European CSR practitioners are wont to comment that their US colleagues just “don’t get it” when it comes to CSR. In the first of a two part article, Ellen West analyses the short and long term factors that are preventing US business from taking up the CSR baton with gusto.
When I returned to the US last August, I thought I would be well positioned to continue my work as a consultant to major companies on corporate social responsibility. After all, I had years of experience working on the front lines of CSR with leading European companies like Vodafone and Unilever. I was heading back to a country where public trust and confidence in large companies had been shaken by a series of corporate scandals. The timing seemed to be perfect for a smooth professional transition.
I quickly discovered, however, that a broad commitment to “sustainable development” or “corporate social responsibility” is not anywhere near as visible amongst the US business community as it is in the UK and Europe.
The question of whether America’s commitment to CSR exists at all, or is simply different in nature from that in Europe is not just one of personal interest. In private meetings with American companies, at major CSR conferences and in conversations with representatives of the World Bank, United Nations and various NGOs, the topic is continually raised. Why haven’t US companies embraced CSR in the same way as European companies? Is it a matter of the typical lag between the “early minority” and the “late majority” of those adopting a new concept? Or is something more fundamental at work that may mean US companies never sign on to the broader concept of CSR or do so in a substantially different way from their European colleagues? Six possible explanations for US – European differences have emerged from my discussions with a wide variety of individuals and organisations over the past ten months. Three of them point totemporal explanations – CSR will catch on, it is just on a different timetable in the US.
Temporal questions
1)political considerations
The current political climate in the US discourages companies from taking leadership positions on environmental or social issues. NGOs in particular feel that the Bush administration does not value corporate social responsibility, or applies it only narrowly to corporate governance matters. As a result, companies perceive that there is little political capital to be gained from a company or its CEO taking a public position on CSR. According to this view, only a few very committed companies will speak out, others will work on CSR in a more internal way, whilst the majority will lie low until they are forced to take a position.
2) legal wranglings
The Kasky v. Nike case is having a chilling effect on companies’ public statements with regard to CSR. Activist Marc Kasky brought a lawsuit against Nike under a California unfair trade practices statute, alleging that the company’s statements on its overseas labour practices amounted to false advertising. Nike claims that these statements are entitled to the protection of the First Amendment and cannot be regulated according to the less rigorous standards applied to commercial speech by the California law. The California Supreme Court’s ruling in favour of Kasky went to appeal before the US Supreme Court, which heard oral arguments on 23 April 2003. It recently ruled that Nike had no such protection under the First Ammendment and that the case could be heard in the Californian court.
While the case remains unresolved, Nike has postponed the release of its corporate social responsibility report and declined to participate in the Dow Jones Sustainability Index. Some companies seem to be following suit, expressing reluctance to engage in public debate on CSR until the Supreme Court’s decision is announced. If the threat of liability for CSR statements is removed by a decision in Nike‘s favour, then US companies may take a more vigorous approach to CSR.
3) continental spread
The US business community is larger and more geographically diffused than the UK, which is arguably setting the pace in Europe in terms of shaping the concept and content of CSR. While it has been relatively easy for peer pressure to influence CEOs and companies in the UK, it is more difficult for consensus to be reached in the US. Whereas London tends to work as an epicentre for prevailing trends in Britain’s business community, the US has very distinct regional business cultures including the West Coast, the Midwest, the South, the East Coast and Texas. It will therefore take longer for an “American” approach to CSR to emerge.
Fundamental issues
There are other explanations for the differences between the US and Europe on CSR centering on more fundamental issues that are not susceptible to change.
4) the American dream
The different historical and cultural context means that public demand for CSR is not as strong in the US as it is in the UK and Europe. America is founded on the premise of individualism, which in turn has given rise to a more entreprenuerial and pro-capitalist society. The roles of the state and industry are more distanced from one another in the US than in the UK and mainland Europe in particular. There has been no strong labour party in the US, no real experience with nationalised industries and relatively little scepticism about the benefits of capitalism. On the whole, Americans seem to believe that whatever inequities and injustices result from the current economic system, they are more than made up for by the overall standard of living and opportunities for socio-economic advancement.
The recent spate of corporate scandals do not seem to have shaken the confidence of the US public in the same way as in the UK, with trust in business showing no long-term dip among Americans. Most tellingly, no-one voted with their votes or their dollars for things to be done differently. Recent research has shown that individual investors have actually increased the amount of funds under investment at Merrill Lynch and Citigroup, two Wall Street firms prominently figuring in public scandals during the past year.
5) the lure of litigation
The US is a more litigious society in which issues are resolved by litigation followed by regulation. The issue-based approach to politics in the US means that individual interest groups focus very narrowly on specific problems and recommendations for reform. There are relatively few advocates for a more holistic approach. Significant strides in issues such as environmental pollution or anti-bribery standards have all come hot on the heels of major lawsuits or corporate scandals. Litigiousness means that US companies are also more fearful of signing up to aspirational standards such as the UN Global Compact, as they are wary of increased exposure to risk of litigation for noncompliance.
6) inbred ethics
US companies feel they have already internalised values. In large part, this is due to the litigious and rights-based culture referred to previously. Again, corporate philanthropy has a long and valued history in American business.
Although the US remains reluctant to move community involvement beyond its historic confines of paternal benevolence, many American companies have extended the reach of their involvement to issues of broader societal concern, such as the original Sullivan Principles on investment in South Africa. The prevailing sense, however, is that US companies are more concerned with satisfying internal audiences (employees) on questions of CSR performance, rather than taking up a quasi-governmental role of solving endemic social problems.
Insurmountable barriers?
As long as CSR proponents see the root problems of their creed to catch on in the US due to an American inability to ‘get it’, then hopes for rapprochement are thin. If CSR is to become a trans- Atlantic phenomenon then its European advocates will need to learn to speak to US companies in a language they understand, with an appreciation for the different home environment in which they operate. Companies on both sides of the pond have much to learn from one another. Should they be willing to do so, CSR will move from a creed with global hopes to a hope for global needs. Now, British or American, surely we all “get” that!
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