CSR strategies that attempt to achieve incremental cost-savings, customer loyalty, or employee motivation risk eroding long-term profitability and market leadership by failing to appreciate the magnitude of shifting consumer needs and environmental realities.
The prevailing approach to CSR, one that parcels social responsibility into a separate add-on strategy, faces important challenges. Here is just one. Incremental CSR strategies, due to technological advances or government subsidies, often achieves short-term cost savings. Wait, cost-savings = good, right? Of course, the sustainability consultants tell you as they pat you on the back for your win-win-win-win CSR strategy. Beware of CSR cost-savings trap. Incremental CSR strategies receive self-reinforcing positive feedback from the market because consumers like lower prices (if cost-savings get pushed downstream) and shareholders like to make money (if cost-savings get captured in higher margins/greater earnings).
The problem is that incremental CSR strategies fail to address the underlying realities of constrained natural resources and changing consumer needs. Taken together this short-term self-reinforcing market feedback, disconnected from the underlying changes to our natural resources and consumer needs, puts your incremental CSR strategy on course to fall through a grand canyon rift between reality and your strategic position.
When company A decides that employee moral is dangerously low they develop a new HR strategy that includes dress-down Fridays and monthly BBQs. Even though employees wear jeans and like the food at BBQs after one-month they end up hating the initiatives and the company even more. Why don't they just treat us better? Why don't they just pay us fairer wages?
Incremental CSR strategy works the same in the long-run. Everyone just ends up bitter and asking, why didn't we just decide to change the way we view and act towards the environment and society?
