Financial executives and CSR: organizations are acknowledging that corporate social responsibility is more than simply "warm and fuzzy," and they're increasingly seing the value in trust as an essential line of business. Being a good corporate citizen is an important reputation factor.

• Author: Cheney, Glenn A.
• Position: CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility is becoming "business as usual." Virtually every Fortune 500 company has some kind of CSR policy and mid-size companies are joining them. Whether it's merely a hat-tip of recognition in the annual report or a full-blown corporate strategy, CSR has entered business culture and is rapidly becoming an integral part of American industry. Financial executives are recognizing that they should be playing a key role in CSR development and implementation.

In fact, there are indications that corporations are increasingly being seen as organizations of stakeholders rather than shareholders. Consumers, employees, governments and others are placing increasing value on the nonfinancial performance of companies. For the first time, according to a recent survey, trust and transparency in the United States and Europe are now more important to corporate reputation than the quality of products and services.

"The results from the 2020 Edelman Trust Barometer underscore that trust is now an essential line of business and that being a good corporate citizen is an important reputation factor," says Matt Harrington, president and chief executive officer of public relations firm Edelman U.S.

"Companies need to engage with all stakeholders about societal business challenges, not just limit their focus to shareholders. ... [T]here are greater public expectations of companies to make a positive contribution to society at-large," he says.

Further, he notes Edelman's 2006 barometer showed that only 33 percent of respondents considered "social responsibility" as a trust factor, while the 2010 results indicate that 64 percent say that being a "good corporate citizen is a factor in corporate reputation."

That's a big change in just four years. The CSR concept has grown so fast that companies are still feeling their way, devising -approaches as they go. Some companies have formal, coherent CSR policies while others have scattered and unrelated policies, such as community involvement, personnel safety, energy reduction, recycling and environmental impact.

Stacie Smith, senior knowledge leader for social responsibility at LRN Corp., a firm whose mission, she says, is to help inspire principles performance in business, sees a wide variety of approaches. "Typically a company won't have a single CSR policy," Smith says. "They may have policies related to very specific risks that are most common in their business. They might have a CSR strategy or framework, or it might make a CR [corporate responsibility] statement."

But, she notes, in terms of actual policy, "it might get fairly specific in nature. It might relate to the treatment of workers, to certain environmental practices, to certain practices with regard to the community. So policies would be manifest in more specific ways."

Because of the amorphous and variegated nature of CSR in most companies, various organizational functions may be involved in the establishment and implementation of policy. But since the policies tend to focus on the warmer and fuzzier aspects of business, the...