience in the Langauge of Business

Beyond Grey PinstripesAn increasing number of MBA programs incorporating social and environmental perspectives into their courses and also dedicated CSR modules. An overview of these programs can be found on the Aspen Institute’s “Beyond Grey Pinstripes” report published annually.

I anticipate that very soon, we will see a growing number of ‘Bilingual’ CSR Practioners, in touch with communities and environmental issues while also comfortable in a boardroom, generating metrics that business decision makers will easily understand.

Inspired by: Prof. John Peloza‘s article on the Financial Post and Katherine Liew’s post “Why everyone should work in an NFP”

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  1. 1 ESG as Risk Management « Evolving Choice Trackback on 27 November, 2008 at 3:20 pm
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