“Is the economic downturn affecting the willingness and readiness of companies to look at the economic, social, and environmental impact of their business practices? Or is this a perfect time to reassess current programs and adapt them to changing—and in many cases increasing—needs in society?” 

These were questions posed by HBS Working Knowledge senior editor, Martha Lagace, in her recent interview with HBS Marketing Professor V. Kasturi Rangan (“Corporate Social Responsibility in a Downturn,” August 2009).  Professor Rangan’s responses point to the latter of the two questions.  He asserts that while corporations will indeed be likely to reduce philanthropic activity in times of economic uncertainty, doing so provides an opportunity to assess the CSR portfolio and realign investments to not only serve the community but also influence the business.

I found Professor Rangan’s perspective to be refreshing for a couple of reasons.  First, by asking corporations to assess (and potentially alter) their portfolio of socially-oriented activities and investments, we acknowledge corporations’ need to measure the results of CSR strategies as opposed to just doing them for sake of societal compliance.  Experience tells us that organizations who measure outcomes as opposed to simply executing activities are not only more effective, but also more efficient.

 
Second, Professor Rangan notes the importance of marrying social impact with business value.  This is a strategy that Mission Measurement suggests when advising corporate clients.  In a recent call with the community affairs director of a major corporation in Chicago, our conversation shifted quickly from “how can we track the social impact we’re creating?” to “how can we transform our work and our organizational role to become a more meaningful contributor to both our communities and our parent company?”  As stated by Mission Measurement founder and CEO, Jason Saul, “To compete in the new economy, companies must rethink their social playbooks.  Corporations must find innovative ways to create economic value through social change.  It’s about making social change work for the business, not the other way around.”

Professor Rangan offered PNC’s child literacy program as an example of effective CSR.  Although the program had a positive social impact and is expected to affect business initiatives, in my opinion, it is not representative of a truly married and innovative approach to CSR.  Instead, I am drawn to companies who have used social change as a platform to produce business opportunities. These businesses thereby establish CSR as a relevant and sustainable part of the business and often access a broader range of resources to achieve social change.   In doing so, companies move well beyond the tradition of “pure philanthropy” and even beyond philanthropy with a strategic lens.  Companies that leverage social change to drive economic value achieve social innovation.  A couple examples come to mind:

• Wal-Mart:  With the introduction of its $4 prescription program, a business strategy, Wal-Mart attracted new customers, increased store traffic and generated sales.  Meanwhile, the program greatly benefitted America’s large populations of uninsured persons and Medicare recipients.
• Coca Cola:  Aiming to secure its supply of raw bottling materials and reduce cost, the company created Coca Cola Recycling, a for-profit organization.  It aims to recycle 100% of its beverage packaging in the US and make cans using 95% less energy.  Coca cola’s investment will pay off not only in the bottom line, but also in the environment.

As these and other examples elucidate, driving social impact need not be disjointed from generating business value, rather, the two can be synergistic.  CSR organizations that achieve this combined approach will not just survive – they will thrive; regardless of the economic state, they will increase their relevance and organizational value.