4 thoughts on “Why businesses don’t need “corporate social responsibility” to be ethical”

  1. Posted 03/06/2015 at 15:32 | Permalink

    “Of course, this experience provides an argument in favour of more shareholder discipline as well as against the state bailing out banks.”

    Shareholders – by which I mean the ultimate beneficiaries, not the portfolio managers – effectively delegate the responsibility of scrutinising what companies do to government. This might mean CSR but usually it means financial regulation and, more recently, calls for limits to boardroom pay.

    There is a perception that these (ultimate) shareholders want share price performance, but many also want companies not to take excessive risks with cash (banks), pollute rivers or deal with oppressive regimes. Given the practicalities of engaging with thousands of companies that your average holder of pension funds, insurance policies and other collective investments might have, a single governmental body is probably the most efficient way of dealing with company behaviour.

    Regarding CSR in particular, I have to say its the part of the annual report I skip over. Yes, it mostly appears to be a box-ticking exercise.

  2. Posted 03/06/2015 at 19:58 | Permalink

    I know it ain’t very constructive to say so, but this is complete rubbish. Modern “CSR” is essentially about businesses ensuring they take steps to avoid, prevent or mitigate risks of harm to others & environment, either through its own operations or through its business practices… “CSR” as you’ve described it –
    the box-ticking exercise or “philanthropy” style community projects – is so outdated in the modern era with benchmarks like the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for MNEs… Call it what you will (“CSR”, “responsible business conduct”, “integrity” “business ethics”), but I’m a practitioner of corporate responsibility for a bank, and it’s exactly this dismissive attitude that makes my job so difficult. Your argument is typically academic, and a useful thought exercise to make the bosses feel better about ignoring the environmental and social risks raised by their ESG practitioners… I mean, really? Shareholder primacy at its root meets social goals??? Uhhhhhh… what about the financial crisis??? or 40+ years of endless reports on exploitation of labour, human rights abuses, environmental damage, etc.??? And the point that CSR can be manipulated to pursue management goals… What???? Perhaps in very rare cases to justify anti-competitive behavior (e.g. cartels or collusion in the guise of industry collaboration to meet social goals), but still this tends to benefit shareholders even more so. And, in almost all corporate governance regimes, fiduciary duty totally overrides any CSR objectives, hence the rise of the B Corp. Also, aside from the bigger, consumer-facing brands, management normally just ignores CSR all together.

  3. Posted 05/06/2015 at 22:53 | Permalink

    @anonymous – I am not sure why you think this is “complete rubbish”. If you are a CSR officer, I think you should take the issue more seriously. I debated this on the evening of writing the article and three practitioners all used the straw man arguments I cite in paragraph 2, so that is certainly not rubbish. Paragraph 3 merely quotes a government report as recently as 2007 and criticises that approach. Surely, you can’t disagree with 4, 5 and 6 which are not about CSR but about shareholder primacy. 7 may be debatable I guess. I suppose you could argue that the article is irrelevant but then given the arguments I encountered in the debate they seem to me not to be. And, what about the financial crash? That is certainly an argument against unethical behaviour and managers running wild unconstrained by shareholders. If you happen to think that modern CSR policies are about natural law ethics, fair enough. That is something worth saying because natural law ethics is what I believe in and I would be pleased if CSR policies were oriented towards them.

  4. Posted 06/06/2015 at 10:35 | Permalink

    I commend you on your brave post considering the size and strength of the modern day CSR/Sustainability practitioner field. I’ve been in it for almost ten years now both as a practitioner and academic. Some years ago I was a true believer in Strategic CSR/Sustainability Strategies/Shared Value/Win-Win etc that business can do wonders for society and the environment and its bottom line.

    Your examples of Enron and RBS demonstrate the importance of ethics and not strategic risk-management focused CSR, which is where its heading today. All the talk about human rights, climate change, social license to operate etc is being translated by companies as Risk Management and dealt with in just that way i.e. via quantifying everything with KPIs, due diligence, controls, processes and a plethora of well meaning policies. The big accounting/auditing firms are now in on the act too.

    However, does any of this make a difference to the climate, communities bearing the brunt of huge so called development projects and working conditions of workers, the amount of tax corporations pay, the amount of corporate influence on governments and governmental decisions/regulation? No, not really. From a certain perspective CSR and all its other names could be summarized as just “rearranging the deckchairs on the Titanic.” Its now certainly a much more professional rearranging of the deckchairs though nonetheless the Titanic still has the same fate.

    The reason being is down to corporate power and a lack of consideration of ethics. The fact that CSR chooses to ignore ethics and obsess with the “business case” only makes this whole scenario worse. In fact should we not ask ourselves whether CSR is and ought to be ethical (from the perspective of those affected by businesses)?

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