Corporate Social Irresponsibility

Corporate Social Responsibility passed a milepost of sorts three years ago. That was when the Economist found that CSR had gained enough support to qualify as a movement, though one without much depth beyond the level of ideas. As the news weekly wrote in its January 22, 2005, issue, for most companies “CSR is little more than a cosmetic treatment…[which] goes on each morning, gets increasingly smeared by day and washes off at night.”

Its judgment in 18 pages on ”The Good Company” was clear: “Better that CSR be undertaken as a cosmetic exercise than as a serious surgery to fix what doesn’t need fixing….It is important to resist the success of the CSR.”

Well, the Economist has just taken a new look at that movement, and finds not only that “CSR is booming” but that it “is now seen as mainstream.” On balance, the 13-page analysis in this year’s January 19 issue is more positive than negative about CSR. Indeed, some sections of the report amount to rationales for CSR, often under other labels, such as “risk management,” “enlightened self-interest,” and “just good business.”

Perhaps the most significant finding of the report is the fact that “the biggest problem that many companies have to deal with is something that has sprung from globalization”: specifically, the risks connected with managing the global production and distribution chain that stretches across the world. Nike, with some 800,000 workers in its contractor and subcontractor network, is among the firms with “a challenge on a grand scale.”

Why? Because:

“Firms can set standards of behavior for suppliers, but they do not find it easy to enforce them. Unscrupulous suppliers may cheat, keeping two sets of records, one for show, one for real. Others, under intense pressure to keep costs low, may cut corners – allowing unpaid overtime, for example, subcontracting work to other firms that escape scrutiny….

“Basic as it sounds, even many big companies fail to [monitor risk across the supply chain]: 60 percent of the 2,000 large companies surveyed recently…said they did not require suppliers to enforce a code of conduct.”

A point that follows from such facts – a point that the Economist does not make -- is that the biggest problem for global companies is also the biggest failure of CSR and its codes of conduct.

The Economist notes and applauds an attitudinal change a growing number of firms and NGOs: it leads them to work together in formal or informal partnerships. “Both sides now see CSR as offering…benefits for both business and society.” But does it, really? The supporting evidence is mighty skimpy.

Consider the vast resources poured into CSR activities in the past two decades, from the UN Global Compact on down. Where are the results? Results, that is, measured in changes where people work and live, rather than in the huge increase in CSR professionals on payrolls and in training. This report has amazingly little to say about problems that CSR has solved.

Could it be that CSR has actually slowed down progress toward solving the burgeoning problems of globalization?

After all, CSR tools such as seminars and codes of conduct can, and do, lull people into complacency by creating a false impression that something real is happening – that global sweatshops are under control, that NGOs need no longer run campaigns to expose them, that the media need no longer publicize them, that public protests against them have become unnecessary. Isn’t CSR catching on even in China? Only a few months ago 13 foreign and domestic companies met in Shanghai to launch the Chinese Federation for Corporate Social Responsibility.

The truth is that human progress often requires measured militancy. The civil rights movement required it. So did the women’s rights movement. And so does the corporate social responsibility movement.

From my own limited contact with the corporate world, even in pre-CSR days, I know that there are some executives who want to do what is right and just but are, or think they are, hemmed in by the culture of their firm or industry. They themselves don’t sign petitions or carry placards in demonstrations, but they need those who do. Students, ministers, workers, and others who agitate for change are the allies of a genuine movement for corporate social responsibility. Without them, CSR is an occupation expanded into a bureaucracy.

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An article of mine, “Corporate Social Responsibility: A Fledgling Movement Faces a Crucial Test,” appeared in the Winter 2007 issue of Dissent. The “crucial test” for CSR was – and is -- whether it would support a redirection of U.S trade and investment policy to make it worker-friendly.