The BP oil leak and the meltdown of the global financial system were enabled by a harmful force: corporate social responsibility.
So writes Chrystia Freeland, global editor at large for Thomson Reuters, in yesterday’s Washington Post.
Ms. Freeland argues that CSR “muddies the waters,” distracting companies from their core goal of maximizing profits and persuading government officials that businesses are doing the right thing and don’t need much regulation.
Others who write about philanthropy and corporate social responsibility are taking issue with her argument.
Matthew Bishop, an editor at the Economist and co-author of a book on philanthropy, says that there is no evidence that the corporate social responsibility programs of BP and Goldman Sachs — two companies singled out by Ms. Freeland — played a part in the oil and financial crises in which those companies have been embroiled. Yes, BP’s espousal of corporate social responsibility might have bought the firm a little time, Mr. Bishop says, “but there is no suggestion this led the firm to think it could get away with anything.”
“Rather than justifying Christia’s dismissal of CSR, the failings of Goldman Sachs and BP underscore the need for firms to take their engagement with society more seriously, and to put being on the right side of social progress at the core of their long-term profit-making strategy,” says Mr. Bishop.
Alice Korngold, an expert on boards who writes for Fast Company, agrees, saying that corporate social responsibility “isn’t the problem, it’s the solution.”
Chris Jarvis and Angela Parker, of the Canadian consulting firm Realized Worth, write that Ms. Freeland doesn’t understand corporate social responsibility. BP’s problem wasn’t that it was practicing corporate social responsibility, say Mr. Jarvis and Ms. Parker, but that the company was practicing “false marketing.”
What do you think?
– Caroline Preston
2 Responses to Corporate Social Responsibility: A Force for Good Or Ill?
81145291 - July 20, 2010 at 7:43 pm
Corporate social responsibility (CSR) and profits are not mutually exclusive. In fact, many companies are starting to use their business acumen toward addresses critical social and environmental needs. For more reading on this topic, I suggest: Big Business, Big Responsibilities (Palgrave Macmillan 2010)–a new book coauthored by Dunstan Allison Hope of BSR, Andy Wales of SABMiller, and Matthew Gorman of BAA Ltd– that challenges popular perceptions about the role of global business in solving the world’s greatest problems, arguing that companies can take the lead in solving poverty, addressing climate change, and protecting human rights.
kevinthomas - July 22, 2010 at 9:05 am
First, CSR is often a thinly-disguised marketing initiative. Sort of like sponsoring Olympic figure-skating, or getting a sticker on a NASCAR vehicle – but with a positive lasting impact beyond the entertainment of the spectators. I doubt that anyone would argue that marketing is theft of shareholder resources.Second, these initiatives aren’t hidden. On the contrary, annual reports proudly proclaim the CSR efforts and outcomes. So if an investor buys stock in a company, then the investor knows (or should know) about the CSR efforts, and can buy stock in a different company if CSR spending is considered excessive. The same is true of unwise expansion of operations, corporate political contributions, executive salaries, or hiring binges. Given the liquidity of stocks, there’s little public policy reason to clamp down on CSR, at least for publicly-traded companies.