How responsible is corporate responsibility?

Popular convention holds that any company wishing to remain competitive in the market needs some element of corporate social responsibility (CSR).1 Consumers, it is argued, demand that the companies reflected in their stock portfolios and shopping cards make a contribution to ending environmental degradation, social inequalities, human rights abuses, and the like. Companies have both expanded their CSR programs and turned back out to consumers products that are co-branded with charitable organizations, a portion of whose sales are promised to go toward ending breast cancer, saving whales, and other such noble causes.
Vogel rights casts a skeptical eye towards the prevalence of CSR in today's marketplace, writing that CSR in itself “reflects both the strengths and the shortcomings of market capitalism.”2 While it may prompt certain business to create new environmental safeguards and gives a certain voice to employee and consumer social values, in most cases it does so on only the most superficial of levels. In addition, Vogel writes that since CSR is completely optional, companies treat CSR as any other research and development project, using CSR only if it will produce a return on their investment.3

Corporate social responsibility programs are often appealing for the wrong reasons. Since the definition of CSR is unclear, companies can point to activities that would normally fall into their strategic planning as examples of CSR.4 There are no guidelines for CSR, so even token programs with no real impact can be listed proudly in the company annual report to shareholders. Vogel cites Enron as one prominent example, which before its notorious downfall was well-known for its local philanthropy.5 Philip Morris/Altria Group is another example of a company giving hundreds of millions of dollars to the non-profit sector. Does such philanthropy—no doubt called “corporate social responsibility” by the company—undue the fact that instead of defrauding investors Philip Morris/Altria instead produces a known carcinogen?

The prevalence and trendiness of CSR can also induce a certain social laziness in consumers, the effect of which can be fairly readily seen in the non-profit world. Co-branded products with “a portion going to support” the work of charities from health to children to animals can lull people into thinking that all they need to do to make a difference is consume. The beneficiaries of such actions are more likely to be companies than non-profits, who have hardly had a chance to convert the customer into a loyal donor or educated activist through their purchase. Fundamentally such initiatives reduce philanthropy and activism to market transactions instead of social movements. While co-branded products, rubber bracelets, and t-shirts hardly paint the entire picture when it comes to examining the flaws of CSR, they do show the superficial nature of both some CSR programs and consumer 'activists.'

Social Changes and the Market
Stone challenges the claim of programs like CSR that market competition increases social welfare.6 She writes that organizing activities people enjoy and care about as market exchanges actually decreases their motivation to pursue them and can actually even decrease the net social benefit.7 By this view, providing an alternative to direct social action, such buying a T-shirt instead of writing a member of Congress or donating directly to a political advocacy organization, people are not only becoming less engaged in social change but they are also less satisfied. The unfortunate, and no doubt unintended, consequence is that citizens become disenchanted with social service and advocacy organizations—and possibly even philanthropic activities as a whole—leading to an even greater decrease in social change.

Both Vogel's critique of CSR and Stone's of market failures boil down to the central issue of power. In CSR, while consumer demands may have produced some tangible changes, the fact of the matter is that the products being put back on the shelves for them to consume are being chosen and shaped by the company bottom line. Stone summarizes this argument by stating, “if consumer preferences are not really individual but shaped by sellers, we can no longer assume that each transaction does increase the welfare of both parties.”8 Indeed, by linking corporate and social goals consumers may actually be doing more harm than good. Certain social issues rise and fall in trendiness for both the average consumer and larger institutional donors. Africa, after years of funding neglect, suddenly finds its HIV/AIDS endemic being used to sell Product(Red) sneakers. Should the problems in Africa prove to be longer-lasting than the seasonality of sneakers, will consumers attention span on the issue last? Or will they turn away from the disappointment and onto another product claiming to alleviate a different injustice in another region of the world?

Perhaps the issue lies not with consumers, as Americas truly are a philanthropic and civic-minded group, more generous with their income to social causes than almost any other nation. The solution, then, lies in reclaiming social issues and their power to move people to action from corporate branding and 'green-washing' campaigns to the activist and community organizations actually making real impacts. How to do that, however, will be more difficult than launching the next co-branded cell phone.

1 D. Vogel, “Corporate Social Responsibility” (Market for Virtue, 2006), p.2. Jeffrey Hollender is quoted that “Corporate Social Responsibility [is]...the future of business. It's what companies have to do to survive and prosper in a world where more and more of their behavior is under a microscope.”
2Vogel, p.3
3Ibid, p.3-4
4Ibid, p.4
5Ibid, p.5
6D. Stone, Policy Paradox, New York: W.W. Nortan & Company, 1997. p73
7Ibid.
8Ibid, p.74