Google Investing in Low-income Housing - Good Cause, Bad CSR?

As a former resident of Allston, MA, I was happy to read in the Boston Globe that Google is investing $28 million to help construct 240 housing units at the Charlesview Residences in Allston. I guess the developers are happy to have Google on their list of investors and according to the article it’s also a good investment for Google. It’s even a good cause, helping low-income families to find affordable housing. Yet, I couldn’t not wonder – is this also good CSR?

First, what does Google have to do with low-income housing? Apparently it’s a good investment. As the Globe explains it, “rental and low-income housing projects are now among the most lucrative investments available, with businesses from Apple Inc. to Sherwin-Williams Co. buying millions in government tax credits used to finance affordable homes in Massachusetts and other states.”

This is not the first time Google is working with such an investment. Last January the New York Times reported that Google invested in income-restricted apartments in California and the Midwest, including a new 84-unit building in Des Moines, Iowa, where a three-bedroom apartment rents for $775. According to the Times, Brent Callinicos, a Google VP, took note in a statement of the “void in affordable housing investment” and said the tax credit investments “allows us to further our goal of providing relief to people who otherwise may not have access to quality housing.”

Google was also very clear this time about its motive – Axel Martinez, an assistant treasurer for Google told the Globe: “We want to be responsible corporate citizens, and that’s what drove us to invest, but the returns are also quite good considering the risk.”

I have to say this response caught me by surprise. I understand this is a good investment and Google has the right to diversify its investments in whatever way it wants to, but I don’t understand their attempt to present it as a CSR-driven action. Why? Because this is more of an example of an out-of-date CSR approach, rather than a meaningful strategic CSR approach one would think Google, with its CSR record and reputation, is more likely to pursue.

What’s wrong with an action that results in increased profits and serves an important public interest? It’s just not the best way a company can and should use its resources when it comes to CSR. It was maybe good enough a decade or five years ago when CSR was still making its first steps in business. But now, with much more knowledge and research in hand good intentions are not enough.

Michael Porter and Mark Kramer of Harvard were among the first to introduce in 2006 the concept that later on evolved into the famous ‘shared value’ framework. The definition Prof. Porter gave for shared value in one of his presentations was: “Corporate policies and practices that enhance competitiveness of a company while simultaneously advancing social and economic conditions in the communities in which it operates.” In other words, Porter and Kramer are talking about moving from ‘doing good’ to working in a strategic manner, by evaluating initiatives through their relevance to the company’s operations, their value to the company (as well as to society) and how much they strengthen the company’s competitiveness. Were any of these points taken into consideration by Google in this case? I doubt.

Porter and Kramer are not the only ones preaching this strategic approach. Accenture and the Committee Encouraging Corporate Philanthropy (CECP) published this year a report, "Business at its Best: Driving Sustainable Value Creation," which also makes the case in favor of a taking a strategic approach when addressing societal issues. The report calls it ‘Sustainable Value Creation’ - a new mode of business that addresses fundamental societal issues by identifying new, scalable sources of competitive advantage that generate measurable profit and community benefit. Does it sound like a description of Google’s investment in low-income housing? Again, I don’t think so.

In times when there is still debate on the value of CSR, it is extremely important that companies take a strategic approach and think about the Accenture / CECP report’s recommendation to look at societal issues “not merely as a source of charity, but as part of core strategy and as an opportunity to achieve differentiation and grow the business.”

It’s not that Google is failing. It actually does a fairly good job when it comes to initiatives related to its core business, whether this is an investment in renewable energy or creating Climate Savers Computing to improve energy efficiency of PCs and servers. I’m also not suggesting Google shouldn’t be involved with low-income housing investments – it can definitely do it, but it just doesn’t need to justify it as a CSR-driven action and can call it an investment per se.

Image credit: keso, Flickr Creative Commons

Raz Godelnik is the co-founder and CEO of Eco-Libris, a green company working to green up the book industry in the digital age. He is also an adjunct professor in the University of Delaware’s Alfred Lerner College of Business and Economics.