Corporate Social Responsibility

Corporate social responsibility, or CSR, has been adopted as a formal policy goal by many advanced society governments and businesses. A flavor of its meaning can be gained by looking, especially at some of the governmental Web sites. For instance, CSR has been defined formally by the British government in the following general terms: It is the business contribution to collective sustainable development goals, concerning how business takes account of its economic, social, and environmental impacts in the way it operates—maximizing the benefits and minimizing the downsides. More broadly, there is the issue of why business should bother. After all, as neoclassical economists have long argued, business owes abstractions such as “society” nothing—shareholders are the owners of business and it is the organization's obligation to do everything legal and legitimate to advance shareholder value, not to squander it on well-meaning but irrelevant CSR projects. On the other hand, the stakeholder model of the firm would insist that shareholders are but one set of stakeholders; that there are plenty of other significant stakeholders, including customers; nongovernmental organizations (NGOs); communities and civil society more generally; as well as activist groups claiming to articulate the interests of the environment, animals, or other mute stakeholders. Looked at in this broader way, the question becomes one of temporality: If businesses serve only shareholder value interests in the short term and do so in such a way as to jeopardize other interests that might claim representation or be [Page 303]represented, and these then boomerang back onto the business by attacking its legitimacy or reputation, then it becomes a matter of shareholder value to attend to broader stakeholder interests. As David Vogel suggested in 2005, it may well be the standard business case that the primary responsibility of companies is to create wealth for their shareholders. But the emergence of CSR and activists associated with it adds a twist: In order for companies to do well financially, they must also be good, ethically, by acting virtuously.

Cynics might say that it becomes a matter of shareholder value for business to appear to be concerned about CSR issues, leading to a common critique that CSR is often seen as a tool of corporate greenwash, a rhetorical device employed by corporations to legitimize the corporate form and accommodate the social consciences of its consumers. However, CSR, if monitored by civil society organizations or other independent external auditors, can operate as civil regulations that limit the range of acceptable behaviors open to firms and institutionalize new responsibilities. Among the common range of auditors are AccountAbility's AA1000 standard, based on notions of triple bottom line (3BL) reporting; the Global Reporting Initiative's Sustainability Reporting Guidelines; Social Accountability International's SA8000 standard, and the ISO 14000 environmental management standard. In addition, NGOs, such as Oxfam, often monitor closely the activities of transnational corporations in industries such as mining and the local impact that they have on communities, politics, and the environment.