Powering Up (and Redefining) Corporate Social Responsibility (Part 1)

At first, GE's "Ecoimagination" appeared to be old-school Corporate Social Responsibility (CSR), albeit a very hip and very expensive version. It involved the company making announcements about and promising investments (some $700 million) in green initiatives to bolster their reputation on a growing wave of concern over climate change.

It started out with a promise to cut greenhouse-gas emissions by 1% over an eight year period. GE caught the wave, however, and with the wind of better technologies at its back, it has apparently already exceeded that goal by 400%.

Far from old-school, however, is the very real, new CSR being driven through GE's Ecoimagination. Early in the initiative, enlightened managers worked to convert the innovations into "eco-certified" product offerings, like the new GE wind turbine.

GE's eco-certified products are "sold out to 2009," according to Bob Corcoran, the vice president for corporate citizenship of GE, as reported in the Economist's Special Report on Corporate Social Responsibility last week.

Old CSR is deficit-driven. It is about protecting your reputation, particularly against an "ever expanding list of NGOs ready to do battle with multinational companies at the slightest sign of misbehaviour," according to the Economist article, which further notes that "more than ever companies are being watched,...(any nonpolitically correct transgression) can be captured on camera and published everywhere in an instant, thanks to the internet."

New CSR puts market forces behind social innovations. When Walmart changes its light bulbs, there is much to say about the huge energy and cost savings coming from this enlightened move. But when Walmart sells only energy efficient light bulbs to its customers, the market impact is so big that the green dial truly moves.

When the three biggest cement manufacturers in the world join together to pledge to cut emissions by at least 20% for every ton of cement they make, that's news. But with the demand for cement growing 5% per year, it will be when they are able to produce stronger, more flexible varieties of cement to reduce the amounts used they'll move the dial on this industry that accounts for some 5% of the world's emissions of greenhouse gases.

When Google.org begins to invest in its newly defined strategy areas (as covered by the Economist), it will bring information distribution reach like none seen in the social sector. With investments in both nonprofit and for profit initiatives in just a few key areas, we may see game changing results.

New CSR gets ahead of the wave of what may end up being enduring demand from customers and future requirements of regulators, and builds a competitive advantage for the early movers.

We here at Philanthromedia have no problem with this form of enlightened self-interest on the part of corporations. In fact, as regards allocating precious capital in the social sector, we cannot help compare the potential impact of one GE compared to a million of the social entrepreneurs and social business enterprises that are the darlings of philanthropy today (see all the Davos coverage) but are at the extreme other end of the spectrum in their ability to scale. I hope our "discerning donors" will take a look at the potential of the new CSR, and their unique ability to harness corporate relationships, as they make their philanthropic plans in the coming years.

Carla E. Dearing