Companies invest heavily in protecting their reputation and ensuring society’s expectations are met. Is this corporate social responsibility or simply a smokescreen?
Big business stalks the corridors of power lobbying for liberal trade policy, flexible labour laws and benign tax regimes. It tends to get what it wants.
Accountants earn hundreds of thousands of pounds from multinationals employing bewildering techniques to move profits around the world so big business pays society a fraction of what it should in tax.
Companies also employ staff to protect their reputation and ensure society’s expectations are met. This is corporate social responsibility. The question is whether CSR is a smokescreen.
George Monbiot, author of Captive State
The purpose of corporate social responsibility is to avoid regulation. It permits governments and the public to believe that compulsory rules are unnecessary, as the same objectives are being met by other means. Of course, the great advantage of voluntary rules is that you can break them whenever they turn out to be inconvenient.
A recent report by a coalition of environmental and human rights groups, showed that a contractor working for BP, was breaking many of the rules the parent firm had set for itself. In developing the Baku-Ceyhan pipeline, it had failed to consult local people, misled them about the associated risks and was planning to compensate only a minority of those affected.
It’s obvious that we cannot rely on trust. Like any other social actors, corporations will get away with whatever they can.
CSR is a public relations device designed to throw sand in our eyes.
Digby Jones, director general of the CBI
British business has so much to be proud of. Some of our top performing companies are leading the way when it comes to corporate social responsibility. They quietly put a great deal back into areas in which they do business through a myriad of special community projects both at home and abroad.
They do it, not because it’s tax deductible or they want thanks or the publicity, but because they are socially aware and want to do something ‘special’. But there are still so many businesses that don’t do enough. To them I say two things: firstly, CSR is good for business; the 21st Century employee and consumer wants to relate to a company that believes in ‘putting something back’.
Secondly, no matter how much you think you have succeeded in business, if you have razor wire on your boundary fences, and live in fear of being mugged because you have failed to take everyone in society along with you, success is an illusion.
Steve Tibbett, head of campaigns at War on Want
When companies don’t even fulfil basic tax obligations it’s difficult to argue that a few recycling schemes and charity donations make up for the loss of at least $50 billion in tax revenues.
After years of co-operation, there is now a major rift between development campaigners and big business. Profit dominates any relationship with business and developing countries cannot rely on corporates to deliver an end to poverty. Washington’s incestuous relationship with business hasn’t helped.
So what now for CSR? Corporate Accountability, rather than Corporate Responsibility, is the new game in town. We want to know what corporations are up to, figure out what they should and shouldn’t do, and hold them to it. This, ultimately, is about democracy.
Big companies have repeatedly failed the poor because the poor have no money. Companies can’t really be blamed for this; it’s simply not in their immediate interest to help liberate people from poverty. Governments are there to set the boundaries and global business regulation has to be the goal for those who want to achieve real gains.
Regulation is now firmly on the international agenda. The OECD, EU and UN have all nodded in this direction and NGOs have rallied round to back moves to make this happen. Progressive business is welcome to help, but it must do so on the basis that social goals rather than business ones should have primacy.
Ella Joseph of centre-left think-tank IPPR
What is a responsible organisation if it’s not one that treats its employees equally, regardless of race or gender? Corporate social responsibility may have entered our national vocabulary, but it has not taken root in our consciousness.
Women, on average, are paid 82 per cent of male salaries. Four in ten FTSE100 companies have no women directors. Only 1 per cent of non-executive directors are from ethnic minority groups.
IPPR’s research shows that three-quarters of directors have an ‘equal opportunities’ policy, but less than half have the information necessary to evaluate whether it’s effective. After a decade of sustained economic growth, we still need corporate commitment to the most basic social and environmental causes.
Government must take a stand on corporate social responsibility and start driving the agenda rather than insisting it will be ‘business-led’.
A good start would be to articulate priorities for voluntary corporate action. A second step would be to ensure companies disclose their core social and environmental impacts.
Directors consistently say market pressure is pivotal in changing boardroom attitudes. Government intervention, like mandatory reporting, can facilitate a voluntary response.
Equality, diversity and environmental sustainability cannot be dismissed by companies as optional. Where it prioritises change, Government must be clear that its taste for voluntarism is finite.
Dr Chris Tuppen, BT Head of Sustainable Development and Corporate Accountability
Consider the hypothesis that business is out to maximise short-term profit no matter what. That any corporate protestations of social responsibility are exactly that – no more than protestations – PR spin dressed up as global citizenship. This singleminded focus on profit ignores the fact that companies still need to respond to societal expectations.
Profit is naturally the lifeblood of a business, but would people want to work for a company that deliberately set out to exploit its workers for maximum productivity at minimum reward? Would customers wish to do business with a company that was abusing human rights down its supply chain or polluting their neighbourhood?
Of course not. And this is why part of CSR is about understanding and meeting societal expectations – keeping a licence to operate through stakeholder dialogue and reputation risk management.
And if there’s value in that, could there not be business value in going further? Not just protecting reputation, but actually building it through a pro-active programme of CSR?
At BT we believe that we cannot achieve a sustainable reputation based on PR spin. It has to be based on substance.
Stephen Timms, CSR Minister
We need to understand much better how progress on social, environmental and economic goals can be mutually supporting. Corporate social responsibility is about organisations in the UK being aware of the economic, social and environmental impact they have, ranging from the local to international.
For business, socially responsible behaviour can help build brand value, foster customer loyalty and attract and retain the most able employees. For society, it has the potential to address some of the toughest challenges we face.
However, there is still some cynicism around CSR, as it can be seen as a PR smokescreen for companies to hide behind. The litmus test, therefore, is the impact it has on real people in real situations.
Government’s aim is to encourage the generosity and imagination that is making a success of CSR in the UK, to help transform it from being seen as an ‘add-on’ to being a core part of business practice. And it is not a luxury that only large companies can afford, but something firms of all sizes should be involved in, for their own benefit and the benefit of others.
CSR offers a new model for building a strong society alongside our strong economy.