A younger generation of executives believe business is not just about the bottom line, but also about humankind and the chance to make a difference. They believe the invisible hand of the market should be supplemented by the helping hand of social responsibility.

The implication for boards is clear: To help ensure a long-term supply of top talent, they must recognize that social responsibility is profoundly important to the next generation of leaders and explicitly work with management in endorsing and evaluating corporate social responsibility (CSR) programs.

A company’s CSR practices may not be the primary factor in a candidate’s decision to accept an offer, but it can certainly heavily influence candidates. Starbucks is widely known for its determination to go “beyond the cup” through its commitment to sustainable agriculture, diversity and socially responsible investments.

"There is no question that CSR is a tie-breaker,” says Craig Weatherup, former chairman and CEO of the Pepsi Bottling Group and board member for Starbucks and Federated Department Stores.

“The young executives I know who are future CEO candidates all have a great deal of interest in these questions about their companies: Are we living our values? What are we doing to make them real?

“In the old days, maybe 25 per cent of the CEO universe would not go near certain kinds of companies for social reasons. Now, 25 per cent really look for the social reasons to join a company.”

Boards these days understand that if CSR is adopted merely as a recruitment or public relations tool, candidates are likely to be unmoved. Boards need to ask:

1. Is CSR woven into the fabric of our organization? Candidates welcome philanthropic donations to worthy causes, but many of the people we talk to also believe that social responsibility should relate directly to the business of the company.
   
   For example, Whirlpool, appropriately for a maker of household appliances, is the largest corporate sponsor of Habitat for Humanity and by next year (2011) will be involved in every dwelling that Habitat builds anywhere in the world. The company is also determined to produce environmentally friendly products and, through its KitchenAid brand’s Cook for the Cure program, supports breast cancer research.
   
2. Are the boundaries of responsibility broadly drawn? Along with regulators, activists, labor unions, the press, and communities, the rising generation of leaders increasingly sees corporate responsibility not only as a matter of a company’s behavior, but also the behavior of its partners throughout the value chain in matters like labor practices and the environment. Starbucks, through its Coffee and Farmer Equity (CAFE) program, seeks to instill sustainable agricultural practices along its entire coffee supply chain, efforts that have been recognized as a model by many throughout the coffee industry.
   
3. Is purchasing and investing power used responsibly? Targeted programs can be especially strong indicators of a company’s commitment to genuine CSR because company purchasing power can contribute to economic development in places that badly need it. For example, the Body Shop, the UK-based chain of cosmetics stores, pursues a “fair trade” program that purchases accessories and natural ingredients from disadvantaged communities around the world.
   
4. Is CSR practised locally as well as globally? Recalling the Renaissance notion of the individual as a microcosm of the universe, many of the new generation of leaders want to see their individual values scaled up in the company, beginning with a commitment to the local community. Novartis says the company “wants to act the same way as responsible and conscientious individuals would act in their community”. Target donates more than $2 million a week to local nonprofit organizations in the communities where it operates, and gets directly involved in local volunteerism through Target Volunteers.
   
5. Do employees have the opportunity to act directly for the greater good? Many companies give their employees “release time” to engage in community service. They may grant paid time for an employee to do volunteer work during business hours, or may grant paid leave to an employee to work full-time with a non-profit organization. When Gap stores in Denver were closed for 10 weeks for renovations employees remained on the payroll and divided their time between training and volunteering with nonprofits in the area. More than 60 organizations hosted Gap employees, who volunteered nearly 10,000 hours.

CSR is often brought under the general umbrella of governance. Increasingly, boards are creating committees explicitly tasked with overseeing CSR. For example, the Public Affairs Committee of Raytheon reviews policies and practices of the company and monitors compliance.

Boards that lead this trend and embrace CSR now reap the familiar business benefits of enhanced brand image, improved quality, and greater customer loyalty, and also help themselves win the all-important battle for talent.