OK, You've Convinced Me

Did you read the article on The Case Against Corporate Social Responsibility in yesterday's Wall Street Journal? Well, I did, as did plenty of others in my company, and I am convinced.

Oh, not that CSR is a bad thing. But it convinced me to keep using the term "sustainability" rather than "CSR". Because while the author says that "the idea that companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed", it seems to me that the assumption that CSR or sustainability is about companies putting their obligations to society ahead of their businesses is itself fundamentally flawed.

I haven't had time to roam the blogosphere in the last 24 hours, but I expect many of my colleagues are responding to this opinion piece. So I'll just keep it short (yes - I can - really!).

Here's what the author doesn't seem to get:

Few, if any, are claiming that by switching allegiance to "the public good", companies will automatically make money. But there are ways - and reasons - to make money in ways that serve the public good. It's not about adding some good things to the list of bad things you're doing now. It's about changing what you do and how you do it.

The system - he doesn't get that we live in a complex system of relationships between business, society, and the biosphere, and that ignoring two in service of the third will harm them all. Sustainability asks companies to think about how decisions made now will impact the environment and community in a way that will affect the well-being of the company, too. Ask Coca-Cola about their experience bottling water next to drought-stricken communities in India.

The timeframes - Sustainability is about thinking about the long term assumptions your company is making about the external context in which you're doing business, how you affect it, and how you depend upon it. Ask the company that took short-term profit over community when dumping toxic chemicals into Love Canal how they fared in the long term.

"In cases where private profits and public intersts are aligned, the idea of [CSR] is irrelevant." The author complains that social responsibility isn't the driving force behind healthier food and so it doesn't count. Wrong on several levels.

1. It makes money because it has a market; part of why it may have a market is because the companies have chosen to create or nurture the market. Not the only reason - there are plenty of external forces. But it's one of the factors.
2. Most choices have multiple potentially successful options. Without having social and environmental performance as decision criteria, perhaps an equally profitable but less responsible choice would have been made.
3. Dow Jones defines ESG as "a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments." Great - they embraced an opportunity. THAT'S THE WHOLE POINT! We're trying to move to an economic framework that sustains the well-being of our economy as well as our planet and society.

And shall we talk about "externalities", which places due accountability for public costs (or benefits) on that which caused them? Yes, legislation is usually the mechanism to drive pricing of externalities. But there are more subtle, if less quantified, forms that it can take, such as when our customers hold us accountable for what we do with our products at end of life and force us to compete on that basis. (More on that in a future post.)

So no, this isn't about putting our "responsibility" to society ahead of that of our shareholders. It's about not being able to serve the shareholders - and our employees, customers, partners, suppliers, neighbors, families - unless we figure out how to do business in a way that "sustains" us and our planet in the long term.

And one more editorial comment - "long term" isn't that long any more :-(

Comments

[Phillip S50]

it's just unfortunate - because with just the headline, the appearance of tacit approval of the WSJ for such a 'case' seems to be given to the readers.

Maybe that's why Brainstorm Green > EcoNomics

[Kathrin Winkler]

Phillip - I agree. It was designed to provoke rather than introduce radically new thinking.

[Phillip S50]

So, I've read the WSJ a couple of times now, and I really don't see what the fuss is all about. Honestly - other than the provacative title, did he really say all that much? Other than a slightly dressed up version of Milton Friendman's shareholder value manifesto, was there much of substance here? Big headline, and not much else.

Good response Kathrin - as I always - I appreciate your posts.