Whilst responsible business is more visible than ever, it’s lost a good deal of its power and potency, argue Jeffrey Hollender and Bill Breen

By almost any measure, corporate responsibility is now front and center on the vast majority of CEOs’ radar screens.

To cite just one prominent piece of evidence: In a 2007 report by McKinsey, the global consultancy, more than 90 percent of the chief executives surveyed said they had done more to push environmental and social strategies into their operations than in the previous five years.

Today, given the number of chiefs who are scrambling to keynote CR conferences and expound on their companies’ beneficent deeds, it’s safe to conclude that CEO buy-in is still on the rise.

And yet, while CR is more visible than ever, it’s lost a good deal of its power and potency.

Despite the flood of corporations that have issued glossy CR reports lauding their stellar citizenship, the events that triggered the Great Recession demonstrate that far too few companies are moving in a truly “responsible” direction.

We haven’t reached the end of the road for corporate responsibility, but it’s our sense that the movement is fast approaching an evolutionary crossroads. Many companies will continue down the same path, making do-good claims that amount to little more than marketing pap.

At the same time, an insurgent band of disparate companies are building market share by authentically committing to a more expansive vision for business. Among the most pronounced indicators that dramatic change is afoot:

A new language is surfacing

“Corporate responsibility” is bloodless and boring, and too often viewed by consumers as a ruse for selling more stuff.

Even CR chiefs such as Nike’s Hannah Jones have grown allergic to the term, arguing that it fails to capture the scope of their work— to use sustainability to seize on emerging business opportunities.

Companies like the London-based retailer Marks & Spencer understand that people don’t support what they can’t explain. So in 2007, when it came time to put a name to a major social and environmental initiative, M&S unveiled not a CR plan but a Plan A—“because there is no Plan B.”

Increasingly, bland buzzwords like “corporate responsibility” and “eco-efficiency” are being supplanted by a new vocabulary—“corporate consciousness,” “resource intelligence,” “social innovation,” and in M&S’s case, “how we do business”—that aims to capture a real-world sense of deeper business purpose.

The focus is shifting (from reputation to innovation)

For too long, our definition of what constitutes responsible corporate behavior has been dangerously timid. We’ve too often glorified our efforts to be a little less bad, hailing them as examples of important change.

CR’s fixation on reputation has even had the perverse effect of fueling greenwashing, as a surge of green pretendershas rushed to cloak their irresponsible behavior with cause-related marketing campaigns.

A 2009 study by Terra Choice, a Canadian research firm, concluded that an astonishing 98 percent of environmental advertising claims in North America were “false or misleading.”

Fortunately, the leading-edge models that are replacing our conventional notion of corporate responsibility are much less about burnishing the brand and much more about inciting innovation.

IBM is doing this through its Global Innovation Outlook effort, where it collaborates with outside thought leaders to crack some of the world’s thorniest challenges, such as the problems befalling the world’s finite water supply.

The initiative is both altruistic and strategic. It’s no coincidence that a few months after its GIO effort, Big Blue rolled out a new line of smart technologies to help utilities and companies more effectively monitor their water supplies.

IBM demonstrates that corporate responsibility needs to work at the beginning of the innovation pipeline, where strategy is set and creativity occurs, rather than at the end, where outcomes are audited, after-action CR reports are filed, and the marketing department takes over.

A new breed of authentically responsible companies is emerging

While we are just beginning to discern the post-CR era, this much is clear: A wide-ranging group of restless innovators is pushing past the cramped notion that corporate responsibility is simply about cutting carbon, saving watts, monitoring factories, and donating to charities.

CR 2.0 is about reimagining companies from within: innovating new ways of working; instilling a new logic of competing; identifying new possibilities of leading; and redefining the very purpose of business.

Linden Lab, the San Francisco-based maker of the wildly successful virtual environment called Second Life, is an unlikely model for any company that seeks to confront the world’s social and environmental challenges.

There’s no SVP of corporate responsibility on its org chart; it doesn’t bother putting out an annual CR report; and Second Life even includes a tiered section (“X-Rated Continent”) for cybersex of every variety.

But dig a little deeper, and you find that Linden has dared to imagine a new kind of “good company” workplace. It’s developed software that allows the company to work more like a democracy than a conventional corporate hierarchy—a democracy with a magnanimous sense of purpose: to create a virtual world that “advances the human condition.”

Perhaps Linden is a prototype for the CR 2.0 era—a company that aspires to be truly responsible, but doesn’t give a damn about corporate responsibility.

Jeffrey Hollender (www.inspiredprotagonist.com) is a cofounder and the executive chairman of Seventh Generation, a Burlington, Vermont-based maker of environmentally responsible household and personal-care products.

Bill Breen (bbreen@billbreen.net) is the company’s editorial director and a former senior projects editor at Fast Company magazine. They are the coauthors of The Responsibility Revolution: How the Next Generation of Companies Will Win (Jossey-Bass, 2010). Portions of this article have been adapted from the book.

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