Do companies care?

Corporate social responsibility (CSR) – the idea that business should contribute to society in ways that go beyond traditional ventures such as making profits or creating innovative products – has become an important goal for many companies. CSR has been criticised for being ‘style without substance’ – for distracting companies from achieving their objectives, and for failing to make meaningful contributions to society. On 15 April 2004 a seminar called ‘Do Companies Care?’, organised by spiked and Hill & Knowlton, explored the phenomenon of CSR and its implications for the future of business and society.

Speakers were Benjamin Hunt, author of The Timid Corporation: Why Business is Terrified of Taking Risk, and Andrew Pharoah, head of corporate affairs at Hill & Knowlton UK.

Benjamin Hunt opened the debate by asserting that ‘CSR is having a significant impact on business across the board’, and that it has become ‘an industry in its own right’ as many companies are seeking to reduce their negative impact on society. He argued that contemporary society has a ‘perception that corporations are behaving irresponsibly’, by ripping off consumers, making people fat, destroying the environment, and so on – he cited the examples of the food manufacturer Kraft lowering the fat content of its products to prevent obesity, and software firm Microsoft closing its chatrooms to protect children from internet paedophiles. Companies’ need to demonstrate social responsibility is a response to today’s ‘climate of mistrust’, he said, where businesses and other institutions are regarded with suspicion.

Hunt argued that the idea that all companies are having a negative impact upon society is too generalised – in some cases, specific scandals or cases of malpractice are used to justify new regulations across the whole industry. He said that there hasn’t really been a proper debate about CSR. He also pointed to a number of possible negative consequences of CSR: that it doesn’t benefit society enough, that it serves to confirm suspicions about companies, and that it provides a narrow criteria by which to judge companies’ performance.

By contrast, Andrew Pharoah claimed that CSR makes ‘sound business sense’ for companies, and that a move in this direction is a ‘positive development and is generally of substance’. In response to the seminar’s title, he claimed that companies do care about society, as evidenced by the fact that ‘virtually all have CSR policies’.

It is important for companies to understand their impact and report it, argued Pharoah, because this forces them to step back, gain perspective on their practices and perhaps initiate changes. In response to critics who deem CSR as ‘just a fad’ akin to the environmentalism of the 1990s, he noted that it is not that environmentalists aren’t active anymore – it is just that these sorts of initiatives don’t make the news. He said that ‘companies take the environment more seriously’ now, suggesting an ideological shift by which yesterday’s radicals have become today’s dogma.

Pharoah admitted that CSR is first and foremost about reducing risk for corporations and that it doesn’t necessarily signify a radical new approach to business. However, he said that studies have indicated that CSR delivers more positive benefits to business than negative ones, and this is partly because people want to work for and do business with companies with good reputations.

When the debate was opened up to the floor, a number of people expressed concerns about the reasoning behind CSR. Stanley Feldman said that companies such as Kraft are bowing to external forces when they alter the content of their products, and that these outside pressures have caused actions that are ‘illogical’ and ‘not well thought through’.

Audience members also voiced concerns about CSR’s implications for business and society. Martin Summers, of British American Tobacco, argued that CSR is immature and needs to be defined more narrowly: ‘everything is under the banner of CSR – there is too much under one label.’ He questioned the future of CSR’s development and asserted that thorough empirical research must be carried out in the field, rather than just surveys.

The economist Phil Mullan considered CSR’s future consequences for business growth and innovation, questioning whether this change in business objectives would have a beneficial impact upon society. He argued that CSR ‘represents a changed approach to what the purpose of business is’, and suggested that an additional broadening of the business agenda, to benefiting society and not just the corporation, may inhibit the traditional role of business by undermining innovation and growth.

Andrew Pharoah argued that CSR has generally been a benefit to businesses because it enables them to make better quality decisions. However, businesses must not focus only on CSR, because ‘ultimately if the company doesn’t deliver solid economic performance it won’t survive’. In response to concerns raised about CSR inhibiting business growth and innovation, he suggested that CSR has helped companies implement positive change: ‘If innovations are going to cause fundamental damage, they are innovations we can do without.’

Debaters proceeded to compare CSR to past forms of regulation and responsibility. Financial journalist Daniel Ben-Ami argued that in the past businesses contended with state regulation – but today’s ‘obsession with risk management’ has caused the trend of microregulation in business. He said that CSR is a form of microregulation, and that this new ideology is ‘driven by a lack of confidence within the business sector itself’.

Arguments ranged from bold assertions that CSR has a fundamental lack of substance, to suggestions that CSR is a slippery slope that will eventually inhibit social development. Chris Grimshaw of Corporate Watch argued that the rebranding of BP (formerly British Petroleum and currently Beyond Petroleum) in an effort to seem more environmentally friendly is just ‘a case of spin’, since it is an oxymoron for an oil company to call itself environmentally conscious. He also maintained that ‘there are extreme abuses by corporations’, and that companies must work to change their behaviour fundamentally.

In his summing up, Andrew Pharoah argued that corporations do have a responsibility to society, and that this corporate responsibility is about companies understanding their impacts and making informed decisions in the light of them. ‘Risk management is sensible’ for companies, he said, and CSR should not be discouraged in the business community because this may have negative effects on business by causing losses in reputations and drops in shareholder value.

Benjamin Hunt criticised the tendency to see harmful behaviour and irresponsibility everywhere. ‘We see things that are good for humanity as irresponsible’, he argued. Hunt said that the current ‘overreacting’ mindset of today’s society has contributed to businesses losing faith in progress. In the end, the result of this over-concern and overregulation, is to restrain the growth and innovation that society so desperately needs.

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