CSR: Substance or Spin?
1 September 2006 Robert Craven
Business strategist Robert Craven notes a renewed sense of anger among environmental campaign groups. They are growing tired of the corporate world apparently glossing over the cracks of environmental damage. Will this lead to tougher government regulation or can business truly regulate itself?
The corporate social responsibility (CSR) movement was born out of the environmental concerns of the 1970s and 1980s. Pollution (the Bhopal Chemical disaster, the Exxon Valdez oil spill, Chernobyl) and rainforest depletion all led to a recognition, at least among some, that the way we were managing the earth's resources had to change.
The Cadbury Report in 1992 was an example of this reaching the public agenda, as heads of state came together for the Rio Earth Summit (also in 1992) where the concept of sustainable development was promoted.
CSR was one of the biggest corporate trends of the 1990s – almost as big as the dotcom mania. And now it is an industry in its own right, with newsletters, websites, consultancies and job titles all steeped in the CSR 'ology'. But tensions arise over how CSR can, or should, be embedded into business culture.
CARROT AND STICK
Because governments have been largely unwilling to make companies address their own CSR impact, the movement has evolved as a voluntary code. But because it is a voluntary code, CSR initiatives are generally disconnected from wider frameworks. This lack of consistency or agreement about purpose or longer-term goals makes the results both fragmented and inconsistent.
The NGOs claim that this lack of compulsion is precisely what is wrong with the current approach to CSR.
Christian Aid is calling on politicians to take responsibility for the ethical operation of companies rather than surrendering to those from business peddling fine words and lofty sentiments. In their 2004 report, Behind The Mask, they name and shame the top ten brands that pay lip service to CSR while 'making things worse for the communities in which they work'.
DOES IT DELIVER?
In many cases the original 'radical' protagonists who fought so hard to get CSR onto the agenda now feel duped and conned.
They accuse firms of paying lip service to ideas of corporate citizenship, but when commercial interests and broader social welfare collide, profit seems to win every time. And when respected charities such as Christian Aid and Oxfam publicly display their disappointment, then maybe it is time for the public to step back and consider what has actually happened.
The Economist has argued that the CSR lobby has made big business appear more responsive, yet it seems that the lobbyists have been fighting an enemy they don't fully understand.
Before you can improve capitalism you first need to understand it and the thinking behind CSR hasn't always taken this on board. Many charities and advocacy groups hadn't figured out whether big business was part of the problem or part of the solution.
Until this is sorted out in their own minds, the lobbyists will be a fragmented force who will lose political power when fighting the might and muscle of the multinationals who see their prime objective as increasing shareholder value on a year-on-year basis.
Do manufacturers with appalling CSR records even suffer any damage? Nike, for example, was one of the key targets of the CSR campaigners, yet there is no specific evidence to show a direct correlation between pressure group activity and a slowdown in sales and share prices, in spite of acres of anecdotal evidence.
CSR became a mission because traditional government action was deemed to be ineffective: orthodox politics was viewed as a sham by activists such as Naomi Klein (author of the influential No Logo), so pressure had to be brought to bear on the companies themselves.
Ten years later, instead of celebrating a great victory, the disenchanted NGOs are coming to regard CSR as an even greater sham. And now they are asking the governments to step in and sort out the companies.
What are the consequences of this ambiguous situation? Firstly, it dilutes the arguments of the pro-CSR lobby. Secondly, it strengthens the resolve of the anti-CSR lobby to ignore them. And thirdly, it demoralises those companies trying to be more ethical, as they are viewed with no more trust than if they'd done nothing at all.
If CSR really is the Holy Grail, then what we are looking at is simply a business version of The Da Vinci Code – at best a great story, but badly executed, and with little concrete evidence to support its case.
Christian Aid supports responsible and ethical action by business. The problem, they and their colleagues argue, is that CSR is unable to deliver on its grand promises.
Their report states that "the corporate world's commitments to responsible behaviour are not borne out by the experience of the many who are supposed to benefit – in some cases the story and the reality are simply contradictory!"