CSR needs to create business value, otherwise why would any company do it? Our class continually reinforces this principle. However, it is extremely difficult to figure out what the business value to a company is from the outside.
Given that the business value is nearly impossible to determine, it is almost as difficult to figure out how much money the company spends on their annual CSR efforts. There are several reasons this is the case. First, a lot of companies have foundations that also donate to CSR efforts in the company’s name. In their CSR reports, companies often don’t distinguish between the efforts of the company and the foundation. Second, many of these companies are very large with many business units who engage in CSR activities independent of the knowledge of their corporate CSR departments. Many CSR departments are very small compared to the large organizations that they support. If the company does not have systems and incentives in place to understand how departments are using their budget to engage in local CSR activities. Finally, some companies do not even generate a CSR report, which makes it next to impossible to estimate their CSR spending.
My project team is currently wrestling with these measurement challenges in an effort to help our client benchmark their CSR efforts against other companies. Our client is interested in understanding what impact companies who spend a comparable amount of money on their CSR activities have on the communities they are working with. Companies need to ensure that their CSR is producing business value in addition to being able to justify the amounts spent on major causes.
Our team is currently trying to understand how much money companies themselves (not their foundations) spend on CSR activities, so we can help our client understand where they fit in the CSR landscape. We definitely do not have an answer for how to do this effectively yet, but this is the challenge that our team will be wrestling with for the next several weeks.
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