New Trends in Corporate Social Responsibility

New Trends in Corporate Social Responsibility

The first panel today included Patrick Jinks, President and CEO of United Way Lancaster County, Sanjay Paul, economics professor at Elizabethtown College, Henry Yaeger, director of corporate strategy for the Hershey Company, who has played a foundational role in Hershey's corporate social responsibility.

Patrick Jinks, United Way Lancaster County

Patrick started by talking about common themes that United Way cares about when they think about the common good. They are a worldwide network of local autonomous organisations focused on supportingeducation, income that leads through retirement, and good health. Typically, United Way has raised funds to pass on to other nonprofits, a "community chest" for a region. That's changing as United Way is trying to be more strategic about their work.

Patrick drew a distinction between charity and serving people's needs. The latter requires focusing on root causes. In the past, they tried to "increase the organized capacity of people to care for one another" -- in other words raising money for United Way member organisations. What went wrong with this? United Way used to get its money through payroll deduction. But as the United States has become more inequal, most giving is coming from the most wealthy. There's also more competition as the number of nonprofits grows. It's hard for middlemen to offer transparency and accountability. Furthermore, the middleman role isn't working so well now that it's easier than ever to give directly.

United Way's new mission is to improve lives by mobilizing communities through networks to make lasting changes. In the past, they supported 25-30 agencies. They're now trying to expand the number of groups they work with, from neighbourhood associations to investor relations and public policy. They have found that the projects with the greatest community impact often raise the most money.

In recent years, there has been a tone of desperation between charities and businesses. Patrick says we need to replace that with inspiration, asking companies how they can access their networks and platforms to create impact together. He told us about IKEA's difficulty preventing child labor in their supply chain, and how they signal their commitment to children by funding UNICEF projects. He also directed us to the Hershey Company, who work closely with United Way in many of their social responsibility initiatives. United Way offers "full scale, full service" opportunities for companies who want to develop CSR programmes.

Sanjay Paul: How Effective is the UN Global Compact?

Sanjay gave a fascinating talk evaluating the effectiveness of the UN Global Compact on Corporate Social Responsibility. He told us about its history, how it works, how well companies have been doing, and the problems with the compact.

Sanjay starts with the anxieties and opposition to globalization which were common in the late 1990s. The Global Compact was a direct response to anti-globalization movements, an attempt by Kofi Anan to develop an ethical vision for global capitalism. The Global Compact encourages companies to be attentive to Human Rights, Labour Rights, the Environment, and Corruption.

The resulting group is the largest voluntary corporate responsibility initiative in the world, with 10,000 participants from 140 countries. Most are businesses, but some universities, NGOs, and cities are also members. Sanjay asks us how participation in the Global Compact has affected performance. He encouraged us to look at "triple bottom line" of of evaluating companies in terms of "people, planet, and proft". Financially, it's not clear if companies gain from CSR. But he pointed us to social wellbeing and hiring advantages for companies that engage in CSR.

How's the compact working? Firstly, there's no accountability. Businesses are not required to carry out their promises. Another risk is that corporations might try to "blue wash" their brands by appropriating the positive brand of the UN. Alternatively, the reputation of the UN could itself suffer if corporations don't play well. Furthermore, the Global Compact gives corporations significant access and influence on the UN. In practice, projects like the CEO Water Mandate supply water but use unsustainable solutions with plastic packaging. The World Health Organisation has criticised the inclusion of Tobacco companies in the Global Compact. The government of Syria, whose human rights record is hardly sterling, is also part of the Global Compact.

Even worse, organisations with membership in the Global Compact don't take it seriously. Sanjay shared a depressing example of corporate social responsibility by one of the member companies:

"Whenever an employee celebrates his/her birthday, the company sends an email of congratulations and prepares exquisite and delicious birthday cakes."

Henry Yaeger, "CSR in Practice" Director of Corporate Strategy at the Hershey Company

Henry says that the Hershey Company has had a major turnaround in the last three years. He started with a photo of the Milton Hershey School to highlight how tricky it is for the company to carry out CSR, given its relationship with the Hershey Trust, which became a topic of international interest in 2010 during discussion of a merger between Cadbury and Hershey.

Henry tried to define CSR for us. Keywords for him involve responsibility, socity, environment, sustainability. Broadly, he considers CSR to be a measure of just how much an organisation acts in all those areas while also trying to succeed as a company.

How can we evaluate a company's overall social responsibility? We look for their reactions in crises, their ongoing actions, and their overall strategies. Do they protect people or protect assets in a crisis? Do they pay employees to carry out community service? Do they fund socially beneficial projects that don't have a traditional payback? He asked us to be critical consumers of media, asking ourselves how much is PR and how much matches a detailed understanding of CSR.

The Hershey Company has changed significantly in the last few years. They have been trying to shift towards greater transparency. He directed us to promising work by the Fair Labor Association to keep Apple accountable to their supplier responsibility codes.

Henry concluded by outlining different levels of commitment to social responsibility. Philanthropy is the first and easiest step; it's an area where companies have a lot of discretion with their funds but can only offer relatively low value to stakeholders. At the next level, "stakeholder engagement," the company involves shareholders, consumers, and companies in the supply chain in decisions about social responsibility. He argued that companies need to move to a further place where their business model is built around social responsibility. This sometimes happens at the Hershey Company on a per-project basis, but Henry also expressed hopes for the future of new social enterprises to make this their core mission.