Hallelujah! Davos debates value of CSR

I read Gillian Tett’s recent FT article “How ‘good’ does a shampoo need to be?”   whilst barely suppressing a desire to shout “Hallelujah!”

This is not due to any desire to increase the sheen and brilliance of my personal hirsuteness (I don’t think “I’m worth it” and one of my colleagues believes I arrange my hair by sticking my fingers in the mains every morning…)  Nor was it a desire for a morning bout of office four part choral harmony.  But rather it was delight that there are some corporate folks out there who perhaps, even just a little bit, get it.

And now they’re talking about it at Davos.  The world is indeed changed.

I’ve never been a huge fan of CSR departments.  The principals on which they are established are sound enough, but the out-working has often failed to be anything other than an under-funded extension of the marketing department.  Why send city professionals out to paint fences for charities?  Let the painters paint, the bankers bank and the shampoo manufacturers continue to give us dreams of unrealistically shimmery hair.  Yet suddenly a number of major corporations are standing up in a very public forum and stating that corporate social responsibility “is at the core” of their activities.  And they are genuinely trying to mean it.

Ms Tett’s article asks if this is a good thing and I, for one, say unequivocally yes.  Corporate behaviour is responsible for much of the destruction we wreak upon the planet and society in general – be it through emissions, habitat destruction, turning a blind eye to (or, worse, funding) the oppression of workers in sweatshops and the like .. the list is endless.

And yet, as with all power, the ability to do good is always at least equal to the ability to cause harm.  Corporations have enormous global reach.  They can be nimble, responsive, entrepreneurial.  They have immense resources – both financial and intellectual.  They have smart, motivated employees who just need to be given the freedom to innovate.  They are not bound by the red tape of internal government policy.   They can, if they try, run their business profitably without destroying people and the planet in the process.  (Well, most of them can.)

Externalities are real.  Just because we don’t price the majority of them into the cost of goods and services doesn’t mean they don’t exist.  And they’re becoming more real.  Think carbon tax.  Think consumers walking away from products they don’t want to be associated with.  True wisdom and insight sees that not only is sustainable business a moral imperative, it will quite simply be the more profitable option over the long term.

The FT article goes on to state “But there is a powerful counter-argument” along the line that companies should just worry about making money and governments alone should solve societal woes.  This is, not to put too fine a point on it, complete and utter rubbish.  The British manufacturing executive quoted as muttering “The fact that companies are doing all this CSR stuff just shows that government has failed” is completely missing the point.  A dinosaur who should be final-salary-pensioned-off quickly.  Is it acceptable for me to drop litter on the street and point to the local authority street sweeper who will pick it up?  Is it acceptable for me to steal from my neighbours and say that the police should be doing a better job in stopping me?  So why should corporate behaviour be any different in a global community?

Business, society and government are intrinsically linked – more so every day – and cannot be simply thought of in three separate buckets.  And who pays for everything that a government does anyway?

Gillian Tett states that her views lie along a middle course; actually, I think there’s only one sensible course.  Of course governments need to set the rules and they should supply both the carrots and the sticks to encourage good citizenship.  And likewise they should continue to be responsible for the social policies and institutions that a civilised, democratic society needs.  But as with all good citizenship, things function best when all parties understand that it has to be about more than just sticking to the letter of the law.  Let’s create and support companies that understand they have an intrinsic social contract – just as each of us does individually – and who respond accordingly.  Let’s enable and encourage those who want to do well, to do better.  And let’s penalise those who demonstrate a blatant disregard for everyone else.

Let us start waking up to the fact that companies are global citizens – huge, powerful ones who can be a friendly giant or a big bully.  The decision as to how they behave ultimately lies with the CEOs and as global consumers, shareholders and voters we need to start persuading them to play nice.  Or they are the ones who should be worried.

And what of the CSR departments once their companies have embraced 360-degree responsibility – are they just to become glorified internal environmental and social auditors?  Or how about developing them into wholly-owned social enterprises taking the parent’s skill set to those who couldn’t otherwise access it?  Let the painters paint – and give them ladders, brushes, dust sheets, cans of paint and everything else they need.

That all gives me hope and a reason to suppress my inner cynic.

Plus it makes me think that maybe another shampoo producer has it about right .. there’s more to life than hair, but it’s a good place to start.

By Martin Rich, Director at Social Finance