The Myth of Csr

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The Myth of CSR
The problem with assuming that companies can do well while also doing good is that markets don’t really work that way

By Deborah Doane

Stanford Social Innovation Review Fall 2005
Copyright © 2005 by Leland Stanford Jr. University All Rights Reserved

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the myth of

CSR
THE CORPORATE SOCIAL RESPONSIBILITY (CSR) MOVEMENT has grown in recent years from a fringe activity by a few earnest companies, like The Body Shop, and Ben & Jerry’s, to a highly visible priority for traditional corporate leaders from Nike to McDonald’s. Reports of good corporate behavior are now commonplace in the media, from GlaxoSmithKline’s donation of antiretroviral medications to Africa, to Hewlett-Packard’s corporate volunteering programs, to Starbucks’ high-volume purchases of Fair Trade coffee. In fact, CSR has gained such prominence that the Economist devoted a special issue to denouncing it earlier this year. Although some see CSR as simply philanthropy by a different name, it can be defined broadly as the efforts corporations make above and beyond regulation to balance the needs of stakeholders with the need to make a profit. Though traces of modern-day CSR can be found in the social auditing movement of the 1970s, it has only recently acquired enough momentum to merit an Economist riposte. While U.S. and European drivers for CSR have differed slightly, key events, such as the sinking of Shell’s Brent Spar oil rig in the North Sea in 1996, and accusations of Nike and others’ use of “sweatshop labor,” triggered the first major response by big business to the uprisings against the corporate institution. Naomi Klein’s famous tome, “No Logo,”1 gave voice to a generation that felt that big business had taken over the world, to the detriment of people and the environment, even as that generation was successfully mobilizing attacks on corporate power following the Seattle antiglobalization riots in 1999. Rather than shrink away from the battle, corporations emerged brandishing CSR as the friendly face of capitalism, helped, in part, by the very movement that highlighted the problem of corporate power in the first place. NGOs, seeing little political will by governments to regulate corporate behavior, as free-market economics has become the dominant political mantra, realized that perhaps more momentum

The problem with assuming that companies can do well while also doing good is that markets don’t really work that way

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could be achieved by partnering with the enemy. By using market mechanisms via consumer power, they saw an opportunity to bring about more immediate change. So, organizations that address social standards in supply chains, such as the Fair Label Association in the United States or the United Kingdom’s Ethical Trading Initiative, have flourished. The United Nations partnered with business to launch its own Global Com- Some socially linked brands, such as Fair Trade coffee, are growing very rapidly in the U.S. and Europe. pact, which offered nine prinin the United Kingdom was worth almost £25 billion in 2004, ciples relating to human rights and the environment, and was according to a report from the Co-operative Bank.2 hailed as the ethical road map for the future. And while socially The Economist article argued that the only socially responresponsible investment had been popular in some circles for sible thing a company should do is to make money – and that years, eventually the mainstream investment community cotadopting CSR programs was misguided, at best. But there...
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