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Last Updated: 04/15/2011
Corporate Social Responsibility and Sustainability
Mayuri Misra

Contrary to criticism by neoliberal economists, NGOs and academics, Mayuri Misra comments on the utility of Corporate Social Responsibility (CSR), offering a perspective on how to strengthen CSR for authenticity and effectiveness toward change.

“Neo- liberal economists like Milton Friedman view CSR as a distraction from the core business of business.”[1]

“Many NGOs and some academics are critical of CSR, suggesting there is a thin divide between CSR from PR (public relations).”[2]

Like most well-intentioned ideas, Corporate Social Responsibility (CSR) has acquired negative, even harmful hues. The primary charge against it is that it is distracting companies from their fundamental responsibilities of making profits. On the other, however, there are insinuations that many companies are using public relations and brand marketing strategies as their CSR initiatives; that they are using CSR practices in a superficial manner just to abide by the law, if not to get a competitive edge.

The big questions today, therefore, are: Does CSR really work? Is it serving its purpose? Or is it a sheer waste of time and money? Some turn the question on its head and shout: Is the pursuit of a profitable business not a socially responsible thing too?

Personally, I don’t think there is anything wrong in having money-money as your sole goal: as the hunger for profit grows, your business grows, too. In turn, you are providing employment to people, improving the quality of your product or services, or simply making them cheaper or more easily available. By each account, society benefits.

The smarter thing, then, is to address the question from its core. To begin with, we must appreciate that CSR initiatives are first and foremost based on a free-market voluntary ethos; if it doesn’t inspire or motivate companies to implement them, it is not going to yield enough benefits.

One must, therefore, ask the more relevant question: how do we make it work, rather than how does it work? Interestingly, the very people who argue against the relevance of CSR also often have the best answers on how it should be done.

As businesses grow globally, they face a complicated patchwork of rules; since they are not bound by any governmental laws or regulations, a few companies take it upon themselves to fill the void. Stringent steps to cut carbon emissions and implementing high labor standards are just a couple of very relevant examples.

In this light, CSR initiatives are more likely to work if businesses can quickly find a common ground, where their initiatives are both profitable and good for social welfare. This is a ‘win–win’ situation for the companies and society, too. The best form of CSR thus boils down to the company’s individual interests, which are managing risks and recognizing opportunity, as well.

CSR today depends more on instinct than on hard evidence; true, the sustainability measurement industry is getting more and more recognition (Global Reporting Initiatives, for example, provides international standards to companies with indicators and also encourages them to use these as a starting point for their CSR initiatives). Many more companies are also publishing their own sustainability reports.

Curiously, as there is no evidence between a company’s CSR and its financial performance, their think-tanks use such rankings to shame the competition. Many of these performance-assessing guidelines often become just a box- ticking exercise and sometimes even act as a cover up for poor performance.

My greatest concern over CSR is that it is fast becoming more of a compliance thing than a conviction one. Though more and more companies comply with the expectations of the society, there are very few that communicate a clear sense of purpose as to what makes them different from their competitors.

Certain big companies take it too far. In their quest to be seen as socially responsible, they behave like slaves and allow themselves to be subjected to all kinds of tests just to gain that privileged status. They do this mainly because they are told to do so; in the same way that companies often tell their stakeholders what they want to hear rather than doing what is really needed.

Some businesses still don’t have faith in their CSR initiatives, especially as they are dependent on relationships. And as we know, in each relationship boundaries need to be set. Trust cannot be built by protocol compliances or regulations; it can only be installed by righteousness, and it is the task of the top leadership to inspire and lay the foundation for it.

Every company must devise real and authentic CSR policies whereby they define their vision, show what their intentions are, and also explain what they can really change and what their own non-negotiable points might be.

They can start by picking the relevant issues that leverage the organizations’ core competencies; this will not only help solve a significant social problem but also enhance the organization’s image.

In a nutshell, I believe that the success of CSR lies in an inclusive approach, as far as a company’s business plan is concerned. In other words, companies must include it in their basic strategy related to wealth creation; they should consider all the factors that help their success, and also acknowledge that it is only when all of these factors are extensively measured and managed that the company will be able to withstand and build shareholders’ value.

[1] Chapter: Understanding Sustainable Development, page 139, Reader RMSED6052: Sustainable Development

[2] Chapter: Understanding Sustainable Development, page 141, Reader RMSED6052: Sustainable Development

Mayuri Misra is a graduate student at the University for Peace.