The World Business Council for Sustainable Development (WBCSD)
celebrated the launch of the 'Walking the Talk' book giving an up to
date exposition of the business case for corporate social responsibility
with a debate - an event bringing together the most eloquent sceptics
to face two of the book's authors for a no-holds barred contest.
Phil Watts, chairman of Shell, kicked the session off. He reflected that the Johannesburg summit had seen business to be part of the solution on the agenda of sustainable development, in complete contrast to Rio ten years earlier when it had been seen purely as part of the problem.
Watts said that these issues were difficult to face - they are about how you do business, not about peripheral matters, such as philanthropy. From Shell's point of view, the business case benefits of corporate social responsibility included the attraction and retention of key talent, the cost reductions available through eco-efficiency, risk reduction, the attraction of customers and enhanced reputation.
Business, he said, is not separate from society and cannot stand apart from it.
David Henderson, author of 'Misguided Virtue' led for the sceptics. He suggested that the case for the sceptics had been misunderstood by the authors of 'Walking the Talk'. He said that he had two main points to make.
Firstly, corporate social responsibility depended on a distorted view of the issues. The state of the world was simply not in the crisis that corporate social responsibility advocates liked to suggest, requiring business to step in as saviours. The rhetoric was alarmist, and the role that business could take seriously overstated.
Secondly, he suggested that the widespread adoption of corporate social responsibility would bring questionable social benefits at considerably higher cost. In addition, the movement meant that businesses conferred upon nongovernmental organisations (NGOs) a status to which they had no right.
Chad Holliday chairman and CEO of DuPont seconded for the authors. As far as he was concerned, the corporation was the same as the people - and one of the principle issues for corporate social responsibility was how these people feel about where they work - and what motivates them.
The suggestion, he said, that shareholders as the owners of business only care about maximising short term returns was simply not true. Most shareholders are concerned for long term sustainable profits - as well as being citizens in their own right.
DuPont had had its wake up call twelve years ago, since which it has started to train people to think differently. As a result, those people regularly spot new opportunities and new ways of working that move the company forward in its objectives.
That wake-up call came in the form of the occupation by Greenpeace in the US of their major plant, where they draped a banner proclaiming 'Dupont - No1 Polluter'. Notwithstanding the fact that, from the road, all the passing motorists could see was 'DuPont - No 1' the company realised that the description had been literally correct - and they had to address this.
Martin Wolf from the Financial Times concluded for the sceptics. He sought to turn the argument around saying that he had no problems with the idea that there was a business case for corporate social responsibility - in these cases it was simply mislabelled, since it was really just intelligent profit maximisation. He had much of an issue with the question of whether there was a social case.
The standard definition of sustainability, he said, contained values that are highly subjective, and needed to be decided by a political process not by businesses. He questioned whether private companies could ever successfully provide public goods when there are real externalities - costs that are currently exported to society as a whole, such as pollution - that would make the business unprofitable if internalised. He used the example of Ford, that has acknowledged the environmental undesirability of SUVs, and yet is caught by the fact that these vehicles are the major growth area in the US vehicle marketplace.
He was concerned about unintended consequences when businesses took actions based on good intentions. For instance, pulling out of using cheap labour in developing countries could deprive communities of much needed wealth, and leave only worse alternatives for the people who are made unemployed.
A few comments: It was refreshing to have some vocal and eloquent criticism of corporate social responsibility since too often these events are merely an excuse to preach to the converted. And it was intriguing to have this turned around to focus on whether the social responsibility of companies really has the role to play that is often taken for granted.
Nevertheless, the arguments of the antis remained unsatisfying.
Whilst it is fair enough to seek evidence of the positive impact of business action, there are plenty of case studies out there that seem to provide bona fide material showing the outcomes from well-considered skilfully implemented corporate social responsibility. One does not have to be anti-csr to point out that poorly considered badly implemented actions can backfire, but then that rather holds true for any other aspect of managing a business.
The apparent case that CSR would generally lead to negative outcomes was simply not evidenced at all. The only real telling point was the general democratic consideration that issues of public policy should not be province of business decision makers, but a democratic, accountable process. There is a basic truth here, that nevertheless doesn't tell the whole story.
At the lower level, corporate social responsibility simply demands that powerful companies take responsibility for the consequences of their actions. The idea that 'unintended consequences' flow from well meaning actions, but never from the pure pursuit of profit is rather bizarre. And the suggestion that sufficient action can be required of business through regulation put in place by competent government does not seem to be borne out by recent history in this area. Take, for instance, the total failure of governments to collaborate successfully to preserve the sustainability of fishing livelihoods.
So multinational businesses, who operate in a sphere where they have major international impact, have noticed only too well the shortcomings of global governance. It is right that they cannot step in simply to fill the gap without creating a democratic deficit, but there is no doubt that their position cannot simply be to ignore the problems and pretend they have no role to play as corporate citizens.
One fascinating comment was the one about how corporate social responsibility made NGOs of more significance than they merited. There is a serious question here. Certainly in my experience, there are companies who focus on corporate social responsibility because they see a range of issues to which they need to respond - and then there are those who engage with it because there is a general fear of the power of campaign groups. Since campaign groups will ultimately be unsatisfied by business-led CSR, the latter group are on an unstable footing.
An Article from Business
Respect, Issue Number 43, dated 17 Nov 2002
By Mallen Baker