Where are companies going wrong?
Executives should not blame themselves alone. One reason they struggle is that the expectations of
citizens and governments have never been higher. Companies are expected not only to obey the law or
meet certain standards within their own businesses but also to ensure high standards across their supply
chains. Large companies are expected to go further still, helping to solve major economic, environmental,
and social problems—even those unrelated to their businesses. Moreover, as the expectations of citizens
have increased, so has their power to scrutinize. Digital communication has enabled individuals and
nongovernmental organizations (NGOs) to observe almost every activity of a business, to rally support
against it, and to launch powerful global campaigns very quickly at almost zero cost. High expectations
and scrutiny are here to stay. Successful companies must be equipped to deal with them.
What is wrong with CSR? Why have well-resourced teams, backed by the authority of CEOs, failed to
deliver on their core purpose? In our experience, that centralized approach has four serious flaws.
First, head-office initiatives rarely gain the full support of the business and tend to break down in
discussions over who pays and who gets the credit. Without the active participation of the big-spending
functions—typically, production and marketing—the ambitions of a central team are difficult to realize.
Second, centralized CSR teams can easily lose touch with reality—they tend to take too narrow a view of
the relevant external stakeholders. Managers on the ground have a much better understanding of the local
context, who really matters, and what can be delivered.