CSR: Ethical Big Business?

One of the defining business buzzwords of the last decade has been CSR or Corporate Social Responsibility. There's no single definition of what it mean, but it involves a company “aligning its business operations with social values” by drawing up codes of conduct and “reporting”, which refers to companies publishing public, self-penned documents assessing their social and environmental “performance”.

This issue splits those in the ethical shopping movement down the middle. Whilst most people agree that a company prepared to acknowledge ethical issues is better than one which is not, some see CR as primarily “greenwash”: a cheap smokescreen to satisfy ethically minded consumers, get rid of annoying protesters, and to persuade governments that there's no need for the thing that big companies really fear: laws and regulations that force them to behave well all the time.

It's certainly true that CSR contains a fundamental limitation, at least in the case of companies owned by shareholders- it can only include things that are likely to increase profits. Doing anything else would violate the basic obligations of company directors to their shareholders: to maximise returns. So while a company's CSR report may talk about wanting to be a “good corporate citizen”, this can only go so far. If it can be shown, for example, that improving conditions for workers will raise productivity, avoid the cost of strikes or high staff turnover, or reduce the chance of a consumer boycott, then changes will probably be made- and the company will make a proud public statement about its solid commitment to its own workforce. But if it looks set to harm profits, then things will stay as they are.

And can CSR claims be believed anyway? According to many anti-poverty NGOs, the answer is often no. “Corporate practices do not match ethical policies”, wrote Oxfam recently about the sportswear industry.

At almost the same time, Christian Aid examined the ethical claims of some high-profile companies such as British American Tobacco (on worker health and safety in their developing-world plantation), Coca-Cola (on their promise not to harm local communities by extracting too much groundwater) and Shell (on its social impact on communities in Nigeria and elsewhere). They concluded that in general CSR was proving “a completely inadequate response to the sometimes devastating impact that multinational companies can have in an ever-more globalised world- and that it is actually used to mask that impact”.

To try and prove that their codes of conduct are enforced, many of the more progressive companies employ independent monitors- professional auditors examining labour rights in Chinese supplier factories, for example. But even “independent” auditors can be contentious: while some companies employ expert non-profit monitors such as Verité ( www.verite.org ) in interviewing staff about violations, others employ companies that may sometimes have a financial interest in not uncovering all the problems (exactly the kind of conflict of interest that lay behind the Enron scandal).

CSR's defenders claim that all this criticism and scepticism is unhelpful. They claim that this ethical approach to running a big business has yielded some very positive results, and that it is sowing the seeds for wider change in a much more effective way than enforceable regulation could ever achieve.

The Rough Guide to Ethical Shopping by Duncan Clark