Debating the future of CSR
I have just been to Italy. I went on a slow-paced Swiss train from cloudy Zurich past Zug and then over snowy mountains and on to sunny Lugano, Como and Milano before catching the high-speed train to Turin. There at the Industrial Union of Turin I debated Luca Poma about whether CSR was a human responsibility. Of course, I played the bad guy in contrast to Poma’s good guy persona.
Later Professor Toni Muzi Falconi and Professor Emila Costa joined us on a closing panel. Professor Falconi was usefully critical of us both. Professor Costa added another dimension altogether by outlining psychiatry’s latest insights into how to motivate and manage people.
I set about questioning some of the assumptions that underpin corporate social responsibility. My intention was to point out that more than ten years of serious investment in CSR had not restored corporate reputations and in fact had arguably harmed them instead.
My key point was that CSR makes claims that generate their own moral and reputational hazards.
Rather than take pride in the moral and social purpose of a firm’s business (let’s say oil or consumer goods) CSR often creates the impression that the core business has questionable merits. In contrast, the CSR programme supposedly makes up for that by giving the firm a human face. This in turn suggests that ordinary business is neither intrinsically human nor socially beneficial.
For example, BP once claimed to have gone “beyond petroleum” and to be on course to save the planet from the supposedly harmful business it was in.
I argued that all firms have an obligation (professional, moral and practical) to be honest. This, I said, is the ancient business of valuing probity: frankness, honesty, integrity, uprightness and sincerity.
Most of the reputational and ethical failure in the business world among bankers and other executives at Enron and so on has been in this area rather than in CSR. I said, BP’s beyond petroleum claim clearly failed the honesty test. Moreover as The Times’ editorial argued, massive executive pay raises in the UK are hard to justify through the prism of probity.
I agreed that I was advocating quite a narrow and inward-looking approach that prized self-examination and de minimus standards. But the key to managing reputations relies on setting realistic expectations about how much a firm can do and the least it must do.
I pointed out how CSR’s grand claims to planetary virtuousness had a demoralising impact on the very workers it was meant to inspire. I said in uncertain and tough times it was simply not convincing to say employees have two jobs: their own and another designed to save the planet (see Rosabeth Kanter’s SuperCorp 2009). I said such idealistic notions created a credibility gap between hype and lived experience that encouraged corrosive cynicism.
As an alternative, I argued that when it came to forging the future, PRs had a responsibility to help clients make a compelling case for economic growth. Though to clear the way we must first grasp that much of what passes for discussion around CSR today points in the other direction.
I said – and received a bit of flack for doing so – that CSR’s influence on discussion tended to undermine society’s efforts to improve our prosperity and affluence. I added that too much stress had been put on trying to connect with anti-corporate and anti-capitalist sentiments.
I criticised the mantra that less is better and that consumerism and greed were intrinsically bad. I criticised those who promote happiness over development. I made the case for supporting new technologies, innovation and massively increased energy generation. I pushed back on those in the audience who argued that profit-led growth was problematic and not morally defensible.
In contrast to Western pessimists, I pointed out that China and other economically dynamic regions of the world had no worries about the merits of profit and progress. The key challenge for the West, I said, was to workout how to compete with the countries we call BRICs.
Controversially I maintained that many popular CSR policies that called for costly regulatory restrictions on our economies, such as cap and trade carbon taxes, might have to be ditched.
While I accepted that CSR is sometimes good for the bottom line, I maintained that that is not an argument in its favour. Or rather, it is an argument about the expediency of CSR, whilst CSR’s real claim is to reach beyond expediency onto some higher plane.
Perhaps I should have said more clearly that I approve of the efforts that many PRs are making to drop the “S” in CSR (see here) because it removes some of the moral hazards associated with greenwash and talking nonsense.
I implied – but perhaps also not as clearly as I would have liked – that I respect PRs who prefer to talk about “sustainability” as an alternative to CSR because it captures ideas about future-proofing the firm. That’s got plenty of problems of its own, but at least it doesn’t claim huge moral virtue. Indeed, sustainability allows firms to put sustainable profitability at the head of all the competing sustainabilitities that different stakeholders advocate.
To avoid being misunderstood, again and again I made clear that I was not advocating for one moment that firms should be allowed to wantonly damage the environment, behave badly toward their neighbours or toward anybody else.
Nevertheless, some of the audience appeared to believe that I was some kind of fascist. One person accused me of supporting the use of child labour in China. People kept implying that those of us resistant to CSR’s charms were less moral and less attractive than those who backed it. But I replied, many businesses, for many reasons, are resistant to lumbering themselves with a wide social or moral remit. Many such businesses do great good and provide life-enhancing social benefits that they are proud to deliver. Such firms and institutions operate with authenticity and conviction.
I insisted on the merit of reminding everybody about the foremost layer of responsibility that firms have to society: probity.
Paul,
That’s an interesting wide ranging post. I’m not sure where to start.
I do agree with a lot of it, and disagree with some.
To me the breadth of CSR and the breadth of opinions on CSR is part of the problem. You have at one end of the spectrum those in the ‘high church’ who – as you mention – aren’t sure profitability is a good thing, and then those at the other end who want an open market free for all. As always the answer is somewhere in the middle.
I’m not sure the moniker matters, but personally I think of this more simply.
Commerical organisations have a responsibility to act responsibly – both in terms of legal requirements, but also ‘doing the right thing’. That’s not to say all organizations do, but that should be the expectation. We live in a more transparent (if not completely transparent) world and people have higher expectations – fuelled by the well known poster children of corporate excess.
Secondly organizations are inherently social, made up of people inside and people outside. Organisations should recognize that and commit to giving back, supporting the community and bringing some of their resources and expertise to address social and economic issues.
The reality is that for CSR to be sustainable, it must strategically align to the business. This is for two reasons, firstly it’s where the business can add most value, and secondly it’s where CSR can add value to the business – and there’s nothing wrong with that.
The complexity and breadth of CSR – or choose your own term – discussion confuses people. That’s why we see cause marketing positioned as CSR, it’s why we see people (often PR people) confusing philanthropy for PR or CSR.
It’s good to have these discussions and broaden what CSR is and isn’t – and what CSR can and can’t deliver for businesses and of course for society!
Tom
Tom, thanks for a very thoughtful comment.
You say: “The reality is that for CSR to be sustainable, it must strategically align to the business. This is for two reasons, firstly it’s where the business can add most value, and secondly it’s where CSR can add value to the business – and there’s nothing wrong with that.” I agree with you. Spot on.
It’s really a contradictory subject. On the one hand companies are by definition in their status meant to make profit. To combine that with being nice and having only good impacts in most or ideally every part of society is a very difficult challange that in a lot of businessmodels is just not possible.
I agree with you that these companies should probably better go for sustainability than CSR because the risk of not being able to do what they are claiming is quite high. In our company it’s a difficult challenge as well. We want to be as fairtrade as possible but as we have only a small size with limited budget the control of this is quite challenging.
Over the long term, I think more and more people do care what the companies they work for, or from whom they buy products, stand for. What they are doing for society is a part of making profit for their shareholders, delivering products for customers and providing jobs for employees.
Hello Paul, thank you for coming to Turin. Even if we think differently on many things, your contribution at the conference was invaluable. As I wrote to you privately, I think that people consistent with their own ideas, like you, are valuable. I apologize for my bad English, but I’m French-speaking (I recognize my limits!). We need to be clear: I do not agree with the CSR definition as “moral action”. If the company’s aim is to “look good” with journalists, it is not doing CSR, not elevated to a strategic dimension, but it is just doing “public relations” or greenwashing. The PR professional has often used CSR to do just that: get good press, image, etc.. This is not ok, it’s a waste of time, hypocrisy, and – finally – it is a boomerang. My motto with my clients is: “The company exists to make profits, and must do this as its main mission, without hypocrisy.” But I also think that there are many ways to make profits. This was also the title of the conference in Turin, where we wrote “there can be a business with a human face?”. In my opinion, this can and must exist, because – without hypocrisy – I wonder what kind of world I will leave to my son. This is not just theory, because only an idiot can say “I only care what happens here today,”: the law of profit at all costs with no barriers to ethical issues, gave us an unprecedented financial crisis. So, in the same vein, CSR’s wonder and concern is about what’s around us and it takes care of them. The environment, employees, pollution, future generations, they are stakeholders of a company: if the company generates damage, it has to compensate for that. If the company is the polluter, it can not just say “I don’t care: it is part of my business and that’s okay.” BP did not risk going bust because of CSR (which was only in this case – unfortunately – greenwashing): it threatened to go broke because it did NOT DO CSR, which would avoided the potentially environmental disasters it caused. BP was only interested in profit, not the effects of its actions, and this is unethical and it is not CSR. I said everything just to know that my spirit, as an Italian consultant on CSR, do not look good to my customers by donations to shelters for the poor children and other things like that. I believe in the possibility of a business with a human face, I think there might be a business model that keeps profits in agreement with the interests of the community, and I believe that this balance can and must be found.
I apologize if I can not respond further to your blog, but time is always very short. Thanks for your friendship, I hope to stay in touch with you.
Luca Poma (www.creatoridifuturo.it)
Luca, thanks for posting your remarks here. We will probably never agree fully on some of this stuff. But that’s to the benefit of others who wish to explore this issue for themselves.
Even though we have approached the subject from different perspectives, our objective is similar: we both oppose corporate irresponsibility. Moreover, we both accept that there is no single – one size fits all – solution/answer/strategy that tells firms how to view or do CSR in the real world. As you rightly say, there are many ways to do business and make a profit.
It was an honour and a pleasure to debate you in Turin.