Insight & Analysis
CSR SWOT - discover risk, value and more
25 January, 2015
CSR budgets, requirements and external expectations have increased astronomically in recent years.
At the same time the depth and breadth of stakeholder groups and related interest has continued to grow.
Layered on top of all this has been an ongoing increase in regulatory requirements around CSR and Sustainability and an almost immeasurable increase in voluntary standards, norms and reporting demands and expectations.
CSR and Sustainability are significant costs to modern corporations in many sectors. And failure to ‘get it right’ is a huge risk with potentially devastating impacts on brand, projects, careers and even companies.
In many cases the cost and complexity of CSR has grown rapidly and often without an effective framework to ensure that shareholder value and societal value is optimized at both the project and the corporate level.
CSR can seem Eyes Glazing Over complex
In my work at the corporate and project level I have often found
1. CSR is efficient at value creation at the project level.
At the project level CSR activities are relatively efficient at optimizing value to society and to the project. The immediacy and discipline of social license and stakeholder interests drives discipline and focus.
CSR projects and activities at the site level (minesite, production site, factory, etc.) are normally fairly well aligned with societal and shareholder interests and enhancing overall social license.
2. CSR is inefficient at value creation at the corporate level.
There is seldom a corporate level strategy/framework for maximizing shareholder/corporate value from CSR activities and budgets at the project level.
At the corporate level CSR value is more often realized across communications, social value branding, talent acquisition and retention, financial market relations, marketing and sales and other areas.
Whereas CSR and value creation at the site level is often responsive and, in some ways almost instinctive, at the corporate level it is much more nuanced and requires broader, more strategic and proactive approaches.
Few companies are efficient at fully capturing value from CSR at the corporate level. This is somewhat ironic in that corporate level CSR value is a highly leveraged and low-risk value creation opportunity.
For the most part the money has already been spent (at the site level) and capturing value at the corporate level is relatively low cost and high impact.
3. CSR/Sustainability Metrics are confused and confusing.
Corporate wide-metrics and reporting frameworks are difficult to fit to project-level needs and often simply add complexity and work without apparent project-level value.
Metrics important for management at the project level are not understood or accepted at the corporate level, and often not even at executive levels on the project itself.
There is more discussion on this in CSR Metrics: You can’t measure temperature with a speedometer here
4. CSR/Sustainability Reporting is inefficient and overwhelming.
The reporting demands of the obligatory, regulatory-driven compliance reporting coupled with what often seems like a disconnected and confusing hodgepodge of voluntary reporting are confusing and overwhelming.
Compliance with regulatory driven reporting requirements is mandatory and can be driven by site level and host country requirements, home country requirements and the requirements of various membership organizations.
Voluntary reporting requirements are often selected somewhat randomly and companies end up complying with sets of voluntary reporting requirements that may not make sense when looked at objectively.
Too often companies end up complying with one or more voluntary requirements that simply don’t make sense when looked at through a value and efficiency lens.
Those that do often find that there is little marginal value in some of their voluntary areas and that there may be other voluntary areas where there is a much better value/cost relationship.
Even fewer look at where and how they may extract more corporate level value from their overall reporting commitments.
5. CSR is ghettoized.
There has been significant improvement in this area in recent years but it is still often the case that CSR is often somewhat of a bolt-on piece of the corporate structure.
Fortunately, there are increasing numbers of companies that have CSR and related interests represented at decision making levels throughout the organization
6. Internal CSR communications & buy-in need improvement.
While there is much improvement in de-ghettoizing CSR and integrating CSR into the corporate structure there is still much work to be done around internal communications.
Too often CSR is clearly seen as important and core to overall shareholder value by those in CSR and related functions and by the CEO.
Other functions and areas recognize that CSR is important but do not understand clearly how and why it is important to their role and the success of their work.
Those responsible for CSR often have a lot of room for improvement in internal communications and value alignment.
7. Confused strategy for external CSR communications.
Few companies have invested the time and resources to develop effective CSR communication strategies at the site level or at the corporate level.
Too often CSR communications is ad-hoc and sporadic, ranging from ‘shout from the rooftops’ to ‘keep your head down and mouth shut’ strategies. Sometime both at the same time.
Communications is a very efficient way to extract more shareholder value from CSR spending and yet too often this is literally left to whim and chance.
8. We’ll get to it soon.
CSR efficiency (especially efficiency at creating shareholder value) too often ends up in the important but not urgent category and simply doesn’t get done.
Executives and managers recognize that there are inefficiencies, that there are value opportunities and that there are likely unnoticed risks and threats.
They know that a CSR SWOT should be done. But, the urgency of day to day demands and priorities keeps pushing this out and it doesn’t get done.
This isn’t to blame the leaders and practitioners of CSR, nor the C-suite team. It is simply the reality of companies and leaders working hard to keep up with a dynamic and rapidly evolving field.
However, a CSR SWOT does represent an important opportunity for companies, especially in these days of economic uncertainty and increasing budgetary pressures.
A CSR SWOT can often uncover value, opportunities and risks that have developed and gone undetected as managers and executives have scrambled to keep up with the rapidly evolving CSR space in recent years.
An objective and dispassionate ‘fresh-eyes’ review will often find:
- Opportunities for increased shareholder and societal value from existing CSR budgets and programs.
- Opportunities for improved efficiency and effectiveness in CSR/Sustainability reporting
- Unnoticed risks and threats
Executives and managers who can’t find the time to undertake a CSR SWOT should look to bring in someone who can bring fresh-eyes and fresh perspectives and just do it.
A CSR SWOT doesn’t have to be comprehensive to be valuable. Most can be done, at least to a preliminary level, without travel to project sites and remote locations.
A CSR SWOT can help companies to unlock new value and better manage risks. But, only if they actually get done and not just thought about.