CSR: Business for a greater good?

"There is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits."

Milton Friedman, Nobel-prize winning economist

The concept of Corporate Social Responsibility describes the relationship between business and the larger society. While some argue that business exists to serve the greater community as well as direct beneficiaries of the company`s operations and that it`s a business`obligation to use its resources in ways that benefit society, others say that business shouldn`t do anything but increasing profits - by legal means. When Henry Ford first tried to invest some of his profit in implementing his social plans in 1919, he actually got sued by his shareholders and was forced to pay them a dividend instead.

Today companies can buy, invest, produce and sell anywhere on the planet. But with globalization came the global players that learned to take advantage of it by exploiting the third world and therefore maximizing their profit. But they weren`t willing to take social responsiblity for the places they operate in and the gap between rich and poor grew. The consequences were environmental damage and the disregard of human rights in developing countries. That`s when NGOs came to life, naming and shaming some of the world`s biggest companies` racketeering - Shell, Nestle and Nike, just to name a few.

When companies realized how much their reputation actually suffered from that, they decided to take the bull by the horns and established the concept of CSR. Thus they were able to restore their image and release the pressure built up by NGOs and governments - because there is another reason why companies seam so eager to help the world: through globalization, national companies turned into transnational conglomerats and therefore went beyond the national scope - national economical regulations wouldn`t apply anymore. On a global level, there simply were no employment or environmental laws, no trade practice rules or a standardized fiscal system. And since companies benefit from that lack of regulations, they used CSR to keep governments and supranational organizations from setting some up. They basically regulated themselves before they were regulated and therefore managed to keep a certain leeway.

That`s were terms like "window dressing" and "green washing" come in. Businesses pretend to care about their environment because they are expected to, when really, most of them never go through with it. They set up funds, print green labels on their products or give money to charities, but what are they really doing? The gas company BP invested $200 million in solar energy, but at the same time they spent $8.5 billion on exploring new oilfields in environmentally sensitive areas. A local water project, supported by Shell, failed because the water tower they built was never actually connected to the water supply mains. If you make your profits out of nuclear power, don`t act like you care for the environment.

Banerjee (2007) concludes: "All the theories and concepts of CSR and corporate citizenship suffer from a fundamental limitation: the absence of a clear political and legal framework for coordinating citizenship rights and responsibilities."

In my opinion, real Corporate Social Responsibility is not about pretending to save the world. It`s about honestly engaging in some simple groundrules, like producing safe goods, securing jobs and paying socially acceptable wages. If a company just sticks to that, it would really make a difference. The practice of CSR is usually regarded as a PR function, because it`s where the organization meets the public outside of the usual stakeholders (mainly producers and customers). So PR practitioners can use CSR as just another element in the creation/engineering of public opinion, to make an organization look good and polish its reputation - or they could realise the idea that PR can actually act in the public interest (like Grunig (1989) suggested) by making genuine attempts to discover the requirements of stakeholders and help companies to be more responsive to social needs.

Bibliography:

Banerjee, S. (2007): Corporate Social Responsibility - The Good, the Bad and the Ugly. Cheltenham: Edward Elgar Publishing.

Theaker, A. (2001): The Public Relations Handbook. New York: Routledge.

Snider, J., Hill, R. & Martin, D. (2003): Corporate Social Responsibilty in the 21st Century: A Vire from the World`s Most Successful Firms. Journal of Business Ethics 48/2003.