Friday, May 16, 2008


Corporate Social Responsibility

I've been intrigued by some answers to a recent question on LinkedIn about CSR which state that companies exist to make money, apparently without much in the way of other considerations. Just now, this (mainly American as far as I can see) perspective seems downright bizarre, short-sighted and antiquated. The current sub-prime disaster that has adversely affected millions of ordinary people, seen the share price of companies plunge, and looks likely to impact the world economy for some time, is a result of some companies chasing profits at the expense of basic prudence. In other words acting irresponsibly. The impact of international outsourcing has been another hot topic recently, and some of the voices arguing against outsourcing are very similar to those arguing that companies should focus solely on shareholder value. The fact is, companies and their actions inescapably affect people as individuals, communities and as society, and increasingly those people expect them to acknowledge the two-way nature of that social contract. Sometimes it is seen in taxes or legislation; would we really be happier if companies could evade health and safety, FDA, equal employment and other regulations on the basis that they compromise shareholder value? Sometimes public pressure comes into play - Nike's use of child labour is another recent example: it's cheap, but that doesn't make it right or acceptable. There are hundreds of examples which demonstrate that companies are not somehow removed from the society in which they operate and can ignore any obligation other than profit. In this now global picture, companies can see benefit in being good citizens. This is often perfectly complementary to being profitable, and is usually closely tied to being sustainable as a business and employer. It's likely to attract bright people who want more from their career than simply generating a better bottom line. Most intelligent companies are now working on the basis of a multiple bottom line anyway. I believe Responsbility is knowing the right thing to do (for all stakeholders), doing it in the right way, without having to be forced to. Tricky balance? Yes, but that should be where CEOs earn their multi-million salaries.


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