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Corporate Social Responsibility - CSR
Corporate Social Responsibility as a field of study has really only existed since the 1950s, so like everything else in this subject area, it’s full of grey areas. The first examples of CSR in recent history can be seen in the great philanthropist businessmen of the Industrial Revolution. Planned towns such as Bournville and Port Sunlight were reactions to the poor conditions endured by many working in the new manufacturing industries, but went much further than the workplace, to enhance all aspects of workers’ lives. That your opinion on these might range from paternalistic devotion, utopian meddling or a cynical attempt to have a more productive workforce, illustrates some of the major arguments still dominating CSR today.
Until the 1950s most attempts by business to use profits for good causes were considered an illegal waste of shareholders’ money. But as big corporations continued to grow, debate began about what, if any, their social obligations were. Over the next few decades formalisation of CSR expanded the field beyond philanthropy to include topics such as discrimination against employees, advertising standards, transparent accounting and ecology. A 1971 publication by the Committee for Economic Development, a Washington think tank, stated that:
“Business is being asked to assume broader responsibilities to society than ever before and to serve a wider range of human values. Business enterprises, in effect, are being asked to contribute more to the quality of American life than just supplying quantities of goods and services. Inasmuch as business exists to serve society, its future will depend on the quality of management’s response to the changing expectations of the public.”
As these ideas developed so did their critics. The most vociferous of these was the economist Milton Friedman. His 1970 article in the New York Times Magazine entitled “The Social Responsibility of Business is to Increase its Profits” argued that business is not equipped to tackle social problems and it should stick to what it is good at - making money. Problems that are not solved by business are the responsibility of the government. He does however state that profit maximising aims should be strictly kept within the law and moral expectations of society.
CSR gave birth to more and more differing and converging theories into the 1980s. As CSR frameworks developed they also expanded. A major contribution was the economist R. Edward Freeman’s book on Stakeholder Theory. This contrasts with the view that business owes no one but the shareholder, and instead argues that business should consider all parties affected by its actions – including governments, trade unions, workers and their communities.
The 1980s were also a decade where corporate irresponsibility hit the headlines, from Nestle baby formula to sweatshirts made in sweatshops. Transparency was going to become an issue if companies were to regain consumer trust. This ushered in a new type of corporate reporting called the triple bottom line. Under the adage that what can be measured can be managed, companies would report not only their financial performance but also their social and environmental performance – people, planet and profit.
This development brought to the fore the issue of corporate social responsibility
versus corporate financial performance. That the two are linked is indisputable,
but as yet no one has been able to lay down a specific framework for companies
to act on. In practice, reporting the triple bottom line is fraught with
difficulties – how can you measure three completely different things
on the same scale? Currently a major focus of the debate is on this relationship
and the business case for CSR.