CSR isn't a sustainable solution

CSR as a tactic will only last for so long. As the economic climate changes, will companies continue to value their socially responsible image?

CSR will only enhance a company's reputation or access to capital if the public is convinced that they really are having a positive impact on society. But the public which is sceptical at present will only be fooled for so long, as companies continue to pollute, profit from wars, exploit vulnerable workers and exacerbate the gap between rich and poor. Once CSR is exposed as a fraud, will the companies continue to spend money on it? Or will they revert to being unashamed champions of no-holds-barred capitalism? Many companies have famously dropped their CSR commitments
when they hit financial problems. For example, Littlewoods pulled out of the Ethical Trading Initiative and disbanded
its ethical trading team when it was bought out by L. W.
Investments Ltd in November 2002 141. What will be the fate of
CSR when we inevitably see a downturn in the economy as a
whole?

The so-called 'leaders of the field' in CSR will probably see the financial rewards of their investment decrease as other companies catch up with them and CSR no longer gives them the competitive edge, which is why some are now pushing for regulation.

So, prospects for the long-term profitability of CSR are probably over-hyped. Once CSR ceases to be flavour of the month with investors, will companies continue to care? With the exception perhaps of pension funds, which look for a return on investment over the long term, a company's quarterly results are the key benchmark of corporate performance. This leaves little room for investment expenditure in long-term shifts towards more sustainable modes of operation.

So is CSR just a bubble that will imminently burst? Unless corporate power is reined in through effective regulation, then CSR will fall off the agenda when it ceases to be profitable.

CSR can't challenge corporate power
'The twentieth century has been characterised by three developments of great political importance: the growth of democracy, the growth of corporate power and the growth of corporate propaganda to protect corporate power against democracy.' Alex Carey142

Ultimately the debate around CSR comes down to whether corporate power can be curbed or whether we should content ourselves with trying to win the smaller victories on the micro level, and whether the two efforts are mutually exclusive. While smaller scale changes could be achieved with CSR, we will never achieve a just and sustainable society without dealing with the structural issue of corporate power and the corporate profit motive. The question is, can CSR be seen as a step towards that goal or does it hinder efforts to dismantle corporate power?

CSR diverts attention from the damaging impacts of companies and deflects concern about corporate power. It also gives companies the power to decide what it means to be responsible. This undermines any work at exposing and challenging corporate
power. Even SustainAbility admits that 'at worst [CSR initiatives] may even undermine long-term solutions by deflecting attention from the root problems '143.

Business as unusual? 144

Ray Anderson, CEO of US-based carpet manufacturer Interface Inc, came out of the film 'The Corporation' as quite a hero: the brave CEO prepared to turn his company around, 'climb Mount Sustainability', and still remain a market leader.

Interface and a few companies like it may be a talisman for the CSR movement and the example that CSR proponents can point in an attempt to counter critiques such as this, but in fact the exceptions prove the rule. Companies like Interface can exist and be profitable whilst making major changes to their operations only because other companies are operating unsustainably. Without that, Interface would not have its unique selling point.

The marketplace only has room for a limited number of companies that operate in a truly ethical way because the pool of consumers that make decisions based on primarily ethical criteria is limited. The only solutions to this are either to increase the pool of ethical consumers or to change the rules of the marketplace. The conditions which enabled Ray Anderson to drive forward his corporate reforms were unique. Anderson is the majority shareholder at Interface, and he sacked the company's MD Charlie Eitel for his reluctance to follow Anderson's prescriptions for the company's environmental sustainability145. Mark Achbar, one of the producers of The Corporation, commented that although he was impressed by Anderson, 'We cannot rely on the CEOs of the world all having epiphanies while simultaneously reading Paul Hawken's The Ecology of Commerce... One way or another, corporations must be forced into sustainability, or else we are collectively doomed.'146

Similarly, the Body Shop is held up as a great example of the possibilities of corporate social responsibility. However, campaigners have frequently shattered the company's green and
caring image147. The Body Shop is an example of how growing to
the size of a multinational and being floated on the stockmarket will transform the ethical stance of a business, even one which has social principles at its heart.

The Body Shop's founder, Anita Roddick, described the stock floatation as 'a pact with the devil'148. Roddick found it much more difficult to keep the company's values at the centre of its business: 'the imperative is to grow - and by a small group of people's standards, financial investors who are gamblers... like in a casino'149. Whilst the company has tried to retain its image as a principled company, Roddick's role in the company since the sale of stock has been significantly diminished150, with the company viewing her as something of a loose cannon. The company's new executive chairman commented, 'we believe in social responsibility but we are hard-nosed about profit. We know that success is measured by the bottom line'151.

We should not be surprised by the announcement in March 2006 that the Body Shop is to be bought out by L'Oreal. The Body Shop's transition to becoming just another multinational capitalising on a niche market has been a
long time in the making.

The really interesting exception to the rule is CaféDirect, the fairtrade company that went public in 2004. CaféDirect's shares are traded on the Triodos Bank's 'matched bargain market' Ethex152, together with shares in the Ethical Property Company, Green Lane Housing Ltd and Triodos Renewables. Through this unique share trading system, social enterprises attract shareholders that do not prioritise profit over ethics. A total of 45% of CaféDirect is owned by its founders (Oxfam, Traidcraft, Equal Exchange and Twin Trading) and producers. CaféDirect's model will be an interesting one to watch. 21

Ultimately the debate around CSR comes down to whether corporate power can be curbed or whether we should content ourselves with trying to win the smaller victories on the micro level, and whether the two efforts are mutually exclusive. While smaller scale changes could be achieved with CSR, we will never achieve a just and sustainable society without dealing with the structural issue of corporate power and the corporate profit motive. The question is, can CSR be seen as a step towards that goal or does it hinder efforts to dismantle corporate power?

CSR diverts attention from the damaging impacts of companies and deflects concern about corporate power. It also gives companies the power to decide what it means to be responsible. This undermines any work at exposing and challenging corporate power. Even SustainAbility admits that 'at worst [CSR initiatives] may even undermine long-term solutions by deflecting attention from the root problems '143.