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This essay is the third focusing on the history of the “responsible business” movement. The first two focused on how workers are treated and on the responsibilities of companies to produce safe, effective, and fairly priced products. See here for these past issues of this newsletter. I first discovered the topic of responsible corporate behavior in 1967 when I had an undergraduate summer internship at Hewlett Packard Company focused on CSR. HP had sought an intern who could help them understand the increasing interest of students in the social responsibilities of business. Journalists writing about my role at HP dubbed it the “radical in residence” program. In the subsequent three years, I worked at Levi Strauss, Southern New England Telephone Company and Wells Fargo Bank in their early CSR departments. As an MBA student at Stanford in 1969-1971, I joined and then headed the “Committee for Corporate Responsibility” launched by students in the class ahead of me. The term corporate responsibility (CR) gradually gave way to corporate social responsibility (CSR) as the most common term of the 1970s. The concerns of CSR in the 1970s were very broad—air and water pollution, product safety, jobs for the urban unemployed, minority business development, engagement with headquarters cities and local communities, and from about 1977, corporate operations in South Africa. Early courses in business schools adopted the CR or CSR labels, or a simpler term “business and society.” The motive for corporate responsibility efforts was not entirely clear. Corporations seemed to be responding to public and political pressure for more business responsibility, unfocused as those demands were. There was even a period in the late 1970s when the term corporate social responsiveness dominated, suggested that corporate initiatives were exclusively designed to head off regulation and improve corporate reputations. The height of the CSR era was a 1981 Business Roundtable statement that companies needed to consider the interests and demands of all their constituencies as a fundamental part of their corporate strategy. The statement was eerily similar to the later 2019 Business Roundtable statement on stakeholder relations and corporate purpose. As many of my readers know, the Business Roundtable dumped the constituencies or stakeholder approach in a 1999 statement saying corporations needed to pay more attention to their obligations to shareholders, only to return to it in 2019. By the 1980s, CSR concerns began to be spun off into separately defined areas of corporate activity and new corporate functions. Early environmental departments were created, business ethics and later compliance functions were established, human resources departments took greater responsibility for minority and women’s employment, and in financial companies created minority and women’s economic development groups. Some described this process of spinning off functions as “mainstreaming” those activities, recognizing that these were essential to corporate operations. This raised the obvious question whether the CSR functions which remained—typically community relations, philanthropy, and voluntarism—were not essential. Managers and executives with responsibility for CSR tried to hold onto their early preeminence as the primary place where questions regarding business’ role in society were addressed. The Center for Corporate Community Relations at Boston College, which managed the professional association of CSR officers, rebranded itself and the field as “corporate citizenship” and claimed all original CSR concerns as part of its mandate. While a few CSR officers managed to retain responsibility for some of these activities, most CSR officers were left managing community relations, corporate philanthropy, and voluntarism by the late 1990s. Since 2000, however, a growing number of CSR departments have added reporting on all aspects of the firm’s social activity, usually under the label of ESG reporting. This often results in the publication of “corporate social report.” The most common names for CSR departments and managers in 2024 are corporate citizenship, community engagement, community affairs, and corporate social responsibility (still!). In some cases, however, the remaining functions of community relations, philanthropy, and voluntarism were recognized as of increasing importance to the firm. Corporate philanthropy has expanded greatly, with an increasing number of firms pledging 1%, 2%, or even 5% of profits for charitable giving. Voluntarism programs expanded greatly and were increasingly seen as one area for the leadership development of company managers. Non-profit organizations embraced corporate voluntarism by creating non-profit board training and placement programs. Community engagement and relations programs expanded greatly, with corporate staff participating in more civic commissions and boards, and championing selected political initiatives such as increased taxes for schools and reform of police and other city functions. Many of these activities were structured to encourage and expand the engagement of the company’s employees in the social and political life of the community, and active participation in funding community charities via company matches to individual employee giving. In the 2020s, the companies most active in CSR (or community relations, etc.) sought to embed their programs in a broader understanding of corporate strategy and corporate purpose. The quest of CSR leaders has been to find evidence that their activities contributed to the long term profitability or risk mitigation of their companies. They sought to prove “impact,” both on the social environment and on corporate profitability. A few CSR officers held the title “chief impact officer.” However, the renewed reach for relevance and respect for CSR activities was limited by a lack of standardized metrics to measure their effectiveness, as well as the reality that most top executives still see the CSR units as purely as cost center. It is unclear where CSR goes from here—both in regard to the breadth of its responsibilities and its relevance to corporate purpose and operations. Some CSR officers still hope for a return to the days when there was a single officer in charge of all “responsible business” activities. Others argue that many or most CSR activities—environment and climate, diversity and inclusion, political engagement—must be handled by specialized units or by operating managers. Where do you think the community relations, community engagement, philanthropy and voluntarism activities of companies are going from here? Will they be more extensive and central to corporate strategy in 5 or 10 years? Will they be grouped under a new term, combined with other corporate functions, or themselves be spun off into new corporate units? Will these remaining functions shrivel as attacks on “woke” corporations escalate? Will a new business responsibility czar be created who reassembles and directs all the functions spun off from CSR in the past? Please answer one or more of these questions in a return email. I will share the most thoughtful responses in a future newsletter. In my next newsletter, I will summarize your input on the first essay in this series—how business will treat its employees in the future.
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