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  • Dec 20, 2014
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Jake's View
PUBLISHED : Thursday, 19 June, 2014, 12:51am
UPDATED : Thursday, 19 June, 2014, 12:51am

Social responsibility should begin and end with the law

Pressuring firms to follow unwritten social obligations does more harm than good – if an activity is unacceptable, then make it illegal


Jake van der Kamp is a native of the Netherlands, a Canadian citizen, and a longtime Hong Kong resident. He started as a South China Morning Post business reporter in 1978, soon made a career change to investment analyst and returned to the newspaper in 1998 as a financial columnist.

Corporate social responsibility (CSR) - a management concept whereby companies integrate social and environmental concerns into their operations and interactions with stakeholders - is widely understood as a business imperative.

South China Morning Post,
June 17

Ihaven't been out bashing the do-gooder lobby for a long while now and the urge can no longer be denied. Here we go. Corporate social responsibility, as commonly understood these days, is an arrogant, false notion.

Let's define what we mean first. The idea is that corporations have an obligation beyond any imposed on them by law to promote social harmony and equality and to pioneer environmental protection practices.

If it is required of them by law then they have a legal obligation rather than a social one. Breach the law and they lay themselves open to prosecution.

CSR means nothing if we talk only of what the law requires. All persons and corporations are required to comply with the law.

But if we are talking of performing more than the law requires then all sorts of questions arise.

First and most obvious, of course, from where does this obligation stem? Did God come down from heaven and inscribe it on an ineradicable titanium plaque?

Let's leave the philosophical point aside, however, and deal with a practical one. What is it you are obligated to do if your company's business is selling lamps? Aside from resolving to sell lamps honestly, how does a lamp sales company promote social harmony?

And one thought then soon comes to mind. We have government to provide a framework on which social order hangs. Surely it is government's responsibility then to set the standards rather than abdicating it to individual entrepreneurs.

I use the example of a lamp distributor here deliberately. The local offices of the Dutch electronics company Philips were asked some time back to join a CSR initiative, a voluntary ban on sales of incandescent light bulbs.

No, said Philips. We are all in favour of banning incandescent bulbs but that ban must be imposed by government on all distributors. Otherwise smaller firms will just continue to sell them and undermine our light fixtures business.

Government provides a framework for social order. Surely it is government’s responsibility to set the standards rather than abdicating it to entrepreneurs

Spot on. This is a matter for all society and thus for government, not for private corporations. The fact that government has still not imposed a ban on incandescent bulbs is a failure of government social responsibility. Making it a corporate matter just muddies the waters.

They are muddied plenty enough anyway most weekends. CSR, to many people, means a dark hint from the human resources department that their year-end employee performance scores may benefit from participation in a showy charity event sponsored by the company on Sunday afternoon.

So they go, dressed in silly hats and forced smiles to raise a few thousand dollars for the children's something or other fund.

It's really just corporate self promotion and, in my view, does more to set back than to advance social harmony. CSR can easily become counter-productive.

I take a simple view of these matters. The law is the benchmark. Anything that any corporation does must be deemed socially responsible if it complies with the law.

If society comes to frown on a certain corporate activity then it is time to change the law. If there is not enough support for this change of law then we ought to reconsider whether this activity is really quite as reprehensible as some of us think.

But what I also have in mind is my local supermarket, which sources tens of thousands of grocery items from all over the world, exerts close quality control over them and then makes them easily available to me every day in a bright attractive environment for a profit margin to itself of less than 1 per cent per item on average. It feeds me.

What a wonderful socially responsible corporate activity this truly is.

And must my grocer then still prance about at CSR events or grovel to CSR gurus for not satisfying their notions of what "stakeholders" require?

The supreme arrogance of it astounds me. Who do these people think they are to adopt such enormous moral hubris?

CSR is do-gooder hot air. Don't trouble yourself with it.



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This article is now closed to comments

you are mistaken in 1 point .... you can purchase new bulbs which are suitable for a dimmer switch ......
Unfortunately, the analogy with local supermarkets, of which of course there are only two, shows up the failure of government properly to regulate the market - i.e. make laws for the benefit of the majority of the population.
The self serving weekend functions are not necessary, but for companies to think that they operate in a vacuum is naive.
Let's not lose sight of the fact that many of the worlds recent financial difficulties arose as a result of companies and the individuals of which they are made up, obeying the law, but showing little or no social responsibility.
It is not an acceptable solution to simply state that we ought to make all bad things illegal and then we don’t have to worry about being moral we can just follow the law. Traditionally philosophers distinguish between the sphere of morality and sphere of law. Kant for example says that the sphere of rights is a small subset of right actions that we can legitimately force people to do. We want people, and corporations, to not merely follow the laws but actually above and beyond what the law requires.
This would be true even in a world were all the truly horrible and bad things were illegal. We can’t make it illegal for people to not help old ladies across the street but that doesn’t mean there shouldn’t be people out there reminding people that they should help old ladies across the street. And similarly, we can’t make it illegal for corporations to treat their employees kindly but that doesn’t mean there shouldn’t be people out there reminding corporations that they should treat their employees kindly.

See more of my response at ****socraticdiablogs.com/2014/06/23/corporate-social-responsibility-begins-with-individuals/
Quite right. Co directors duty is to obey the law and earn return for shareholders. Anything else is vanity, and there are good arguments for punishing directors who indulge in vanity at the shareholders' expense.
To chen....
Here one more piece of news: ‘Alibaba’s Jack Ma and Bill Gates discuss charity at Beijing dinner’ for you to ponder.
It is reported that, ‘Ma, the chairman of Alibaba Group Holding and worth about US$12.6 billion, set up a charitable trust with co-founder Joseph Tsai Chung in April, using share options that amounted to about 2 per cent of the e-commerce company's equity.’
To chen....
Let me refer you to today’s SCMP’s story – Organizers deny week-long discount scheme aimed at diverting people from July 1 march.
Please explain to me why Pier 88 is going to sell dim sum at one hk dollar in respose to Chinese Chamber of Commerce? Corporate existence is just not as simple as you have depicted. There is life outside of the boardroom.
The tangible must meet the intangible and only the wisest can deliver both until the intangibles become part of the law.
You are quite wrong, too.
The problem with CSR is that there isn't an universal or standard definition of what it means. Hence it is impossible to say what is or what is not socially responsible. The UK is one of the few countries that comes closest in legislating it by introducing section 172 in its Companies Act where directors have the duty to "promote the success of the company" by taking into consideration of various stakeholders from members of the community to employees and the environment. But in reality, this has just ended up as a box-ticking exercise in most companies where directors would simply declare that they have taken them into consideration in the decision-making process. In short, this has just led to "business as usual".
Good doers have a useful place in society. It doesn’t take any argument – pro or against that they exist everywhere at any moment in the existence of mankind.
The social responsibility by corporate comes into being because when existing law is insufficient to guide corporate to be a good doer to the society. Its objective still very much rooted in good doer impulse of mankind.
However there is a decline in exercising such notion in US of recent years where I believe the concept of corporate social responsibility was first conceived in the early 80s.
Precisely it should. When issues created by corporate behavior have evaporated into law, less separately they are evoked by use of corporate social responsibility.
Hong Kong goes through the similar transformation. But its pace is exceedingly slow. As long as we have LKS and the likes, Hong Kong will by and large maintain a refuge culture or more correctly a refuge economic culture where corporate social responsibility is next to be a mortal sin in ‘free market’ ideology.
JvdK neglected putting a prefix ‘corporate’ to social responsibility. I only can tell by the content of the comment that he sidestepped it quite knowingly. Here, his comment today is insincere perhaps a good doing for LKS again after the electrical import comment.


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