The DEARTH of Corporate Social Responsibility
The responsibility of companies, corporations and institutions to their stakeholders is probably more important today than ever before. This is because the lack of responsibility in so many of our largest companies in recent years has thrown the whole issue of market freedom into question. Even the limited version of responsibility, beloved by Milton Friedman, where the only responsibility of companies is to their shareholders, has been undermined by the crash of shares, bonds, titles and, in some cases, the total loss of pension funds and savings from Wall Street to Iceland, and from Antigua to the City of London.
As our politicians and press speculate about the future model of our economies, and ‘more of the same, but better' remedies emanate from the April, 2009 G20 world leader's conference in London, where are we?. Should we follow either a socialist (aka communist) or a market (aka capitalist) agenda? Currently, a third way of responsibility with a mix of socialist and market principles is attractive as Eric Hobsbawm argues (cited above.)
Yet companies have lurched against responsibility as exemplified by their seeming move to embrace ‘corporate sustainability' or ‘corporate citizenship'. This is aided and abetted by the ‘think-tanks' of change such as the consultancy SustainAbility or The Global Reporting Initiative. If either embrace the tenets of strategic CSR[3] then perhaps we should worry less. But it does appear that those who embrace the last two ‘phrases' have lurched either toward more environmentalism (sustainability) or more community involvement either at home or abroad (citizenship).
Now there is nothing wrong with being concerned with either of the latter two issues. A strategic approach to CSR includes both of these as part of its overall systems approach. So has CSR been rejected too soon?
CSR rejected?
Curiously, the increased need for ‘responsibility' comes at a time of a perceived tiredness with the concept of CSR. The rush into CSR in the 1990s was led mainly by environmentalists who had seen a useful concept to use in a world that eagerly and continually searches for new concepts. Further, when CSR is defined as 'treating the stakeholders of a company in an ethically responsible manner' it provides a powerful systems tool to managing a company.
Perhaps the problem is the word “social” as companies may believe that this means socialism through the backdoor? Clearly, on first sight, it seems to exclude economics and the environment. But then, do not Economics faculties in our main universities come under the heading of social science? And can we deal with environmental problems without their economic roots? Of course not!
I think we would all love a 'new' term that describes all that succinctly. CSR has survived because it, as I define it [5], has concentrated minds on all key stakeholders and how they are treated by a company or entity. Yet, when people start saying goodbye to concepts without defining them, as many have done with CSR recently (eg the overly dramatic 'death' of CSR in The Financial Times and an earlier critical piece in The Economist, subsequently reversed) perhaps these concepts have more mileage left in them? For instance, many have predicted the 'death' of GDP as a concept because the growth it purports to measure does not capture such things as 'intangible' assets, environmental protection and so on.
Companies, or at least some of them, are now delighted that new terms allow them to forget the stakeholder model that covers such knotty issues as corporate governance, employee layoffs, supply chain standards, customer concerns, corruption etc and allow them to concentrate on such things as 'corporate sustainability' (i.e. long-term environmental issues) or 'corporate responsibility' (which is what they do already).
A VP of Unilever, who looks after these issues, confirmed what I suspected: that many companies switched too quickly over to 'sustainability' issues and ignored the social and economic ones and he felt that a re-alignment towards 'social responsibility' was sorely needed[6].
A truly independent and forward thinking advisory company, such as MHCi, can best serve companies by not being a slave to them and giving them a 'get out of jail for free' card, but to help them honestly and critically to deal with all their stakeholders so that the 'responsibility' crisis of the present, and the future, can be avoided and their reputation and business model be reinforced. [...]
To read the entire article visit MHCinternational.com
Posted by on 04/27 at 03:11 PM