The same businesses that are constantly analyzing, tweaking and optimizing the connection between inputs and value created across all aspects of their operations, seldom (if ever) apply the same management rigour to optimizing value creation from CSR and Sustainability Budgets.
I recently delivered a keynote at a mining event and asked two questions of the audience.
1. How many had been involved in a mine/mill optimization study discussion in the last six months? Every hand went up.
2. How many had been involved in a CSR value/impact optimization study or discussion in the last two years? Not one hand went up.
Pretty revealing. And it isn’t just in the mining industry. Little focus (often none) is put on optimizing overall value and impact from CSR and Sustainability budgets and resources. Too often the road from budget-to-value is not connected.
Many businesses recognize the importance of CSR and Sustainability and allocate significant budgets and resources to it. And then they basically let it go, trusting that the budget will somehow create value and impact. Almost like it was a self-driving Tesla that you just turn loose and it takes you there, finding the land where CSR budgets magically turn into social and business value and impact.
It doesn’t work that way. Doesn’t work that way for capital and operating budgets. Doesn’t work that way for marketing budgets, or any other area of business. Why do so many leaders and companies think it works that way for CSR?
To be fair CSR and Sustainability are relatively new issues on the business agenda. They are often brought to the table wrapped in external-facing social and environmental language as if they didn’t really have a core business aspect to them. As if they were all about packaging the company as a do-gooder.
But, they do represent business value. Lots of it. Smart businesses and managers must learn to manage that value effectively. Manage it for value and impact. Value and impact for society and environment, AND value and impact for the business.
So, here are five key points for optimizing CSR budget to value creation
Of course, these are all interconnected and inter-related.
1. 360 degree value focus – So often the key focus (sometimes the only focus) of CSR and sustainability budgets is external. The starting point is impact on society and the planet, doing good.
Of course this is important. But, so is your business, the source of your budget. Focus on all three value pillars (social, environmental and business value) simultaneously. You will never optimize value creation if you constantly have to retrofit one value dimension into the equation.
2. 360 degree value communication – Really. And the blame on this goes both ways. Too often mainstream leaders and executives are more interested and engaged in the social and environmental aspect of CSR and Sustainability than they are in its business aspects.
They love to talk at home or at events about the ‘good’ things their company is doing. In their enthusiasm for the social and environmental good that is being done, they are effectively marginalizing the business impact that can and should be happening.
The default focus of CSR and Sustainability is on social and environmental impact. It takes discipline and commitment to ensure that business value gets equal billing in the communications. Because when it doesn’t, it tends to reinforce the stereotype that this is only about social and environment and not about business.
And, interestingly enough, it makes the communication less credible. Corporate communications that stress social value impact and seemingly deny a connection to business value are often discounted by publics that realize there must be a self-interest as well as a social interest.
3. Performance frameworks and management rigour – Going back to the mine optimization studies. Mining (and most businesses) have well developed performance frameworks for people, projects and operations, helping to ensure that value creation is optimized across the full range of inputs and variables.
Management rigour needs to be baked in from the onset, with well-designed approaches to measuring and tracking impacts that can facilitate optimization of value on all three dimensions. And the projects and programs should be held accountable for all value dimensions, not just social and environmental.
4. Meaningful internal engagement – Many CSR and Sustainability leaders need to have more, and more meaningful internal engagement. Early business value conversations with key internal stakeholders can make for more effective performance frameworks, and much broader buy-in and engagement across the firm. This will enhance all three value dimensions.
Often this isn’t easy. When CSR team leaders sit down with executives and managers from throughout the business the tendency of both parties is to talk about the social and environmental value dimensions. It can take a lot of work to pull the conversation back to get meaningful thinking and input about how a particular CSR project can create (or destroy) value for Finance, or Engineering, or HR, or other business areas.
But, this is important. Force the conversation, help them to think and engage on all dimensions. If successful you will not only have a better understanding of the internal value propositions, you will have broadened ownership and buy-in. This is so important when the next budget crunch happens
5. No Skills Required – Seriously? Effectively running a CSR and Sustainability unit in a business is very difficult and takes a complex mix of skills. Yet, so often we see positions filled with people that don’t have the full range of skills, and they aren’t supported to either acquire them, or acquire the professional support they need.
To truly excel at managing and running CSR and Sustainability functions requires strong business skills as well as strong community development skills, communications and a host of other skills. Today’s successful professional must straddle both worlds, engaging effectively in each and helping to bridge between them. It is a complex and multi-dimensional environment.
Despite all this, I still often see positions filled with incredibly well-intentioned people, but who simply lack some of the key skills needed – and their organizations often don’t provide budget for external support and/or training. This isn’t a slight on the workers, it is about the organizations not understanding the full suite of skills required and taking steps to make sure it is available in the same way that they do with other areas (finance, engineering, human resources, etc) where they routinely use external expertise and support.
CSR and Sustainability deserves the same level of management rigour and attention to value as all other areas of business. They deserve training and professional support the same as other areas. It is too important for any less. Budgets are too tight, margins of error too slim, the impact too important and the consequences of underperforming too high.
If you remember nothing else, remember that CSR is about #ValueCreation.
Do your business a favour. Take a serious look at how effective you are at optimizing CSR and Sustainability budgets to value creation. Where are your strengths? Where are your gaps? What is your path to improvement?