CSR transformation: lessons from the 30% who succeed

If most transformation initiatives fail, the ones that succeed share at least three common traits.

By Ante Glavas
Professor of Sustainability
SKEMA Business School

“Sustainable”, “sustainability”, “corporate social responsibility” (CSR)… In a field with abundant terminologies, it is important to clarify what we mean by CSR. Here, it refers to the corporate strategies and practices that contribute to a net positive social and environmental impact, while also creating positive business value.

It is commonly stated that over 70% of all transformation initiatives appear to fail. However, those that succeed have key commonalities, applicable to any kind of transformation or change process.

Engage the whole system

Due to the multi-sector and multi-stakeholder nature of CSR, any substantial change requires the participation of all internal and key stakeholders, including minorities and disadvantaged groups. This is a different approach from typical change processes which only involve a few people (e.g., board of directors or consultants) who then try to lead the process in a top-down manner. One successful process is Appreciative Inquiry. When the U.S. dairy industry made a sustainability plan (see Glavas & Fitzgerald, 2020), they involved all players: farmers, producers, transportation, retailers, non-profits, government, and local communities. This type of process also redefines governance models. Those in power must be able to let go of some control and embrace a truly bottom-up initiative, driven by those at the bottom.

Leverage core strengths

Most CSR activities today focus on minimizing negative impact, such as reducing carbon footprints and water consumption. These are, of course, a central part of any CSR strategy. However, a major emerging focus is the positive and regenerative impact: instead of merely mitigating harm (i.e., doing less “bad”), rather to more good by contributing to overall societal and environmental well-being and regeneration. To do so, organizations need to build on their business models and core competencies. IBM, for example, has expertise in data analytics, which places the company in an ideal position to work on green cities, smart grids, and similar initiatives. Unilever focuses on sustainable farming and production practices. Whereas General Electric, works on developing sustainability initiatives through its “Ecomagination” and “Healthymagination” projects. In the financial sector, this translates to impact investing or microfinancing. This approach is counter to what many CSR activists demand. While reducing negative impacts cannot be ignored, it is important for each company to also have its unique approach that optimizes the use of its own strengths to have a truly regenerative impact. Additionally, this approach builds on a business’ core competencies and allows CSR to be integrated at the heart of its business model. Without such integration, creating business value becomes difficult. And without value creation, these initiatives risk not being supported in the long term. Moreover, while CSR activities might initially motivate employees, this dynamic can reverse overtime. Many employees already face significant pressure in their roles; thus, CSR should not be seen as an additional burden, but rather as part of their work.

Leverage points

In systems thinking and change management, leverage points refer to parts of the system where the ratio of input to impact is greatest. Identifying these points requires following the above stated two steps: understanding the system’s complexity and then recognizing its strengths. Only then is it possible to identify key initiatives based on leverage points. Returning to the aforementioned dairy example, stakeholders identified 7 initiatives that target 80% of greenhouse gas emissions.

MOVING BEYOND sustainability

Organizational behavior professor Chris Laszlo argues that we need to move beyond sustainability. He uses the analogy that no one wants their marriage / partnership to be simply sustainable, you want it to flourish. Similarly, CSR should not just be about minimizing harm but about regenerating the environment and fostering a thriving society. When organizations adopt this mindset, they too can flourish.

As corporations strive to have a positive impact, CSR allows employees to align their personal values, motivations, purpose and meaningfulness with their professional lives – which in turn benefits the organization due to increased motivation and productivity from employees.

Other key business practices also need to be implemented, such as transformational leadership, human resource development, organizational culture building, and effective infrastructure and systems. Let’s not forget that most organizations were not founded on CSR principles and thus are only starting their journey. However, efforts of non-profits and governments alone will not be enough to achieve Sustainable Development Goals (SDGs). Therefore, greater engagement from the private sector is essential.