Rethinking How We Do Business: ‘Corporate Social Responsibility’ Is Not A Myth

Rethinking How We Do Business: ‘Corporate Social Responsibility’ Is Not A Myth

PHOTO: Women outside a Danone yogurt factory in Bangladesh

By 
Ladybud, July 10, 2013

Even though the Supreme Court has said corporations are “persons,” there are many who feel they have rights, but, unlike real people, very few obligations. As economist Milton Friedman said:

“The sole purpose of business is to provide a financial return for their owners. By doing that, they are providing a social good, and are therefore adhering to the moral code while behaving in the only way possible for them.”
-The Social Responsibility of Business is to Increase its Profits, NY Times Magazine

There are others, of course, who feel that businesses, whether they are people or not, have obligations to the society in which they exist, the communities where they do business, the people who work for them, and the planet which is their home. This is called “Corporate Social Responsibility (CSR).”

There is really nothing unique about CSR; for centuries we have expected people (real ones) to not only obey laws but also to adhere to certain moral obligations regarding their fellows. If you feel this is the way to live with your fellows, then we should expect nothing less of entities like companies.

Unfortunately, in the free market capitalist world, there is a strong belief, stated above by Friedman, that breaking no laws and making money are the only moral obligations for commerce. This leads inevitably to things such as corporate tax avoidance, where they, in corporate lawyer speak, “adhere to all applicable rules and regulations” (translation: yes, we did bad stuff, but we broke no laws), and yet pay no income tax on billions in profits. And things like the reckless behavior in financial institutions that led to the Great Recession, whose effects we are still feeling. And things like corporate lobbyists, buying influence so that “all applicable rules and regulations” doesn’t include stuff like EPA regulations regarding pollution and government regulations on miles per gallon. And things like not providing a living wage so your employees have to turn to government services, paid for by us real people. But, hey, they’re “providing a financial return for their owners,” so who cares?

Well, we care, because we don’t want to live in a world where there is one set of standards for real people and another for companies, any more than we want to live in a world where there is one set of standards for rich people and another for poor.

“We don’t want to live in a world where there is one set of standards for real people and another for companies, any more than we want to live in a world where there is one set of standards for rich people and another for poor.”

If this sounds like an impossible standard, something only saints could live up to, well, you’re wrong.  Yes, many corporations are soul-sucking demons, unleashed on the world by legions of lawyers, lobbyists and paid-for politicians.  It isn’t size that matters; we don’t need to go back to that mythical time when small local businesses gave out credit and good stuff.  More and more real people are demanding that businesses practice CSR. Many are, with the emphasis on “practice.”  They post CSR slogans, support community organizations, do diversity hiring, and reduce use of energy and materials.

But most of those companies don’t believe in CSR; they do it because it has become a cost of doing business. We can’t argue with good actions, no matter what motive drives them. But at heart such corporations are still the same souless, profit-driven entities.

Muhammad Yunus is a Bangladeshi banker, economist and Nobel Peace Prize recipient.

Muhammad Yunus is a Bangladeshi banker, economist and Nobel Peace Prize recipient.

There are, however, in addition to many smaller businesses that are people- and environment-friendly, some big corporations that really believe in “doing well by doing good,” which is a logical result of taking CSR to heart.

Group Danone, for example, went into the yogurt business with Bangladesh’s Muhammad Yunus and his Grameen organization in an attempt to reduce malnutrition. The unique thing about this project was Danone did not expect to profit, although they did want to bring in enough money to make the effort self-sustaining.

The Danone-Grameen joint venture is an extreme example of CSR; Yunus calls it a “social business,” a sort of non-profit that still makes money, but only to keep its operations going while it provides social benefit.

A look into the Danone-Grameen venture:

 

A less extreme type of CSR-driven business is called a “social enterprise,” a company that expects to make a profit but also has CSR at its heart.  In some cases, the product or service provides a direct social benefit, while in others the company sells standard products and/or services but is organized to do good for people (including employees) and the environment.

Patagonia ($540 million in revenue in 2012) for example, sells outdoor stuff, which is not essential to life (OK, for most of us).  Since its formation, it has been an employee-, community-, and environment-friendly company, not just in slogans but in credo and actions.

Johnson and Johnson, the medical products company (2012 revenue of $67.2 billion), had CSR at its heart long before the term was invented. In 1943, Robert Wood Johnson, the Chairman, published a corporate credo and the company has done its best to live up to it since then.  The credo outlines four responsibilities: first to families and medical personnel who use their products, then to their employees, then to communities where they do business and the “world community,” and finally to make a profit.

Take a look at who you buy from, how they treat their employees, the community, society and the planet we all live on.  It won’t take you long and you will probably decide to do business only with those “doing well by doing good,” whatever they sell and whether or not they make a profit.

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