Corporate social responsibility is such a fast-moving, modern day phenomenon that it can sometimes seem companies' ambitions are outstripping the discipline of studying and understanding the subject.

Almost every day another multinational corporation announces ambitious new environmental or community initiatives, while governments around the globe are constantly reminding the business world of its responsibilities, whether through advice or new laws and taxes.

Luckily, the academic community is reacting fast, and corporate social responsibility is increasingly studied, especially in top business schools, some of which now even have special departments concentrating on ethical practices.

The highly-rated Wharton Business School, part of the University of Pennsylvania in the U.S., has just issued a timely report into how companies can get their environmental and other social policies in order, notably following a new international report saying global warming is almost certainly caused by human activity (see the Principal Voices story on the IPCC report here)

The study has two essential words of advice for companies -- firstly, going green is increasingly necessary to appease both consumes and government regulators; secondly, it's simply good for business.

The IPCC report has made headlines around the world, noted Wharton marketing professor Americus Reed.

"It's really getting some traction now," he said. "There's a big idea in the scientific community about global warming, and I think consumers are much more aware of these issues than they were."

Marketing yourself as a green-conscious company helps differentiate yourself from competitors, he said, adding: "And when you market yourself as environmentally friendly, it also implies that your competitors are not."

As well as the business incentive, there is also the motive of fear, the school notes -- apart from government regulations and taxes, companies seen as environmentally or socially irresponsible can face anger from consumers.

Part of the motivation behind retail giant Wal-Mart's new environmental policies could be the harm its image suffered due to criticism about its labor policies, said Eric Orts, director of Wharton's environmental management program.

"A lot of times a big company gets seriously burned in its reputation, what happened to Wal-Mart. Although that criticism was about employment issues, not the environment, sometimes these things all go together and you get a bad reputation that starts to hurt you," he explained.

However, another expert from the school warns that corporate social responsibility has to be genuine, rather than only a veneer.

"You need to have a history of this kind of social responsibility. You can't fake it," said marketing professor Barbara Kahn.

"It's hard to do, but that's what makes it worthwhile. If it's easy to copy, then it's no longer a competitive advantage."

So, you have decided to implement some socially responsible policies. How do you know they are working? This is where another business school steps in.

A new study by Andrew Likierman, a professor of management practice who is acting dean at the U.K.'s highly-rated London Business School, says such policies must be carefully assessed, something by no means all companies do.

Firstly, realistic objectives must be identified, which should then be linked to concrete performance indicators. Thirdly, measurement must be made credible by using transparent data. Lastly, limitations must be recognized, with plans amended as necessary.

Likierman concludes: "If corporate social responsibility is to be an integral and credible part of the way an organization works, a good measurement framework is essential."

What do you think?


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