A whole new world of CSR metrics...

There is but one "social responsibility" for corporate executives, Friedman believes: they must make as much money as possible for their shareholders. This is a moral imperative... There is, however, one instance when corporate social responsibility can be tolerated, according to Friedman - when it is insincere... Hypocrisy is virtuous when it serves the bottom line. Moral virtue is immoral when it does not.

This is a quote from the book "The Corporation: The Pathological Pursuit of Power" by Joel Bakan, from an interview with Milton Friedman. This quote brings the trouble with corporate social responsibility (CSR) to the point: Where CSR is honest, it is immoral against shareholders and when CSR is only for the sake of marketing or looking good it is immoral anyways. Nevertheless I am sure a lot of CSR efforts have a positive impact on the social or environmental surroundings of companies, but as with many things the question is how to measure it. Natural Logic advertises a tool aiming to provide ROI for CSR, giving some basic directions where it could go in terms of indirect benefits:

Indirect benefits include improving financial performance (leaner cost structure, gains in market share and penetration, improved customer loyalty & employee morale, increasing shareholder value, gaining brand momentum as CSR leader); improving tools and capabilities (innovation in product & business development, better feedback for better operating efficiency, improved strategic thinking & managerial confidence); while improving environmental performance (reduced footprint, regulatory “insulation”)

Granted, I ll easily buy the employee morale point and the brand momentum as well as the footprint by extension, but it will be difficult to measure the real ROI. I dont believe a lot of organisations can put a value tag on e.g. 1% rise in employee morale, provided they measure it in the first place (see the Rucci at Sears classic for more on that).

As for employee morale: Everytime I was allowed to do pro bono over the last years, I was a happier employee afterwards, even though I still remember the sad eyes of the poor kids we took the museum when they unpacked their lunches while for us our law firm catering consisting of everything they had never seen before arrived. Also not to forget the week we flew to Poland to build houses, which was fun, but came with a travel expense price tag that would have allowed them to build an entire village themselves with proper workers knowing their job. Sure, taking part in your firm's CSR efforts is fun, but the general approach made me sad every time.

Also read Jai's posting on the Starbucks example, which is a good example for gaining brand momentum through CSR. Even though I never go to Starbucks (after all I live in Vienna where we still have proper "Kaffeehäuser") they managed to get the message through to me as a non customer that they are all about fair trade coffee, distracting from the fact that they dont pay proper wages and create more waste a day than all the other coffeehouses in Vienna together.

As for the moral value of CSR, I think one sentence says it all: "Actions are But By Intentions", I wish organisations would be rewarded for the real intentions behind actions and not for "doing" CSR out of needing something positive on their annual reports...