We should
drop the business case for CSR and get back to corporate philanthropy
that is based on doing the ‘right thing’, argues Philip Collins
Responsible companies will make more money than irresponsible ones,
says the business case for CSR. If this were true, everybody would be a
CSR enthusiast. The argument has been reduced to a banality: market
reputations matter. But if it were always profitable to be responsible,
being an effective capitalist and being an adherent of CSR would amount
to the same thing.
That just isn’t so. Underlying the
concept of CSR is the idea that capitalism has some seriously
undesirable outcomes. The ‘business case’ for CSR contradicts this
basic insight. Of course, companies have a social role and can’t be
separated from wider society. No sophisticated market economy is
imaginable without a network of social institutions to educate its
people, prevent the exploitation of monopoly positions, and give legal
force to contracts. Companies are part of the public realm and share
the public space, and there are external costs, such as pollution,
incidental to their business. They do not operate in an island called a
market, and so bear responsibility for what they do.
However, their obligations need to be carefully specified. In essence,
a company’s obligations are to pay all the costs, internal and
external, of its activities and to operate within the law. If it
doesn’t, it should be held to account or the law strengthened. CSR or
appealing to the better nature of some managers doesn’t come into it.
Oddly, philanthropy is usually not considered part of CSR. In my view,
it should be. Indeed, I think most of the money spent on pursuing
muddled CSR objectives would be better given to charity. There is no
need to bother with a specious business case. The very nature of
philanthropy is that the interests of the company are not paramount. As
soon as a business case can be established, it is business and not
philanthropy. Nineteenth-century non-conformists gave money to
charitable foundations out of a sense of noblesse oblige and religious
conviction. Enlightened employers such as the Rowntrees and Leverhulmes
went beyond the requirements of commerce in providing for their
employees. They did so because they felt it was right. It is time we
re-asserted that moral pressure. Distribute some of your wealth, not
because it is in your economic interest, but because it is the right
thing to do. Moral arguments sound strange these days. They seem to
have been systematically trumped by economic arguments. We have lost
confidence in arguing that companies ought to act out of a sense of the
collective good, for no other reason than that some good will flow from
it.
Philip Collins is the director of the Social Market Foundation. This article is adapted from The right use of money,
edited by David Darton and published by The Policy Press for the
Friends Provident Foundation, Marston Book Services + 44 (0) 1235 465500
