Burgess COMMENTARY

Peter Burgess

WHAT’S WRONG WITH CSR?

Sir Geoffrey Chandler (formerly a senior executive with Shell and then founder of the Amnesty International Business Group in the UK) stated in 2003:

“[CSR] implies that business … has no inherent social utility, but requires a sanitising “add-on” – something which enables it to “give back” to society, a sentiment frequently heard on the lips of corporate leaders apparently unaware that this suggests that their own core activities are parasitic, which, without appropriate policies and principles relating to the whole of their impact, they may indeed be.”

Many of us miss Sir Geoffrey’s leadership and must ask ourselves how much has changed in the past years? Corporate social responsibility (CSR) has grown into a global industry, with companies and CEOs lining up to show how they contribute social and environmental value to some of society’s most pressing problems. This, of course, is a good thing—better than the Milton Friedman vision of business operating in a context totally removed from society (although he too believed in mandatory rules of the marketplace). This movement of course, has made a positive contribution, however, there is much – good and bad – that currently sits under the umbrella of CSR: from self-serving public relations to philanthropy, and from supply chain compliance to working on shared social value projects. So asking a question such as “do you think CSR is a good thing?“ is like asking “do you think newspapers are a good thing?” It depends a lot on the content. This diversity of things that are included under the CSR banner, and the lack of a clear definition, means the label “CSR” too often obscures and does not clarify any activity’s relationship with the social contract.

The purpose of this critique, developed in Chapter Three of my book, is not to condemn the vital work of many others, or myself for that matter, but to show the size of the conceptual gap that needs to be filled if we are to explore the social responsibilities of non-state actors seriously and the value that the social license concept might offer in this context. For anyone who might find some of my criticisms of CSR a little too direct, remember I am criticising myself here also – I have worked in CSR for nearly 20 years. My intention is to point to where I see problems and offer a way forward.

CSR lacks a clear definition, purpose, or end goal

There are many definitions of CSR. Sometimes, when I am teaching, I put on the Powerpoint presentation the official (but unattributed) CSR definitions recognized by the Brazilian, Chinese, and Indian governments, as well as that of the European Union, to see if the students can guess which belongs to whom. It is a fun exercise—try it sometime, perhaps for the whole of the G20. The idea of business doing good for society has been interpreted in line with the political context of each of these economies and the societies they reflect. There is no internationally recognized definition of CSR, which in itself tells you something.

CSR is not a requirement

When push comes to shove, business unit managers in the vast majority of companies are rarely fired for not meeting CSR targets (unless they are the CSR manager themselves). They might be marked down on their scorecard during appraisal, but not fired. However, if they seriously breached health and safety, workplace discrimination, or the personal privacy of an employee, they might well be fired—and rightly so. But this is not seen as CSR? Why? Herein lies the contradiction in how many businesses still regard CSR. If CSR is about what is voluntary, then it is always on the edge of what one must do, and if health and safety or equal opportunities are something one must do, then it can’t be CSR. But why would some of the most serious social impacts a company can have not be seen as corporate social responsibility. It is a responsibility, it is social, and it is most definitely within a corporation.

CSR is not core to the business model

Porter and Kramer are also talking about CSR nowadays or the need for an improved version of it. So whilst civil society has criticized CSR for its lack of accountability, business schools have criticized it for its lack of focus on innovation and the creation of value. The concept of “shared value” is a compelling one and has attracted the attention of a number of leading CEOs. The role of business innovation in terms of tackling societal ills, in particular in healthcare, or the opportunities brought to the world by the internet or mobile telephones, suggests that there is much that shared value can deliver as a concept. If the “Shared Value” construct helps to bring CSR closer to core business models, then this is a good thing also. But if business is serious about the delivery of public goods, it is entering the social contract. What is missing from much of the discussion on shared value are the consent-based and justice-based expectations we might have for businesses. As I will seek to explain, true shared value will not be possible without social license.

So why is social license a better way of understanding social responsibility?

So why do I think social license might be a more useful concept than much mainstream CSR when trying to define what is going on, and what will need to go on for organizations to be responsible societal actors in the years to come? In my view, social license offers the following advantages

• It describes a set of relationships by which it is the relationship between individuals in society that sits at the center and the duties they confer to the state. Non-state actors need to be clear about whether they are part of the social contract (i.e. civil society) or not (i.e. organizations whose primary purpose is not social), and then interact on social issues accordingly.

• Social license cannot come into being unless the organization which seeks to secure it is perceived to have enough legitimacy and trust, and the specific activities involved cannot proceed with sufficient consent from those who are impacted or have a stake in the consequences of the activity. Importantly, this requires clarity about an organization’s position in relation to the social contract.

• As a facet of the social contract, social license requires a number of consent-based and justice-based phenomena to be present—balancing the needs and views of specific communities with international norms, in particular, internationally recognized human rights.

• Unlike CSR, social license relates to specific activities and not to organizations. Therefore it avoids platitudes such as “company x is good at CSR” or “company y is a good company.”

• Social license cannot be “self-declared”—it describes an equitable balance of interests which allows an activity to continue and to thrive, but it is dynamic and can always be withdrawn. Organizations can work to achieve the underpinning requirements, the result of which will hopefully be securing the social license for a particular project or activity. But social license cannot be managed or controlled directly by any single organization. This also reflects the reality that even a local community cannot necessarily hold the right to veto against a particular activity if it is clearly in the interests of all others.

• Social license avoids tiresome generalities about whether mandatory or voluntary approaches to CSR are better. Social license focuses on the impacts of specific activities and the associated behavior of all involved. By focusing on the outcomes, it allows discussions about how best to get there—what needs to be required by law and what does not.

My book takes these arguments further, but I recognise it is just the start of a more profound discussion we all need to have and to share reflections about what is wrong with CSR, or at least old-fashioned understandings of what CSR is. Nor I do I believe so a second that Geoffrey would have agreed with all of my arguments but he would want us all to continue to challenge each other and to advance collective thinking and accountability.