Corporate Social Responsibility

I haven't had a chance to blog much over the past several weeks, but I recently had an interesting experience that I thought would be interesting to write about.

As part of my internship at eBay this summer, we have the opportunity to hear from many of our executives as part of a brown-bag lunch program. During these brown-bags, an executive will spend an hour with the interns. He or she will usually spend 30 minutes discussing their background and 30 minutes fielding questions from the audience. It provdes a great opportunity to hear about people's career experiences and their perspectives on the company and the Internet industry in general. For me, it has also been a great opportunity to learn about how private-sector leaders make decisions.

Yesterday, Bob Swan, the company's Chief Financial Officer (CFO), had his brown-bag sessions with the intern class. As the CFO, Bob basically controls the purse strings for the entire organization - what projects get funded, the size of an organization's budget etc. One of the interns asked Bob about funding initiatives that would typically be classified as 'corporate philanthropy' or 'corporate social reponsibility'. I was surprised and enlightened by Bob's answer: while the company must spend money on meeting regulatory requirements, the most important metric for him was financial return. Financial return is key not because he is cold or heartless, but more because they company is truly responsible to its shareholders, aka investors. Investors did not put money into the company for any other stated purpose than to receive a good return on investment. Fair enough.

Thinking about Bob's comments led me to a couple of thoughts regarding CSR or social-entperise activities:
1. It is important to find socially-oriented business models that are able to be profitable or at least break-even in order to secure and maintain investment. While this seems obvious, there is always a tendency to push for lower returns in order to increase 'give back'. However, I think that creating a sustainable social enterprise is the most impactful outcome and one that requires more dollars be used to fund investment and to build credibility. It also made me realize that there are many benefits to 'incubate' social enterprise ideas within a large company. Being part of a large corporation increases profit motives, but it considerably drives down cost. You can leverage the skills and assets of an entire organization, basically for me. Looking at my project, we get legal, HR, commucations, PR, marketing services for much cheaper than if we were to do it on our own.
2. Government policies matter. If something becomes regulation, it forces all companies to spend money on those issues. Companies are then forced to internalize the costs that would otherwise be bared by society. Regulation is, of course, just one form of policy - rebates, tax credits, and other demand-side incentives would also encourage companies to make investments in socially-oriented initiatives. Many companies in California are investing in solar panels because of rebates offered by PG&E, the state energy company.
3. We are empowered. While regulation and incentives help the economics of socially-oriented initiatives, many companies listen to their people. They also listen to what other organizations are doing. Consequently, employees should take an active role in raising concerns that are close to their hearts and understanding what other companies are doing. If enough companies start acting in a certain way, it becomes 'expected business practice' and acts almost like a regulation. For example, almost all companies currently provide retirement benefits to their employees and companies who do not make this investment in their people may not be able to compete for talent. A more current example would be rebates for 'green' cars. Many companies - Timberland, Adobe etc. - offer to provide their employees with a rebate typically $5,000, if they purchase a 'green' car, I wouldn't be surprised if this becomes a de facto HR practice if the attention to Green continues.