Debating the future of CSR

I have just been to Italy. I went on a slow-paced Swiss train from cloudy Zurich past Zug and then over snowy mountains and on to sunny Lugano, Como and Milano before catching the high-speed train to Turin. There at the Industrial Union of Turin I debated Luca Poma about whether CSR was a human responsibility. Of course, I played the bad guy in contrast to Poma's good guy persona.

Later Professor Toni Muzi Falconi and Professor Emila Costa joined us on a closing panel. Professor Falconi was usefully critical of us both. Professor Costa added another dimension altogether by outlining psychiatry's latest insights into how to motivate and manage people.

I set about questioning some of the assumptions that underpin corporate social responsibility. My intention was to point out that more than ten years of serious investment in CSR had not restored corporate reputations and in fact had arguably harmed them instead.

My key point was that CSR makes claims that generate their own moral and reputational hazards.

Rather than take pride in the moral and social purpose of a firm’s business (let’s say oil or consumer goods) CSR often creates the impression that the core business has questionable merits. In contrast, the CSR programme supposedly makes up for that by giving the firm a human face. This in turn suggests that ordinary business is neither intrinsically human nor socially beneficial.

For example, BP once claimed to have gone “beyond petroleum” and to be on course to save the planet from the supposedly harmful business it was in.

I argued that all firms have an obligation (professional, moral and practical) to be honest. This, I said, is the ancient business of valuing probity: frankness, honesty, integrity, uprightness and sincerity.

Most of the reputational and ethical failure in the business world among bankers and other executives at Enron and so on has been in this area rather than in CSR. I said, BP's beyond petroleum claim clearly failed the honesty test. Moreover as The Times' editorial argued, massive executive pay raises in the UK are hard to justify through the prism of probity.

I agreed that I was advocating quite a narrow and inward-looking approach that prized self-examination and de minimus standards. But the key to managing reputations relies on setting realistic expectations about how much a firm can do and the least it must do.

I pointed out how CSR's grand claims to planetary virtuousness had a demoralising impact on the very workers it was meant to inspire. I said in uncertain and tough times it was simply not convincing to say employees have two jobs: their own and another designed to save the planet (see Rosabeth Kanter's SuperCorp 2009). I said such idealistic notions created a credibility gap between hype and lived experience that encouraged corrosive cynicism.

As an alternative, I argued that when it came to forging the future, PRs had a responsibility to help clients make a compelling case for economic growth. Though to clear the way we must first grasp that much of what passes for discussion around CSR today points in the other direction.

I said - and received a bit of flack for doing so - that CSR's influence on discussion tended to undermine society's efforts to improve our prosperity and affluence. I added that too much stress had been put on trying to connect with anti-corporate and anti-capitalist sentiments.

I criticised the mantra that less is better and that consumerism and greed were intrinsically bad. I criticised those who promote happiness over development. I made the case for supporting new technologies, innovation and massively increased energy generation. I pushed back on those in the audience who argued that profit-led growth was problematic and not morally defensible.

In contrast to Western pessimists, I pointed out that China and other economically dynamic regions of the world had no worries about the merits of profit and progress. The key challenge for the West, I said, was to workout how to compete with the countries we call BRICs.

Controversially I maintained that many popular CSR policies that called for costly regulatory restrictions on our economies, such as cap and trade carbon taxes, might have to be ditched.

While I accepted that CSR is sometimes good for the bottom line, I maintained that that is not an argument in its favour. Or rather, it is an argument about the expediency of CSR, whilst CSR’s real claim is to reach beyond expediency onto some higher plane.

Perhaps I should have said more clearly that I approve of the efforts that many PRs are making to drop the “S” in CSR (see here) because it removes some of the moral hazards associated with greenwash and talking nonsense.

I implied - but perhaps also not as clearly as I would have liked - that I respect PRs who prefer to talk about “sustainability” as an alternative to CSR because it captures ideas about future-proofing the firm. That’s got plenty of problems of its own, but at least it doesn’t claim huge moral virtue. Indeed, sustainability allows firms to put sustainable profitability at the head of all the competing sustainabilitities that different stakeholders advocate.

To avoid being misunderstood, again and again I made clear that I was not advocating for one moment that firms should be allowed to wantonly damage the environment, behave badly toward their neighbours or toward anybody else.

Nevertheless, some of the audience appeared to believe that I was some kind of fascist. One person accused me of supporting the use of child labour in China. People kept implying that those of us resistant to CSR's charms were less moral and less attractive than those who backed it. But I replied, many businesses, for many reasons, are resistant to lumbering themselves with a wide social or moral remit. Many such businesses do great good and provide life-enhancing social benefits that they are proud to deliver. Such firms and institutions operate with authenticity and conviction.

I insisted on the merit of reminding everybody about the foremost layer of responsibility that firms have to society: probity.