Corporate Social Responsibility (CSR) is supposed to be win-win. The companies make profits and society benefits. But who really wins?
[1] Jeff Collin, London School of Hygiene and Tropical medicine, cited in Behind the mask [2] David Miller 'Unspinning the globe' [3] Echo Research, CSR reaches top table of global business and political leaders www.echoresearch.com/echo_zones/press_area/press_release/csr2_pressrelease.htm visited 16/6/05 [4] www.foe.co.uk/resource/reports/red_tape_to_roadsigns0.pdf [5] Per comm, through focus group session with NGO workers engaging in dialogue with companies. [6] See 'Green Backlash' – Andrew Rowell and John Stauber & Sheldon Rampton Toxic Sludge Is Good for You!: Lies, Damn Lies and the Public Relations Industry, Common Courage Press, 1995. [7] UNRSID
"If corporate responsibility did not already exist then BAT [tobacco firm] would have to invent it... It's what BAT and the industry need in order to rehabilitate itself to make itself acceptable to investors and governments and to resist more regulation." [1]
Jeff Collin, London School of Hygiene and Tropical medicine
Corporate Social Responsibility (CSR) is supposed to be win-win. The companies make profits and society benefits. But who really wins? If there is a benefit to society, which in many cases is doubtful, is this outweighed by the losses to society in other areas of the company's operation and by the other gains the corporation is able to make as a result? CSR has ulterior motives. One study showed that over 80% of corporate CSR decision-makers were very confident in the ability of good CSR practice to deliver branding and employee benefits[3]. Corporate philanthropy is rarely altruistic. When corporations make donations to charity they are giving away their shareholders' money, which they can only do if they see potential profit in it. They may want to improve their image, to exploit a cause for advertising, or to counter the claims of pressure groups, but there is always an underlying financial motive.
"Like the iceberg, most CSR activity is invisible... It is often an active attempt to increase corporate domination rather than simply a defensive 'image management' operation." [2]
David Miller 'Unspinning the globe'
As Deborah Doane points out in 'From Red Tape to Road Signs', CSR enables business to claim progress despite the lack of evidence of verifiable change.[4] Similarly a 2004 survey of media coverage by Echo Research found that journalists dismissed a majority of CSR reports as 'self-congratulatory' and full of 'unsupported statements and claims. So much of the business case for CSR depends on corporations being seen to be socially responsible, that since perceptions are the key concern rather than sustainability, it is easier and cheaper to spin than to change.Most CSR workers in companies sit in the communications and PR departments[5], The strategies of CSR: - dialogue with NGOs, codes of conduct, social reports - were all designed and developed by PR companies such as Burson-Marsteller, E.Bruce Harrison and Hill and Knowlton[6].
Many CSR activities can be defined as public-private partnerships (PPP), a common euphemism for privatisation. This cover the projects where companies pool their resources with governmental or civil society organisations[7]. Examples include running community development projects, sponsoring school playgrounds or providing healthcare. These projects blur the boundary between the role of governments and the role of companies. As Nigel Twose from the World Bank Group put it, 'with the private sector increasingly centre stage, questions are being raised around prior assumptions that global public goods can only be tackled (ethically and practically) by the public sector.' CSR shifts the ground towards privatisation, it makes the government/corporate relationships acceptable, generates contacts and builds trust and reputation, to smooth the transition towards private ownership and control.
CSR ISN'T A SUSTAINABLE SOLUTION
1. CSR as a tactic will only last for as long as it is good business.
2. Many companies have reneged on their CSR commitments when they have hit financial problems. For example, Littlewoods pulled out of the Ethical Trading Initiative and disbanded its ethical trading team when it was bought out by L. W. Investments Ltd in November 2002.
3. The long-term profitability of CSR is probably over-hyped. As other companies get in on the game, CSR will no longer give the 'leaders of the field' an edge. Once CSR is no longer flavour of the month with investors will companies continue to care?
4. The corporate mindset is very short-termist, with profits increasingly being announced quarterly. Apart from pension funds, which look for a return on investment over the long term, the quarterly results are the key benchmark of corporate performance. This leaves little room for investment in long term shifts towards more sustainable modes of operation.
So is CSR just a bubble that will imminently burst? Unless the corporate structure is changed so that companies are able to act on the basis of what is good for society, or unless corporate power is reined in through effective regulation, then the idea of corporations acting responsibly will inevitably fall off the agenda once it is no longer profitable.
This is an edited extract from Corporate Watch's forthcoming report on Corporate Social Responsibility.
References[1] Jeff Collin, London School of Hygiene and Tropical medicine, cited in Behind the mask [2] David Miller 'Unspinning the globe' [3] Echo Research, CSR reaches top table of global business and political leaders www.echoresearch.com/echo_zones/press_area/press_release/csr2_pressrelease.htm visited 16/6/05 [4] www.foe.co.uk/resource/reports/red_tape_to_roadsigns0.pdf [5] Per comm, through focus group session with NGO workers engaging in dialogue with companies. [6] See 'Green Backlash' – Andrew Rowell and John Stauber & Sheldon Rampton Toxic Sludge Is Good for You!: Lies, Damn Lies and the Public Relations Industry, Common Courage Press, 1995. [7] UNRSID
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