Corporate Social Responsibility DiscussionAugust 12th, 2009 by Elizabeth Ulion
Corporations are beholden to their shareholders. They exist to make a profit. For this reason what good can a corporate social responsibility statement or plan really do?
“Managers should try to act more responsibly. But they should not expect the market to necessarily reward them–or punish their less responsible competitors,” stated a 2008 Forbes article. While many have claimed that a socially responsible company will do better in business there has been little evidence to support this across the economy. ““Part of the reason why CSR does not necessarily pay is that only a handful or consumers know or care about the environmental or social records of more than a handful of firms,” said David Vogel, a professor at U.C. Berkley’s business school. The public is more concerned with price, convenience and quality when purchasing products.
Even those who are aware of the impact a company has on the world will find it extremely difficult to find a completely responsible or irresponsible supplier of their needed wares. An example given by Vogel was Merck. The pharmaceutical giant “has been widely applauded for its development and free distribution of a drug to cure river-blindness, a dreadful disease which affects tens of millions of the world’s poorest people. Yet this same company withheld important information regarding the safety of its highly profitable drug Vioxx.”
While it’s always nice to hear about a company building green or donating to charities for many corporate social responsibility is more about what the company does not do. Betsy Atkins , CEO of Baja Ventures highlighted what CSR should focus on:
–Transparency in financial reporting
–A quality product, not misrepresented through marketing
–If something about the product endangers the consumer, be forthright and let the public know
–Do not use predatory practices in offshore manufacturing, such as child labor.
–Do not pollute your environment or other environments, and adhere to laws and regulations.
–Be respectful, fair and open in your employment practices.
- The market can deliver both short-term financial returns and long-term social benefits – the interests of businesses are often at odds and responsible investment is unlikely to pay off as quickly as the stock market requires
- The ethical consumer will drive change – again, consumers are looking for price and convenience, just look at Wal-Mart
- There will be a competition to be the most ethical business – often CSR is just good PR without any incentive for changes in behavior
- Countries will compete to have the best ethical practices – competitive pressure for foreign investment has created a system where less stringent for human rights standards or environmental regulations attract more investors.
What do you think? Yell it out at SocialYell.com! Or in the comments below.
Elizabeth Ulion is a graduate student at Northwestern University.
Photo courtesy of Office Now/Flickr.