Critics of CSR as well as proponents debate a number of concerns related to it. These include CSR's relationship to the fundamental purpose and nature of business and questionable motives for engaging in CSR, including concerns about insincerity and hypocrisy.
CSR and the nature of business
Corporations exist to provide products and/or services that produce profits for their shareholders. Milton Friedman and others take this a step further, arguing that a corporation's purpose is to maximize returns to its shareholders, and that since (in their view), only people can have social responsibilities, corporations are only responsible to their shareholders and not to society as a whole. Although they accept that corporations should obey the laws of the countries within which they work, they assert that corporations have no other obligation to society. Some people perceive CSR as incongruent with the very nature and purpose of business, and indeed a hindrance to free trade. Those who assert that CSR is incongruent with capitalism and are in favor of neoliberalism argue that improvements in health, longevity and/or infant mortality have been created by economic growth attributed to free enterprise.Critics of this argument perceive neoliberalism as opposed to the well-being of society and a hindrance to human freedom. They claim that the type of capitalism practiced in many developing countries is a form of economic and cultural imperialism, noting that these countries usually have fewer labor protections, and thus their citizens are at a higher risk of exploitation by multinational corporations.A wide variety of individuals and organizations operate in between these poles. For example, the REALeadership Alliance asserts that the business of leadership (be it corporate or otherwise) is to change the world for the better. Many religious and cultural traditions hold that the economy exists to serve human beings, so all economic entities have an obligation to society (e.g., cf. Economic Justice for All). Moreover, as discussed above, many CSR proponents point out that CSR can significantly improve long-term corporate profitability because it reduces risks and inefficiencies while offering a host of potential benefits such as enhanced brand reputation and employee engagement.
CSR and questionable motives
Some critics believe that CSR programs are undertaken by companies such as British American Tobacco (BAT), the petroleum giant BP (well-known for its high-profile advertising campaigns on environmental aspects of its operations), and McDonald's (see below) to distract the public from ethical questions posed by their core operations. They argue that some corporations start CSR programs for the commercial benefit they enjoy through raising their reputation with the public or with government. They suggest that corporations which exist solely to maximize profits are unable to advance the interests of society as a whole.Another concern is when companies claim to promote CSR and be committed to Sustainable Development whilst simultaneously engaging in harmful business practices. For example, since the 1970s, the McDonald's Corporation's association with Ronald McDonald House has been viewed as CSR and relationship marketing. More recently, as CSR has become mainstream, the company has beefed up its CSR programs related to its labor, environmental and other practices All the same, in McDonald's Restaurants v Morris & Steel, Lord Justices Pill, May and Keane ruled that it was fair comment to say that McDonald's employees worldwide 'do badly in terms of pay and conditions' and true that 'if one eats enough McDonald's food, one's diet may well become high in fat etc., with the very real risk of heart disease.'
Critics concerned with corporate hypocrisy and insincerity generally suggest that better governmental and international regulation and enforcement, rather than voluntary measures, are necessary to ensure that companies behave in a socially responsible manner.
The business benefits of corporate social responsibility
Corporate social responsibility (CSR) isn't just about doing the right thing. It also offers direct business benefits.
Building a reputation as a responsible business sets you apart. Many consumers prefer to buy from ethical businesses. Companies often favour suppliers who demonstrate responsible policies as this helps them to minimise the risk of any damage to their own reputations.
Some customers don't just prefer to deal with responsible companies, but insist on it. For example, sales of "environmentally friendly" products continue to grow - and these products often sell at a premium price. Ben & Jerry's ice cream became as famous for its approach to responsible business as for its products. The company has grown dramatically while continuing to focus on CSR. Find out about Ben & Jerry's approach to CSR on the Ben & Jerry's website - Opens in a new window.
Reducing waste and emissions doesn't just help the environment - it saves you money too. It's not difficult to cut utility bills and waste disposal costs, bringing immediate cash benefits. For more information read our guides on how to save money by reducing waste and save money by using energy more efficiently.
There are other benefits too:
A good reputation makes it easier to recruit employees.
Employees stay longer, reducing the costs and disruption of recruitment and retraining.
Employees are better motivated and more productive.
CSR helps ensure you comply with regulatory requirements.
Activities such as involvement with the local community are ideal opportunities to generate positive press coverage.
Good relationships with local authorities make doing business easier. See the page in this guide on how to work with the local community.
Understanding the wider impact of your business can help you think up profitable new products and services.
CSR can make you more competitive and reduces the risk of sudden damage to your reputation (and sales). Investors recognise this and are more willing to finance you.
^ cf. Grayson, D. and Hodges, A. (2004) Corporate Social Opportunity! Seven Steps to Make Corporate Social Responsibility Work for your Business
^ Williams, Cynthia A.; Ruth V. Aguilera (2008). "Corporate Social Responsibility in a Comparative Perspective". in Crane, A., et.al. (PDF). The Oxford Handbook of Corporate Social Responsibility. Oxford: Oxford University Press. ISBN 0199211590.
^ Habisch, André; Jan Jonker, Martina Wegner, R. Schmidpeter (eds.) (2005). Corporate Social Responsibility across the Europe. Heidelberg: Springer. ISBN 978-3-540-23251-3.
^ R.H. Gray, D.L.Owen & K.T.Maunders, Corporate Social Reporting: Accounting and accountability (Hemel Hempstead: Prentice Hall, 1987)p. IX.
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