As nice as it is to think that modern corporations can do well while also doing good, there are serious limitations that the market imposes on their CSR initiatives, says Deborah Doane in the Stanford Social Innovation Review. Mrs Doane is chair of the CORE (Corporate Responsibility) Coalition of over 130 NGOs, organizations, and individuals in the U.K., which is campaigning for reform of the corporation to consider social and environmental issues. The question is, she says, whether or not CSR has been promoting a strategy more likely to lead to business as usual than to tackling the fundamental problems of our time.
Source: Stanford Social Innovation Review
The Corporate Social Responisbility movement has grown in recent years from a fringe activity for some earnest companies, like The Body Shop, and Ben & Jerry’s, to a highly visible priority for traditional corporate leaders from Nike to McDonald’s. Reports of good corporate behavior are now commonplace in the media, from GlaxoSmithKline’s donation of antiretroviral medications to Africa, to Hewlett-Packard’s corporate volunteering programs, to Starbucks’ high-volume purchases of Fair Trade coffee. In fact, CSR has gained such prominence that the Economist devoted a special issue to denouncing it earlier this year.
Although some see CSR as simply philanthropy by a different name, it can be defined broadly as the efforts corporations make above and beyond regulation to balance the needs of stakeholders with the need to make a profit. Though traces of modern- day CSR can be found in the social auditing movement of the 1970s, it has only recently acquired enough momentum to merit an Economist riposte. While U.S. and European drivers for CSR have differed slightly, key events, such as the sinking of Shell’s Brent Spar oil rig in the North Sea in 1996, and accusations of Nike and others’ use of “sweatshop labor”, triggered the first major response by big business to the uprisings against the corporate institution.
Naomi Klein’s famous tome, “No Logo“, gave voice to a generation that felt that big business had taken over the world, to the detriment of people and the environment, even as that generation was successfully mobilizing attacks on corporate power following the Seattle antiglobalization riots in 1999.
Rather than shrink away from the battle, corporations emerged brandishing CSR as the friendly face of capitalism, helped, in part, by the very movement that highlighted the problem of corporate power in the first place. NGOs, seeing little political will by governments to regulate corporate behavior, as free-market economics has become the dominant political mantra, realized that perhaps more momentum could be achieved by partnering with the enemy. By using market mechanisms via consumer power, they saw an opportunity to bring about more immediate change.
So, organizations that address social standards in supply chains, such as the Fair Label Association in the United States or the United Kingdom’s Ethical Trading Initiative, have flourished. The United Nations partnered with business to launch its own Global Compact, which offered nine principles relating to human rights and the environment, and was hailed as the ethical road map for the future. And while socially responsible investment had been popular in some circles for years, eventually the mainstream investment community cottoned onto CSR: In 1999, Dow Jones created the Dow Jones Sustainability Indexes, closely followed by the FTSE4Good. All of these initiatives have been premised on the notion that companies can ‘do well’ and ‘do good’ at the same time – both saving the world and making a decent profit, too.
The unprecedented growth of CSR may lead some to feel a sense of optimism about the power of market mechanisms to deliver social and environmental change. But markets often fail, especially when it comes to delivering public goods; therefore, we have to be concerned that CSR activities are subject to the same limitations of markets that prompted the movement in the first place.
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