In the downturn, corporate chiefs like GE's Immelt say social responsibility will remain vital, but it must be cost-effective and fit corporate needs
By Alyson Warhurst
How will the downturn affect the nascent field of corporate social responsibility? Jeffrey Immelt, the chairman and chief executive of General Electric (GE), provided a hint at the recentBusiness for Social Responsibility (BSR) conference in New York. "The most important part of corporate social responsibility is 'corporate,'" Immelt said. "You have to make money. The economic crisis doesn't represent a cycle; it represents a fundamental reset."
Tough talk, but Immelt isn't predicting the end of social responsibility. He's arguing instead that in some ways it will become moreimportant than ever—but must be cost-effective and aligned with the needs of businesses. Transparency, accountability, and strategic engagement with government will become increasingly essential, Immelt says, and only companies that understand these new rules of engagement will prosper.
It's amazing to contemplate how different the mood and tone were at the BSR event compared with just two monthsearlier at the Clinton Global Initiative (CGI) annual meeting, also in New York. The financial earthquake already was starting to be felt then, but the business philanthropists, civil society activists, and celebrity ambassadors there carried on almost as if on autopilot. Even as Wall Street trembled a few miles away, participants at the CGI rolled out impressive new philanthropic commitments, many ofwhich had been months or years in the making.
Will we see an end to the sort of involvement on display at the Clinton meeting? Alas, maybe so. As evidenced by the BSR event, the face of philanthropy is changing. As budgets tighten and the generosity of the boom era gives way to more limited and "strategic" engagement, corporate giving is becoming unapologeticallyvalue-added. Gone for now are the days when companies could give money just to be beneficent: Instead, we will see investments targeted to help companies manage their risks, responsibilities, and reputation—what I call R³.
The implications aren't necessarily negative. Companies likely will focus more than they used to on assessing and managing global risks such as energy security, climate change, andgeopolitical conflicts. In a brutal retail market, some will try to differentiate themselves by developing ethical supply chains to boost consumer confidence, or support micro-entrepreneurship to lift purchasing power in emerging economies. To protect their local communities and retain key talent, they'll reexamine their responsibilities toward employees. And to guard their share prices, they'llseek more than ever to manage their public image.
These aren't half-bad objectives, and they're pretty much what corporate social responsibility promoters long have pressed for. They may be carried out in a budget-constrained environment, but if the goals are achieved, it won't be an exercise in cynicism: The results will be positive for investors, communities, and international development.
Despite a seeming disconnect from the Wall Street turmoil at the CGI, the shift in thinking about corporate social responsibility actually began to appear there. Every year, former President Bill Clinton encourages business, nongovernmental organizations (NGOs), and philanthropists to make financial commitments in support of development initiatives in the areas of education, health,environment, and poverty alleviation. These pledges are worth millions of dollars and sometimes involve multiple partners across different geographies—like the "Hunger Partnership" initiated at the start of the meeting and the Haiti emergency relief commitment agreed to in the final minutes. According to Clinton, over the last few years CGI members have made nearly 1,200 commitments to action...