CSR - Necessary but not sufficient?

Like me, you've probably read a lot about how companies that actively practise Corporate Social Responsibility (CSR) generate greater returns for their shareholders than those that don't. It's very fashionable, but a recent article in Harvard Business Review challenges this comfortable PC view.


According to HBR, there's only a weak link between CSR and increased shareholder value. However, there does seem to be real evidence that the absence of CSR practices can increase risk - a string of corporate misdeeds has shown us all how damaging that can be to the share price, which may recover, and to directors' reputations, which sometimes can't. One of HBR's conclusions is that it may pay "to do good, but not too good": in only 2% of the companies actively dedicating resources to CSR did it actually cost shareholders value. So, for the cynic, perhaps you can think of CSR as another - inexpensive - insurance policy: if we do good things, and consciously don't do bad things, then we're less exposed to the downside. Think of it as a corporate variation on that old definition of conscience, "a mother-in-law who never goes home."


One interesting conclusion I think we can draw from the study is that increased profitability is a poor rationale for CSR. But, as HBR puts it, perhaps doing good is its own reward. And even in the corporate world, is that so wrong?