Jake's View

Moral hubris drives talk about corporate social responsibility

The large majority of corporations already honour ethical values and respect people, communities and the natural environment

PUBLISHED : Tuesday, 25 June, 2013, 12:00am
UPDATED : Tuesday, 25 June, 2013, 4:45am

"Currently in Asia, there is a lack of understanding about what [corporate social responsibility] really is"

Richard Welford,
chairman, CSR Asia,
SCMP, June 18

He's right. I don't understand what CSR really is, and I live in Asia. What is more, I don't think you have to live in Asia to lack understanding of what CSR really is. Any place will do when everyone has a different definition and it changes daily.

Here is Mr Welford's own definition from a special report on corporate social responsibility, which we recently published: "CSR is about companies achieving commercial success in ways that honour ethical values and respect people, communities and the natural environment."

This describes most companies I know or have ever researched as either an investment analyst or a journalist. I am aware of shady operators, but they tend to operate as small, one-boss shops or as individuals within larger companies.

To the extent that corporations can be likened to individual humans, the large majority honour ethical values and respect people, communities and the natural environment, which says that Mr Welford's definition doesn't really mean much.

I shall try my own hand at it: The essence of corporate social responsibility to most people who talk about it a lot is moral hubris - the conceit that you are morally superior to people who run private corporations because greed makes them do (unspecified) bad things to other people and to the environment and you don't believe in greed or bad things. This gives you the right to lecture other people, in particular corporate directors, on how to improve their conduct.

Two regrettable results ensue. The first is that government never gives you enough money to host and travel to all the seminars, colloquiums and roundtables you need to spread your message of rectitude, nor all the required publications. You need sponsors.

Enter the corporations who consider themselves most vulnerable to your criticisms and who can hire public relations specialists to deflect you. The result is that your published appeals are cluttered around with unctuous advertisements on the warm-heartedness of these corporations. You can do nothing about it. You took the money.

The second and even more regrettable result is that this approach places primary responsibility for doing something about environmental and social evils on the shoulders of corporations when the lead should really be taken by government.

An example I cited in an earlier column will serve again. When asked recently to join a voluntary scheme to ban incandescent light bulbs, big light-bulb manufacturer Philips declined on the grounds that such voluntary schemes are too easily subverted by companies that choose not to take part.

Best have government ban incandescent bulbs outright, Philips said, and then everyone will be on the same level playing field from the start.

I think that is absolutely the right stance to take. This sort of regulation is primary the responsibility of government, not industry, and harping on about corporate social responsibility only obscures government's greater failings of social responsibility.

Corporations have a fiduciary responsibility to their shareholders, one that you yourself take note of when you review your pension account statement or the value of the investment fund to which you have subscribed. Shareholders means you and me as much as it means any tycoon, much more than it means any tycoon in the case of most big listed companies around the world.

This does not mean that corporations must be at odds with public social objectives, only that government must take the initiative in such objectives. Corporations will comply if none is given an advantage over any other and they can recover attendant costs.

The only real way to approach this is to say that any corporation that complies with the law is a good corporate citizen. If we are not happy with this, then we need to change the law, not deride corporations for social responsibility failings, which some people may discern but the law does not recognise.

Meanwhile, we easily forget that most of the goods and services we truly value are delivered to us every day by private corporations. If this is not a good example of social responsibility then all attempts to define CSR will prove futile.

But I still think my short definition works best - moral hubris.