Saturday, December 22, 2007

Why Corporate Social Responsibility is fashionable

Corporate Social Responsibility (CSR) seems to be in fashion. Is this a fashion that is going to become a classic, or will it fade away rather quickly?

CSR should be an integral and important part of corporate governance, and should be integrated into the mainstream of the business. But CSR is usually something that has been clearly added as an afterthought, and hangs on the outside of the core corporate structure.

Because the lack of CSR can have serious public relations (PR) consequences, it is quite common to have senior executives linked to the CSR effort ... but whether this has any impact on the scale and value of CSR efforts is not at all clear.

In due course Tr-Ac-Net will get a body of information together about CSR activities, and will eventually be in a position to relate the cost of CSR activities with the revenues of the organization, and the profits of the organization. Compared to the main business of the corporate giants, the CSR component is tiny ... really tiny. In fact, sufficiently tiny in most corporate organizations to be embarrassing, if the data were widely known.

The good news is that the social value of CSR activities is often significant ... and there is the possibility that expanding corporate CSR could eventually increase stockholder value, rather than being a drag on earnings and therefore on stock prices.

Corporate CSR is fashionable because more and more of corporate leadership is hearing that there is good news associated with CSR, and it is good business to link to this. It will stay fashionable when corporate executives know that CSR is a parameter of corporate performance that is being measured.

Part of the Tr-Ac-Net mandate is to provide performance metrics that go beyond the traditional corporate financial statements and the information needed to satisfy GAAP. Information about CSR activities, including the corporate impact on society and the commons will go a long way towards improving corporate citizenship, and the world's quality of life.


Peter Burgess
The Tr-Ac-Net Organization

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