September 2004

Irritated by CSR


Michael Hopkins

Irritated Me?

Maybe I get irritated too easily. But too many reports suggest we are in the third generation of this or fifth wave of the other. Helps to sell books and, salve criticising helps to promote oneself and ideas – obviously this short article is no exception.


Of course, sick my irritation increases because no-one defines what they are talking about as we meander from CSR to corporate responsibility, to corporate citizenship to corporate sustainability and so on. Are these terms thrown at us by companies who want to move the goalposts while claiming to be terribly responsible, or NGOs who wish to steal an advantage in the market for funds?


Global Compact and Sustainability’s Gears

For instance, a recent contribution to the welcomed, but flawed, UN Global Compact debate was ‘From corporate responsibility to good governance and scalable solutions’. Just a minute, I thought, was not corporate responsibility about good governance, well even George Bush said that a year or so ago? To add insult to injury we also get in the UN report waves, or this time gears – first gear is to comply with emerging social agendas, second gear is volunteer, then on through the gears to partnership and then integrate or embed. Finally, fifth gear is re-engineer so as to ‘comply with the Global Compact’. Eh? The UN Global Compact has ten principles of which four are labour related, and have nothing about corporate governance. The principles are not universal and would be well placed in the first gear.


Well, let’s try and get out of this tangle. There is no doubt that companies are moving along a CSR agenda but it is early days. In a 100 years time there is not much doubt that companies will be around but in vastly different shape than today. Social responsibility will be embedded simply because companies wont survive otherwise. Countries and their populations, too will be socially responsible simply because we wont have a world otherwise. If we take a hundred year view presumably we shall be in the 75th wave by then or will cars (if they exist) have 75 gears?


CSR is a systems approach

The attraction of CSR is that it is a systems approach to the issue of business in society. Many of the criticisms, as will be seen, stem from problems with concepts and definitions. Now business, in general, is more concerned to stay in business and be profitable than to be concerned with such seemingly academic discussions. This is unusual, since business is usually a stickler for detail – a company can hardly prepare accounts, sell pharmaceuticals, computer software, copper tubing or whatever without knowing exactly the definition of the product they are selling.


Yet, somehow, management concepts are manipulated at ease to fit in with some pre-conceived notion or other that will please the chairman or some shareholders. This translates into a confusing set of definitions for the same concept. This confusion leads to a proliferation of concepts in the business in society area – corporate sustainability, corporate citizenship, corporate responsibility, business responsibility, business social responsibility, business reputation, the ethical corporation etc.


I consider CSR to be a systems approach that takes into account both internal and external stakeholders. Others confuse a systematic view of CSR by including a crucial word in its definition that implies the process by which CSR will be achieved – namely the word ‘voluntary’. In the latter case both the ILO and EU include the word ‘voluntary’ in the definition of CSR. But whether CSR should be voluntary or be subject to some form of legislation is a matter of intense debate – in an earlier monthly feature on this issue I argued that the discussion is not either/or legislation but somewhere in the middle. I would at this point not include a process that is so controversial in a definition.


CSR definition

There are, of course, a number of criticisms of the CSR movement but, before listing these, let me give a definition on what I am talking about.


The CSR definition that I find most appealing is the stakeholder definition:


CSR is concerned with treating the stakeholders of the firm ethically or in a socially responsible manner. Stakeholders exist both within a firm and outside. The aim of social responsibility is to create higher and higher standards of living, while preserving the profitability of the corporation, for its stakeholders both within and outside the corporation.


This definition, of course, begs the question on what is meant by ‘ethical’ and what is meant by ‘stakeholder’. Without going into a long discourse on ethics, ethical behaviour is clearly in the eye of the beholder and, like beauty, we know it when we see it but find it difficult to define. Who the stakeholders of a company are has also sparked intense debate but, at minimum they include those both within the company: the board of directors, shareholders, investors, managers and employees; and those outside the company: suppliers, customers, the natural environment, Government, and local community.


CSR criticisms

The many criticisms of CSR are channelled, into six essentially different statements. In brief they are:

1. CSR is just part of public relations to bamboozle an increasingly sceptical public.

2. CSR is just another word for corporate philanthropy and that the contribution which a business directly makes to the welfare of society (or ‘the planet’) is to be viewed as largely independent of its profitability.

3. CSR is misleading as it diverts attention from key issues, it is a curse rather than a cure

4. CSR ignores development economics and its concerns with capitalism, neo-liberalism and, anyway, is just a proxy to introduce socialism through the backdoor.

5. The social responsibility of business begins and ends with increasing profits. CSR is an unnecessary distraction.

6. CSR is sham because companies cannot be left to self-regulate.

I have looked at each of these concerns in more detail elsewhere.


But I am still irritated!

Returning to my opening remarks, the otherwise excellent BSR (Business for Social Responsibility) seems to have fallen into the same trap of one stage after another. Its November annual conference is based upon the premise that ‘Many business leaders have moved beyond the basic need to justify the incorporation of greater corporate social responsibility (CSR) into the way they manage their enterprise.’ If true this is welcome news and perhaps we could be moving into a new phase of CSR. But don’t let’s jump the gun.

Remember, that CSR is not a new concept, but one that has rapidly come to prominence in the past few years with hardly a day going past without a new report on CSR by a leading company, international organisation, NGO or journalist. But, given the above criticisms, is CSR here to stay or will it disappear into the mists of time as just another fad? More likely than the latter is that CSR will transform into different concepts but not disappear entirely. Since the realm of business in society is so crucial, CSR and its entrails will eventually become embedded in all organisations rather like the concern with the environment is becoming right now. Consequently, by the time a hundred years have passed, there will be less talk about CSR simply because it will become just part of routine daily operations. Phase 93 or gear 87 will finally have arrived but, of course, the gurus of that future time will be back to the irritating habit of counting phases on the fingers of one hand.

[Thanks to comments on an earlier draft by Ivor Hopkins]



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