Why so-called corporate social responsibility is not the answer to our problems

WHAT’S your image of a socially responsible company? One that pledges not to pollute unnecessarily and donates a percentage of its profits to supporting vulnerable communities or habitats maybe? Better still, one that encourages its staff to volunteer their time to achieving this? Certainly one whose aims go beyond making a profit and are clear for all to see.

Welcome to the world of corporate social responsibility, or CSR. Born in an age of disillusion as to the proper purpose and conduct of business in the midst of the economic turmoil of the early 1990s, CSR is making a comeback now as another period of financial confusion besets ruling elites the world over with the limitations of their system and an even deeper crisis of confidence. But this time it is coming back with a vengeance.

One need not be a capitalist die-hard, announcing that “the business of business is business”, or suggesting that anything other than enhancing shareholder value is an aberration, to note a few problems and inconsistencies with CSR. On paper, of course, who could possibly oppose companies that think beyond the bottom-line and who put people and the planet before their profits – or at the very least on a more balanced footing?

But that would be to confuse the rhetoric about CSR with its content. Indeed, many of its original corporate supporters are no longer around today, suggesting they were better at talking the CSR talk than walking the CSR walk.

Right from its earliest inception the advocates of CSR were more interested in saving themselves than saving anything else. One of its proponents noted that a key area to examine was “the notion of business as the most important agent of social change, in an age when governments are redefining and limiting their own sphere of influence”.

In other words, as state leaders the world over became confused – in the immediate aftermath of the Cold War – as to their purpose and direction, so some, encouraged no doubt by a few disillusioned CEOs, sought to invest business with the role of social leadership instead.

But by arguing that there had to be a purpose to business beyond simply making a profit, the prophets of CSR slyly assumed that which had to be achieved in the first place – realising sufficient surplus to ensure their companies own employees were adequately rewarded in the first place.

What is notable about many CSR schemes is how much they focus their benefits elsewhere – typically on people without a voice (ideally in Africa) – or better still the dumb (animals), or the inert (the environment). Staff who, collectively, consciously and loudly fought for better wages were ignored. So British Airways could be commended for its social and environmental reports whilst facing down its workers in a series of strikes.

That way, businesses could patronise impoverished communities, eco-activists and their media groupies with token sums and gestures – rarely held to account or scrutiny – and at the same time encourage their staff to subsidise these schemes by volunteering their own time. That way, the real role and responsibility of government in achieving effective change was simultaneously overlooked.

CSR today is not significantly different, although it has added one ominously new element to its arsenal. Inspired by the supposed insights of behavioural economics, evolutionary psychology and neuroscience, its advocates want businesses to nudge us all into shape by selling us things that are held to be good for us, or teaching customers how to recycle their goods.

Mathew Taylor, chairman of the Royal Society for the Encouragement of the Arts, Manufacturing and Commerce (RSA), whose institution was behind the promotion of CSR in the mid-1990s through its Tomorrow’s Company Inquiry, is quite explicit about this. “The state has many competing objectives”, he laments, “and when it uses its power to nudge it opens itself up to charges of paternalism and social engineering”. He thus encourages businesses “to build on a relationship based on choice and consent, and in some cases a good degree of trust”.

Of course, in the process, the notion that choice, consent and trust, are qualities we should expect – if not demand – from government, gets overlooked. What gives businesses the legitimacy and authority to act on behalf of the people is never clarified – still less NGOs, which Taylor proposes should act as the “quasi-regulators” of business.

CSR has never been about doing good. It was, from the very beginning, a mechanism that a confused ruling class used to maintain its legitimacy and control in a disillusioned age. Today, combined with the fashionable, but sinister, new orthodoxy of nudge, it is more backward still. If we want to do good for other people, the planet, or whatever else we choose, it is high time we refocused our attention on getting the right government to do this, rather than expecting businesses to act as its prefect.

Dr Bill Durodié is associate fellow in the international security programme at Chatham House. He is speaking at the debate ‘Profiting responsibly? Business in the Big Society’ at the Battle of Ideas festival at the Royal College of Art on Saturday 29 October, sponsored by City A.M. www.battleofideas.org.uk.