Branson and The Corporation

I've blogged before about whether Corporate Social Responsibilty (CSR) is just PR. Now I have a case

Is Corporate Social Responsibility just good PR?

Ok, what would be a good definition of Corporate Social Responsibility?

Here’s one: “a company's commitment to operating in an economically and environmentally sustainable manner while recognizing the interests of its stakeholders. Stakeholders include investors, customers, employees, business partners, local communities, the environment and society at large.”

A laudible definition. But it raises some questions.

There are two extreme views on corporate social responsibility:

One -- that it is an empty gesture designed only to improve the public image and sales of a corporation, or—

Two -- that it shows corporations can actually be good, that it can actually be concerned about more than profit.

There are elements of truth to each of these, but neither is fully

accurate .

I want to make several points about social responsibility:

1) The corporation as an institution (—and my focus here, and the focus of the film, is on the large, publicly-traded corporation—) is legally compelled always and only to serve its self-interest. At the core of corporate law is the requirement that directors and managers must prioritize the “best interests” of the corporation, which courts interpret as the best financial interests of shareholders. It is not incorporated for the benefit, financial or otherwise of its various stakeholders. It may be wise for a corporation to take their interests into account, but there is no legal mandate for the corporation to concern itself with the wishes of customers, employees, business partners, local communities, the environment or the society at large.

2) That means that any program of social responsibility must be

justified as serving the corporation’s interests first. In other words,

corporate social responsibility can’t be taken to the point where it costs, rather than benefits, the shareholders of the company.

3) It is because of this legally compelled obsession with self-interest that we use the metaphor of a psychopath to describe the corporation in the film.

4) But the people who run corporations are not psychopaths—with some exceptions—and it’s important to realize that while the corporation, as an institution, is incapable of concerns for others, the people within a corporation may care deeply about the socially responsibility programs a company has in place, and the causes that it helps. So this is not to say they are somehow duplicitous and insincere. It is to say that their good intentions must still operate within the corporation’s institutional constraints. They can try to push the envelope—but there is an envelope.

What all the definitions of CSR lack is a reference to the voluntary nature of a company’s so-called “commitment” to operating in an economically and environmentally and socially sustainable manner. The question isn’t whether or not you’re all good people working for the better good. And in your hearts, you may well be committed. But if you are a publicly traded corporation, your “commitment” is to the best financial interests of your shareholders. That must be your highest value. And as concerned human beings, we must have a higher value than that. In my view, our institutions must be re-created to reflect that fact.

The issue is not uncomplicated.

There are two extreme views put forward in the film. One is expressed by Richard Grossman: that the money corporations spend on social responsibility programs (and here CSR gets a little muddled with strategic corporate philanthropy)—he argues that money should be considered TAXPAYER money to be allocated to social programs democratically through accountable government spending. That is, corporations should stick to their knitting and not go beyond.

The other view is that, Corporate Social Responsibility must be encoded in law, and the full force of the state must be brought to bear to force ALL businesses—and stakeholders—to work within sustainable operating parameters. This is the argument for full social accountability.

Whichever route we collectively opt for, there’s no time to simply hope that “The Ecology of Commerce” is going to arrive in what is called “The God Pod” at EXXON and make it’s way into the brain of its CEO. And even if it did, there’s no guarantee it wouldn’t simply be shredded therein.

Which brings us to the question: When is CSR simply PR and when is it impactful and relevant?

CSR is simply PR as long as the legal mandate of the corporation is to put profit before all else. If CSR can ONLY be justified in terms of serving the self interest of the corporation, then it is PR. That doesn’t mean the programs are meaningless, but they must be recognized for what they are.

Where are the business and sustainability opportunities and solutions?

We know people want corporations to be responsible, sustainable, accountable. The reason Greenwashing PR is used as a tactic is that the public is being told what it wants to hear.

6) So we should welcome the good deeds that corporations do, and we should recognize the good intentions of the people within the corporation, but we should be realistic about the limits of corporate social responsibility.

7) In particular, we must reject the deduction often drawn from corporate social responsibility that, because corporations can be good, they are capable of regulating themselves, constraining themselves from causing harm in the world, and, therefore, we no longer need government regulation, or at least not as much of it.

8) Corporate social responsibility will always be a secondary goal for corporations, and one that must be limited to ensure the corporation’s primary goal is met. It should be welcomed for what it does, but never accepted as an argument that corporations are now benevolent and can be entrusted to regulate themselves.

—From a talk given by Mark Achbar to Canadian Business For Social Responsibility, with notes from Joel Bakan

Acting noble may not be noble, but it's relatively better than what most people in society contribute or achieve. I may be a little biased because Branson is a hero of mine. The flipside of his nobility could basically be an acting of buying his soul back or legitimising any misdeeds his company may have done in its years of growth, though I don't know the specifics of the rumours.

If only there were more business people, who have empires that CAN truly influence the state of world (more than any other collective force), that pay back society in such obvious and seemingly noble ways.

Cynicism has its place as a good survival mechanism. But I don't think people today want to just survive through life. I believe people want more out of life, more for the world we live in. Instead of survival, we seek significance. Perhaps enlightenment.

Yes, trust your gut. Be insightful and don't believe in hype. Value truth, and work to find it. But above all else, keep your faith. Not the religious "I-go-to-church/mosque/temple" type of faith. I'm talking about the kind of faith that says, "I believe in something.", that unites people and makes them stronger.

I'm not saying I believe Branson, or that his actions are mostly noble. I believe in the power of his story, and that for the most part it is an excellent story. I believe it would be far more excellent if an individual could learn from his story and find it in themself to have faith in their own ability to someday be noble enough to pay back society for the better. Wouldn't you like to do that?