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C
orporate social responsibility (CSR) is complicated. The public fre-
quently dismisses it as “greenwashing.” A company’s reputation and
bottom line take a hit when goals on environmental and other social
efforts aren’t met. Conversely, when a company gets it right, the brand
and business performance get a boost.
Many companies have made CSR a cornerstone of their strategic vision and
shareholder engagement efforts. In 2018, 86 percent of companies in the S&P
500 Index published a CSR report, up dramatically from just under 20 percent
in 2011.
But compliance can be tricky for any firm, and a new study suggests that
CSR is especially complicated for multinationals. After all, managers at subsid-
iaries are often culturally or geographically distant from the home office. They
have to make trade-offs between the social objectives espoused by top executives
and the short-term, profit-related realities of running a local business unit. In-
deed, prominent firms have suffered damaging social and economic consequenc-
es after a headline-generating breach of CSR policies by subsidiary managers,
who can be tempted to cut corners. Further, breaches can also result from a
simple lack of coordination.
To provide guidance for multinational firms, the study’s authors built a
game-theory model of global CSR coordination, which allowed them to simulate Illustration^ by^ Phil^Marden164
Keep your CSR
programs on track
Corporate social responsibility can be tricky, especially
for multinationals. A new study lays out some guidance.
BY MATT PALMQUIST