What’s the difference between CSR and Social Purpose?
Corporate Social Responsibility and Social Purpose may sound similar. But the differences between the two are vast.
There is a shift happening in the business world. More and more, CEOs of major companies are starting to recognize that social purpose is an important and necessary part of business. It’s no longer a “nice-to-have”. In order to be competitive, there must be purpose in the work.
Earlier this year, Larry Fink released his annual letter to CEOs, urging these senior business leaders to start looking towards social purpose and impact. And when Larry Fink speaks, the business world listens. As chair and CEO of BlackRock — the largest investor in the world — Fink knows a thing or two about wise business decisions, so it’s no wonder that there has been a response.
Just last week, a CEO round table consisting of more than 180 of the largest companies in the world came together to state that social purpose is part of the road-map to success for companies — that more stakeholders must be considered and valued; including the environment and communities. No longer is business’ sole purpose to generate profit — but also to have a positive impact.
But there is still some confusion. What’s the difference between CSR and Social Purpose? We will take a look at both of those concepts and delve deeper into why Social Purpose may be the better fit for the long-term viability of your organization.
What is CSR?
At the most basic level, Corporate Social Responsibility (CSR), is a self-regulated business model that helps companies be more socially accountable to a wide range of stakeholders.
Some other common characteristics of CSR include:
- A siloed and focused approach to creating societal impact
- A strategy linked to philanthropy
- Something that is often linked to reputation of a brand and risks
- Short term efforts that are often very tactical
- A strategy that communicates what the business does, and how it helps community
Corporate Social Responsibility has gone through various iterations within the world of business, each building on the last and filling gaps that were missed in previous strategies.
CSR 1.0: This was the first version of Corporate Social Responsibility, and it revolved around the idea that companies should do good things, simply because it’s good. Companies and businesses do no exist in isolation from the environment, the community, and society at large. So it’s best to find ways to contribute to it.
CSR 2.0: This evolution goes a bit further. With CSR 2.0, there was an understanding that you can create a shared value — that you can do good in places that align with your overall business strategy. One of the more exciting parts of CSR 2.0 was the possibility of adding new revenue by doing good.
CSR 3.0: The third progression of CSR taps into the value of your network. CSR 3.0 takes a more integrated approach into aligning with business strategy and encourages tapping into the power of your value chain and social network. This has the potential to create great financial benefit to the company, while still helping society as a whole.
While all three of these versions of CSR are valuable — they still differ from social purpose.
What is Social Purpose?
A business with a social purpose is a company whose enduring reason for being is to create a better world. It is an engine for good, creating societal benefits by the very act of conducting business. Its growth is a positive force in society.
Businesses around the world are redefining their role in society to foster business and societal success. They are adopting a “social purpose” to navigate turbulent times, and attract and engage top talent and customers. A global scan of these businesses, and recommendations from those that advise them, reveals there are three elements of a social purpose business: a reason for being, a social ambition, and a profit motive.
Reason for Being
First, the purpose company has an enduring core reason for being. It is clear and consistent about why its business exists, what it stands for and what it is about — beyond what it makes, does or sells.
This enduring reason for being goes beyond the company’s product or service, it guides everything it does and determines its goals and strategies. It is placed at the core of its operations, central to the company’s brand proposition, as a focal point, guidepost or “stake in the ground”.
The second dimension of a social purpose company is one which has a social ambition. The social purpose company determines the role it can play to improve society — how it contributes to society and the greater good overall. It has a desire to contribute to human betterment, and has embraced a human goal for its business.
Its social purpose is a shared intent by everyone in the business to improve people’s lives. It has a mission that everything the business does increases a social good. As such, it creates social benefits by the very act of conducting business.
The final consideration is the profit motive or model. Social purpose companies take different approaches to this question of profits, pursuing one of two models:
- They see their social purpose as either beyond profitability and transcending profitability; or
- As the route to profitability.
In both cases the financial agenda is linked with the societal agenda. But let’s dive a bit deeper into each of those scenarios:
Beyond Profitability: Characterized by statements of how the business model goes beyond making money and beyond making a profit, where its purpose is something that transcends creating shareholder value, commercial success or maximizing profits; the social purpose is the compelling world mission that transcends profitability. In these business models, profit follows as a consequence, rather than an end in itself.
Route to Profitability: Characterized by statements of how the business creates value both for itself and society, and how it marries business value with societal value; how its social purpose is a program for profit and growth based on improving people’s lives; how the shareholder or profit seeker is rewarded as a result of the social purpose.
How does Purpose Differ from Mission?
There are different opinions on whether a mission and a purpose can be the same thing, and/or whether a company should have both a mission and a purpose.
Companies also often develop a long-term corporate vision, which directs where the company is going — how it sees the world after it’s done its purpose and mission. The vision creates a mental image of the ideal state or outcome that the company wishes to achieve.