The pure pursuit of profits won't get you anywhere ... Dr Michael Hopkins answers questions on corporate social responsibility and the role of business in addressing social problems

Burgess COMMENTARY

Peter Burgess

The pure pursuit of profits won't get you anywhere

Dr Michael Hopkins answers questions on corporate social responsibility and the role of business in addressing social problems

Bank notes IMAGE The cracks will begin to show in any business, if profit is its only drive. Photograph: Tim Gainey/Alamy

Hopkins is a PhD economist with a strong focus on measurement, employment issues and executive education especially in emerging market economies. He spoke to Dimitra Tzigianni, an On Purpose fellow, about CSR and the role that companies can play in addressing social problems.

What’s your definition of CSR?

CSR is about treating all stakeholders of an institution be it private or public in a responsible or ethical manner, which means treating key stakeholders in a manner deemed acceptable according to international norms. It includes economic and environmental responsibility and stakeholders who are both within and outside an organisation.

Big entrepreneurs have always had high social consciousness, because they were always interested in their legacy

The wider aim of social responsibility is to create higher and higher standards of sustainable living, while preserving the profitability of the corporation or the integrity of the institution, for people both within and outside these entities. CSR is a process to achieve sustainable development in societies.

Why should companies adopt a CSR strategy? And how are these strategies evolving?

You will also find generally that companies which have CSR as part of their business strategy are more successful than others. CSR is not simply a cost but an investment.

Companies need a longer-term CSR strategy and the question is not about profits itself but how you make your profits. Every company needs to make profits in order to invest them back, but if you make them the way, for instance, Enron did – by tricking the system, and increasing inequalities – then you are not going to survive. So yes, they need to continually analyse their business case, their investment in social issues and consult their stakeholders.

I think more and more that big companies see that the pure pursuit of profits is not going to take them anywhere. In fact the big entrepreneurs have always had high social consciousness, because they were always interested in their legacy. Think of Bill Gates, Henry Ford or Rockefeller.

How does CSR address entrenched social problems?

I went into CSR years ago because I felt that the public sector, the UN and NGOs couldn’t really tackle the big problems of development [on their own].

There are many NGOs doing great things but they can’t reach everyone in every community, while governments can. For example, education and skills provision for young people has to be a government issue, yet governments should continually work with the private sector to ensure that appropriate skills are being taught. CSR can help to tackle the big development issues and also contribute to the aforementioned public-private interface.

And when I look at successful countries such as China, South Korea, and Malaysia that have drastically reduced poverty they had a massive investment in education and training but also allowed the private sector to take off.

However, the growth of CSR is occurring on a backdrop of increasing inequality which is unacceptable and can only be addressed by government involvement.

Do you think that a new social economy is emerging as a way to counter growing levels of inequality around the world?

There is certainly a higher level of social consciousness around the world

My view is ‘wouldn’t that be nice?’ but I don’t really think it’s happening [yet]. In Europe, according to the EU’s definition, 10% of enterprises are involved in the social economy in the region. Certainly many people are thinking that there might be another way to help society than existing forms of enterprise or NGO and there is certainly a higher level of social consciousness around the world.

What can governments do to support the growth of social enterprises and impact businesses?

Much of the third sector is based on donations from foundations and governments and therefore is not really creating its own dynamic.

I think that governments should think a bit more about what they mean by social enterprise. Governments and international agencies should look at the different fiscal systems and point out what exactly needs to be done to improve the conditions for social enterprises.

If you operate a market economy, you also have to provide incentives – not everyone can be on a form of social welfare and dependency. Happily there is no doubt that there is a strong current of social responsibility, sometimes also called sustainability, right across the world even in the poorest and troubled nations – but that is another story.

Dr Michael Hopkins is chair and partner of MHC International, a research and advisory company on corporate social responsibility (CSR), employment and socio-economic development. He has worked in and with the corporate sector, the United Nations, ILO, The World Bank and in academia.

Dimitra Tzigianni is an On Purpose Social Enterprise Fellow who worked with the British Council’s Global Social Enterprise programme. Prior to joining the On Purpose Social Enterprise leadership programme, Dimitra worked as financial and CSR auditor for KPMG and Deloitte in Luxembourg and Greece and served as a business mentor for young social start-ups in Switzerland and China.

Content on this page is paid for and provided by the British Council, sponsor of the international social enterprise hub