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Even CSR efforts have unintended consequences

Do you own a pair of Toms Shoes? If you do, you probably knew about the company’s one-for-one business model before buying those shoes; maybe that even explains why you bought them. In case you aren’t familiar, Toms Shoes gives away a free pair of shoes to someone in need for every pair of shoes a customer buys. Sounds pretty great, right?

As the Wharton School points out, it might not be that simple. According to Andreas Widmer, a social equity expert who gave Toms Shoes an award a few years ago:

“The unintended consequence is that, of course, there is a local cobbler who actually makes shoes and sells them. Can you imagine what happened to that guy the day the truck showed up with Toms shoes? Why would you go buy something if you could get it for free? And then, to add to this complex situation, that truck doesn’t show up all the time. That wreaks havoc on a lot of businesses, especially small- and medium-sized ones.”

To be clear, this is not just about Toms Shoes. Nor do I think we should throw blame around companies and philanthropists clearly trying to do the right thing. But it is a larger question of how well corporate social responsibility programs look at the total impact of their efforts, not just the immediately obvious benefits.

An inherent part of CSR is turning the lens on yourself and scrutinizing the (long-term) effect your decisions and actions are having on employees, customers, shareholders and communities. Here’s how: 

For one thing, start with your business strategy when evaluating opportunities. Think about how you can tie them together to create mutual benefits and a cohesive story. For example, Citi’s recent announcement about investing in solutions for climate change and sustainability is unapologetically tied to its business strategy. This is a good thing.

You can also leverage that into the development of a framework of priorities that outlines what issues the company is going to tackle (education or arts and culture? childhood hunger or infant mortality?). This process will give you a clear understanding of where you want to have an impact so you can determine the real effect of your activities.

The next step is to ask yourself the tough questions. Is this really helping anyone but the company? Is it the best way for us to make an impact? Are we creating lasting change or just producing a marketing win? (They are labeled “tough questions” for a reason.) If the answers aren’t palatable, think about ways you can boost your impact. And then…

…do something anyway. It’s important not to greenblush – or shy away from doing the right thing and talking about it. In fact, it’s critical to tell a clear story and stand behind your efforts. Make sure your stakeholders understand why you’re doing certain things and not others, and the impact you want to have. (i.e., Do you want people to have shoes or know how to make and sell them? Either way, what’s the story there?)

Importantly, keep in mind this will be an iterative process. Your CSR initiative – and story – will be continually evolving just as your business does. Be authentic, transparent – and, yes, scrutinizing.

Image Source: CC Image courtesy of LIN SHU HUNG on Flickr

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