On August 23 of this year, The Wall Street Journal published a piece titled "The Case Against Corporate Social Responsibility" by Dr. Aneel Karnani, an associate professor of strategy at the University of Michigan’s Stephen M. Ross School of Business.
Can companies do well by doing good? Yes — sometimes. But the idea that companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed.
That’s his opening salvo – and it actually sounds as though he’s raising two issues: (a) do companies have a responsibility to act in the public interest? and (b) will they necessarily profit from doing so?
All of which is food for thought, and hopefully for some challenging conversation here on The Edge – opening the box, peering into it, and maybe stepping out of it — all depending, of course, on where you stand, and where you think the box is.
As you’d expect, Dr. Karnani’s piece didn’t pass without comment.
Dave Douglas, the co-author of "Citizen Engineer: A Handbook for Socially Responsible Engineering," ran a CSR group at Sun Microsystems for five years. He now blogs at NearWaldenHis basic critique of Karnani’s piece? He suggests that:
Corporate Social Responsibility professionals at the world’s largest companies only do two things: propose projects that the business should already be doing because they make total financial sense, and propose projects which are financial disasters and companies should never seriously consider. And if you lived in his world, you’d reach the same conclusions that Dr. Karnani does. … CSR is at best irrelevant, and can even be dangerous.
Douglas then argues that it’s the function of a CSR team:
  1. to add discussion and analysis of a new set of risks into corporate decision-making,
  2. to represent issues within the corporation that watchdogs, NGOs and advocates represent within society
  3. to assess the future "global legal and social opinion environment that the product will be sold into" as part of the ongoing design process
  4. to help prioritize consideration of socially/environmentally friendly projects that might otherwise lack a corporate advocate
  5. to keep corporations aware of potential major societal impacts even when a negative impact may not be immediate, and thus lessen liability
  6. and most importantly of all, to assist in and positively influence decision making where "two choices have different societal impacts, but the financials aren’t that different."
And Douglas’ conclusion?
Be careful of academics talking about real world corporate issues: they can be irrelevant, and in some cases even dangerous.
I’m assuming there’s something to be said for both sides, and indeed that the matter is more complex than a single somewhat combative article or a single no-less-combative rebuttal can convey. So let’s dig into some of the complexity.
  • Is CSR dangerous, mostly irrelevant, basically a façade with some social benefits, or a major corporate initiative, urgently needed?
  • Does the CSR team function (eg via risk assessment) as a sort of corporate conscience?
  • What about "projects which are CSR winners but financial losers"? Do they have a place in corporate thinking? What should CSR do about them?
  • For those of you who like quotations — What profiteth a man? What profiteth a corporation?
  • And we’re back to the old chestnut: should social impact be a quantified aspect of our economic thinking?        
Dr Karnai writes:
Healthier foods and more fuel-efficient vehicles didn’t become so common until they became profitable for their makers. Energy conservation didn’t become so important to many companies until energy became more costly. These companies are benefiting society while acting in their own interests; social activists urging them to change their ways had little impact.
Is that right? And if so, where should the socially concerned pitch their efforts for maximum impact — I’m reminded of Donella Meadows’ brilliant Places to Intervene in a System [pdf].
There’s a lot to be explored and explained here, your own experiences and hunches are valuable contributions to an important discussion. Let’s get the conversation started, and add some of our own "crowdsourcing" input – leavened with real-world expertise and impact.
Please join Charles (hipbone) Cameron, in a timely event on The Case Against Corporate Social Responsibility, here on The Edge.