The ethical entity, CSI and the spirit of giving
There are two levels to governance. One is compliance, and all the elements that contribute to being able to comply with ethical behaviour. The second level is voluntary, sometimes expressed as corporate philosophy or values, which influence the behaviour of an organisation as a discrete entity
The idea of outreach in governance is not universal, but is has been expressed by King and embodied in the concepts of ‘people’ and ‘planet’ which sit alongside the third element, ‘profit’. Those three elements, according to King, are the governance pillars on which the personality and behaviour of entity rest.
The idea of an entity is sometimes reduced to legalese and the realm of jargon, yet each organisation has a personality and behaviour of its own, much the same way a human entity does. Some organisational entities may be greedily acquisitive, some may optimise for sustainability and some may be surprisingly giving.
These are aggregate forms of personality and / or behaviour driven by the operational expression of philosophy. Note that the operational expression of corporate philosophy can easily become distinct from the formal expression of philosophy as the enterprise is subject to the behaviour of its board, management and staff, as well as the needs of competitiveness and, if all goes wrong, survival.
Corporate social investment (CSI) has become almost universal as an operational element of corporate philosophy.
The sense I get is that at very least, CSI is a control mechanism in the realm of ethical corporate behaviour. Even those entities which can be classified psychopathic corporations are expected to show some form of willingness to give, as a tenuous outreach to the broader upliftment needs of society.
At the other end of the spectrum, social entrepreneurship seeks to maximise gains to ‘people’ and ‘planet’ while sustaining the enterprise with ‘profit’.
The returns to ethical behaviour are difficult to measure with a few exceptions.
The baseline measure is the absence of ethical behaviour. The best example of this is how a fair number of consumers responded to the revelation that Nike employed child labour by abandoning the brand.
The best example of ethics translating into profit is the example of Bodyshop which built a hugely profitable brand based on not testing on animals and early principles of fair trade. CSI falls between the two extremes, ranging from a haphazard CSI policy which pays lip service with occasional handouts driven primarily by approaches from beneficiaries, to physical involvement of staff and / or a focused, result-driven effort close to the other end of the spectrum. The occasional handout approach relies on the impact of the beneficiary, and is not ideal as it does not associate the entity with a particular field or pin down a result. By seeking a particular focus, the entity can begin to manage its impact and seek the results which please it best. However this approach also requires the courage to exclude initiatives which fall outside of its focus.
Taking the approach which seeks impact in a specific field implies the need to find the particular field. This is complicated by the fact that some fields are more popular than others, for instance old age homes, vulnerable children and the environment. It also takes the determination to step off the beaten path and develop, through communication, association with the beneficiary and the value of the initiative.
The benefits of the extra effort involved in managing impact-driven CSI will however be more likely to please external stakeholders and will create loyalty among management and staff, even if they are not directly involved.
This seems appropriate and worthy to think about now, as it is the ‘season of giving’. The strategy takes time to implement, but if you haven’t implemented it yet, now is a good time to begin thinking about how.