Jake's View

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

PUBLISHED : Thursday, 19 June, 2014, 12:51am
UPDATED : Thursday, 19 June, 2014, 12:51am

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.