In-depth research involving more than 350 interviews with 130 global companies showed that, while all had sound economic reasons to invest in CSR, these were under-exploited due to several obstacles.
CSR or sustainability issues are numerous and diverse, differ from industry to industry and are often shrouded in controversy. And CSR costs and gains are still considered difficult to quantify. Operational managers who try to make CSR a natural part of their businesses often meet heavy resistance from key departments, such as finance and marketing where short-termism reigns supreme.
A properly planned effort first of all requires a convincing company-specific business case to counter opposition and indifference. Essential to this is identifying and focusing on the ‘smart zone’ – the area of CSR that will create real economic value for the company.
To aid with this, we have developed Business Case For Sustainability (BCS) toolsets to highlight the value drivers most affected by CSR issues, for instance, brand reputation or cost effectiveness.
That said, our research showed that proactive companies care less about quantifying sustainability benefits than industry ‘laggards’. To date, financial quantification (other than eco-efficiency savings) has been relatively absent in attempts to formulate CSR strategies.
In our view, this probably does not matter. After all, attempts to quantify future benefits are at best an uncertain estimate. Thus, what makes any value driver relevant is whether it supports the business strategy – not because hard numbers exist to justify it.
Collaboration between chief financial officers and sustainability managers will remain important, as companies move to building their own, company or even plant-specific business cases for sustainability.
Ulrich Steger is director of CSM at international business school, IMD
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