Is CSR a delusion?

February 28, 2014

Charlie Ashford takes a look at a new book that claims to expose CSR as a sham – and asks where the future lies for responsible and sustainable business.

 

Remember when capitalism was in crisis? Five years ago, you couldn’t move for prophecies of impending doom. The credit crunch, we were told, had opened people’s eyes to the false promises of capitalism, and things could never be the same again.

The revolution hasn’t happened. But can everything really go back to the way it was before? A recent report by Oxfam revealed that the world’s 85 richest people are now as wealthy as the poorest 3.5 billion, and inequality is still rising. Meanwhile, report after report says that the world is still failing to combat the risk of climate catastrophe. The author Naomi Klein recently described the global economic system as “careening out of control”, accusing it of “[fetishising] GDP growth above all else, regardless of the human or ecological consequences”.

John Hilary, Executive Director of War on Want, agrees. In a new book, The Poverty of Capitalism, he argues that globalisation has “condemned the peoples of the majority world to mass poverty, and now threatens to do the same to those living in the core capitalist economies”. And as the world careens towards disaster, Hilary argues that corporate social responsibility (CSR) is greasing the wheels.

Hilary’s main target is the concept sometimes known as ‘shared value’ – the idea that the interests of business and society can not only overlap, but be completely aligned. Simply through business as usual, it is argued, companies are uniquely placed to tackle social or environmental problems. As one enthusiastic conference participant recently put it, “sustainability is the name we give to problems government can’t fix”.

For example, Coca Cola states that it can deliver vaccines to remote parts of Africa far more effectively than governments or NGOs. Unilever’s commitment to reducing deaths by promoting handwashing is done “not out of a sense of guilt or as a charity, [but] because when we do good for society it is also good for our business”. Vodafone says that it aims to transform societies simply by “bringing innovative products and services” to emerging markets.

Many would argue as to how far this concept can be pushed. “There’s a lot of things the private sector can do well but not everything,” said one Oxfam director recently, in response to the G8’s ‘New Alliance’ with big businesses. Hilary sees such initiatives as examples of companies “appropriating key roles of the state”. Using promises of responsible behaviour, he says, corporations trick governments into relaxing regulations, removing any barriers to their global expansion. Any loftier claims for CSR are dismissed as a “myth” and a “delusion”.

Some companies undoubtedly use CSR to “greenwash” unethical practices, but is it fair to tar everyone with the same brush? Many global companies are now disclosing their impacts and engaging with stakeholders in ways that would have been unthinkable even a decade ago. Last year’s tragic Rana Plaza factory collapse in Bangladesh exposed the gulf between lofty corporate policies and real-world practices, especially when it comes to complex global supply chains. But it has been followed by a concerted, legally-binding effort by over 100 corporations to work with local unions, the government and international NGOs to improve conditions.

NGOs are increasingly finding real value in engaging with the private sector. Far from accusing them of siphoning state power, Oxfam last year called on food companies to use their influence to change laws on land rights. Meanwhile, Greenpeace forest campaigners recently surprised some by shaking hands with executives from Asia Pulp and Paper. As Greenpeace UK’s Executive Director, John Sauven, put it, “We want to protect the environment… If businesses commit to doing that, I don’t see any problem shaking hands with them.”

However, for every future-focused, sustainable business, won’t there always be those just out to make a quick profit? Hilary’s basic argument – that unscrupulous companies have too much power – still carries a lot of weight. He lists historical wrongdoers such as United Fruit and Union Carbide to show what happens when profit trumps all else.

I started to wonder who would go on the opposite list, and why. From Cadbury and Rowntree’s through to The Body Shop and Patagonia, these pioneering companies all have one thing in common – they have turned responsible business into business as usual.

This is the argument made by Jane Burston in a recent talk, Putting Profit in its Place1. When it comes down to it, she says, companies will always ultimately face a choice between maximising profit and doing social good. She argues that the solution is to deliberately compromise on profit – not as a PR stunt, not to appease campaigners, not even because it makes long-term business sense, but simply because it is the right thing to do.

Business models that put social or environmental goals at the heart of a company’s purpose are not only possible but legally defined, including through the UK Companies Act and the ‘Benefit Corporation’ legislation that has now been passed in 20 states of the USA. Certified ‘B-Corps’ already include Patagonia and Ben & Jerry’s. These companies still exist to make money, but have defined wider goals, to which they are held legally responsible by their shareholders.

Are we starting to catch glimpses of the future of capitalism? Call me deluded, but I think it’s a possibility.

Charlie Ashford is a Senior Researcher at Corporate Citizenship.

 

 

1 Jane Burston is also featured in this month’s Corporate Citizenship Briefing – click here for her article, Climate Change May Trigger the Next Financial Crisis

COMMENTS

  1. Chris Satterthwaite

    Having a positive social purpose and making profit as a consequence is the best possible way to make your profits sustainable.

    Reply ↓