Thanks for a helpful article. Alas, too many people (Reich included?) are using confused or outdated notions of Corporate Social Responsibility. Among the good summaries of the history and current meaning of the term, the best that I have seen is a lengthy examination in William Frederick's Corporation, Be Good! The Story of Corporate Social Responsibility (Indianapolis: Dog Ear, 2006). I commend it to all who want to know more about this subject. Frederick's published work (including Values, Nature, and Culture in American Corporations) deserves to be studied and discussed widely.

As Frederick's title suggests, the core point of CSR is that organizations should/must be responsible in the same way and for the same reasons that individuals must. As with individuals, organizations must be able to justify their decisions and actions in terms of law and generally recognized moral principles. Corporations are not amoral agents, notwithstanding that they have no soul. Aligning mission, values, policies, procedures, and culture with moral responsibility is challenging work. As the SustainAbility/WWF report "Influencing Power" indicates, few mega companies have gotten it completely right. But the larger society of stakeholders (employees, communities, shareholders, etc.) of corporations are learning to hold corporations accountable for what they do or fail to do in ways that are analogous to how communities insist on the pro-social behavior of their individual members. This is a good thing. It does not displace or supplant the need for legislative requirements and government efforts on such matters as the Climate Crisis. Rather, it complements and supplements them and, in the end, makes it easier to obtain the proper government contribution.

All the best,

Mike Palmer
www.EthicsByDesign.com

Robert Reich is correct that Corporate Social Responsibility can be a dangerous distraction.

Mark Kramer and Michael Porter are correct that companies should systematically analyze their current and potential impact on social responsibility as part of their ongoing strategy development and pursuit of competitive advantage.

Mike Palmer is correct that organizations must be able to justify their decisions and actions in terms of the law and generally recognized moral principles.

However, we should not depend on governments, even if it is their purview.

The solution will come from many sources including the free market and new inventions.

It would be helpful, however, if society, and all its stakeholders, had a better way to analyze social issues. Porter has magnificently developed methodologies to analyze industries and to develop corporate strategy. Porter and Kramer have also analyzed the linkage between strategy and CSRs in their article: “Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility."

What is now needed is a methodology and framework for systematically analyzing each type of social need.

For example, maybe we need a “Seven Forces Model for Analyzing Social Issues”. A model that would be used for each social issue (clean ocean water; clean air; elimination of child hunger; etc.) – and used in collaboration efforts by industry consortiums, individual companies, leading experts, government agencies, etc.

Maybe Mark Kramer, Michael Porter, and/or Bill & Melinda Gates or someone else can suggest something. It will take a great thinker because no government or company has the global role to tackle societies problems, one by one. (Nothing against the United Nations but that’s not the likely source of the solutions needed.)

If 51 of the 100 largest economies in the world are corporations (the other 49 are countries) perhaps, then, we shouldn't discount the ability of leading corporations to recognize trends and contribute eloquent social solutions in advance of the government sector. In the hypercompetitive corporate sector there may be structures, knowledge, processes, capabilities, and talent which far outstrips the capabilities of the government sector; tripping over itself in accomodating the interests of diverse lobby groups.
My three favored books on the subject are "The Money Men" by Birnbaum, "Top Down Policymaking" by Tom Dye, and "Leading Corporate Citizens" by Sandra Waddock.

I appreciate Kramer's response to Reich.

I recently read a comparison between the quantity and quality of official development assistance (ODA) and philanthropic /private international assistance. The latter was presented as overtaking the former in both sheer volume and efficacy. I view the CSR debate through a similar lens.

No single method or channel can be used to address todays multidimensional social and environmental concerns. So long as we, as consumers and citizens, are disillusioned by the efficiency of one method or channel, we have the freedom to create a new one. CSR is a logical and successful response by consumers and professionals to weak/failed policies throughout the world.

That corporations which are setting the high standards for CSR are simultaneously reaping the benefits in their bottom-lines is a beautiful incentive for companies throughout the world to "get in the game" of CSR.

If Reich lived in Africa, he would not need to be told he is wrong. I agree completely with Mark Kramer on Corporate Social Responsibility especially with my African experience, where I can see first hand what a “supercapitalist” attitude by multi-nationals, franchises and other corporate entities results in. Weak government gives organisations plenty of leeway as far as any kind of standard is concerned. However, organisations are forced to be proactive about protecting their own environment and workers by thinking critically about the social dimension of their activities because of CSR “fallout” from more developed countries. The main incentive for CSR practice here has been the fear of supply chain disfavour. For example, flower farms were amongst the worst abusers of people and the environment with little or no personal protection for pesticide spraying workers, rampant sexual harassment of female staff, disregard for child labour laws and/or regulations and pollution of the water bodies around which most were built. Until major buyers, the European Union threatened to boycott any produce that did not meet stringent code of conduct requirements. Working conditions on flower and horticultural farms are now much improved thanks to measures being taken to adhere to European Union inspired CSR.

Recently though, calls in the European Union for fewer food miles and smaller carbon footprints have been a real test for CSR. The idea of reducing carbon emission by cutting down on airfreight is just one aspect. Closing down horticultural farms in Africa by refusing to buy their produce would make workers on these farms poorer and contribute to higher carbon emission when the now impoverished ex-employees have to cut down trees for settlement and fuel. Any benefits gained by less air travel to the West will be cancelled out by shrinking forest cover and more wood burning in Africa. Unfortunately, global warming is borderless so what hurts Africa will hurt the rest of the world eventually. The ramifications of “CSR action” are not given full shrift and this is a dangerous trend for such an emotive subject.

The trouble with CSR is that the moral argument is usually advanced first and since Adam Smith, there has been a schism between being “good” and being “profitable.” Porter and Kramer tell us how it is possible to do both well and good in their quoted article. There appears to be still a lot of need for CSR re-education after Porter and Kramer if the world must save itself in spite and despite government!

Robert Reich Corporate Social Responsibility argument: at issue are two wide-ranging sets of responsibilities

It is obvious that corporations are primarily business organizations operating for the benefit of stakeholders with wide-raging sets of responsibilities – to their employees, customers and suppliers, and to their communities in which they conduct business and the general society at large.

Most corporations are cognizant of this important fact and are observing the same. There are also negligent corporations in fulfilling the responsibilities they acknowledge.

There are no easy answers here to Robert Reich’s argument that corporate social responsibility is a dangerous destination. From my perspective it is clear that corporations on their own cannot solve every social problem, however some criteria are necessary for distinguishing those situations in which the corporation have an obligation to assist other institutions.

Businesses are better suited to address the economic welfare of members of society and the non-economic factors are best left to government and other non-economic institutions in the society to pursue. Let us not ignore the issues that confront us daily that corporations have become very large and powerful today and as such require effective measures by mental focus and government regulations to restraint their activities. The need for greater social responsibility by corporations in relation to their increasing size and influence in society require some self-imposed or voluntary restraint to secure the public welfare.

Vey interesting discussion
Neville

Very interesting and meaningful discussion. I can not imagine such discussion is happening in U.S. about the function of CSR for today's business and society. I think only in developing countries there are still similar debates about whether CSR is good or bad for a company.
I also agree with comments of Mr. or Ms. Evelyn Mung'au (sorry, I don't know how to put a title for you based only on your name) that if Reich lived in a developing countries, he would not need to be told he is wrong. I am a Chinese and knew the situations in China. Many Chinese companies ignored or neglected CSR in their operation intentionally or unintentionally, including foreign and domestic companies. It also reminds me the recent food and toy safety issue of Chinese exports to U.S. The CEO of Mattel company did not tell the truth when he testified before U.S. Congress that 90 percent of recalled Chinese toys have a designing problem, but not the lead concentration, which is the fault of Mattel company. Such a cheating behavior is also an omission of CSR requirement, since it intentionally misguides the consumers to profit its own company. Another example of ignorance of CSR is the fixed cut-throat price set by many U.S. companies on their suppliers in developing countries, which is another fundamental reason triggering products safety issue.
I deeply hope all the companies read the papers written by Mr. Porter and Mr. Kramer and conduct their business according to what they promoted.

Best Regards,
Xingan

I fully agree with Mr Mark Kramer. It is very surprising that there could still be a debate about whether CSR is good or bad.Since every organisation lives, survives and grows in the society it is vital that they must respect the social norms. Imagine a power plant which does nor respect the emission norms or food company which does not respect the hygiene.Today in many develping countries, governments are not geared up to handle the social issues.Therefore the corporations must partner with the governments to address these issues as much as they can.

I may be allowed to quote below the great Mahatma Gandhi on things that will destroy us.
'Things that will destroy us

--Politics without principles,

--Pleasure without conscience,

--Wealth without work,

--Knowledge without character,

--Business without morality,

--Science without humanity,

--Worship without sacrifice.

--Mohandas K. Gandhi
In my opinion calling CSR dangerous itself can be termed dangerous since it will permit corporates to do whatever they like. Why business, no human activity including scientific research can be absolved of Social and Moral responsibility. If most of the major resources are going to be controlled by a handful of business corporates this is even more true. Thanks for a really good discussion, Regards.

Copy of my post to my blog "http://conversations-on-innovations.blogspot.com

I am glad Harvard Business Online (HBR online) got in touch.

I have not explicitly chatted about management for some time, although many of my posts imply or call upon, more or less, "Corporate Social Responsibility (CSR) or more generally "Social Responsibility".

The "Conversation Starter" for HBR's new online approach (global by definition labelled "GlobalBus" on their web link string) thought I might be interested by their leader post "Why Robert Reich Is Wrong About Corporate Social Responsibility", by Mike Kramer.

By some coincidence this theme appeared to me to be related to my post "Healthy Steel? Smart Steel." early this week in my Blog:[Link cf. above]

Without any further ado I whole heartedly recommend reading M. Kramer's "conversation starter" , its links and ensuing discussion.
Link : [as in browser]

I further recommend even to those deprived of the full review paper(s) to follow their excellent summary and links to related papers.

My Action: Change the title of my earlier post from "Healthy Steel? Smart Steel to "Healthy steel is smart steel" & its corrollary "Smart steel is Healthy steel".

Many thanks Harvard, Kramer, The Economist and conversation

James Alexander
Free-Lance Consultant

Even though I'm someone whose career is entirely wrapped up in the CSR movement I had to respect Robert Reich's point that CSR (which admittedly often amounts only to small changes here and there at the fringes of large problems) can cut off the push for truly comprehensive and substantial reforms, the kind that can only come when society - through their elected representives - lays down new rules.

However, I still think that in addition to what others have written here, there are at least three important defenses for CSR:

1 - Government usually lags behind society and doesn't lead society, in part becuase government action generally requires majority support. It has to wait until 51+% of society acknowledges a problem and believes it to be serious.
In contrast responsible companies, and business leaders, only need their own convictions and niche markets. They can take initiative (& often do) when only 1% of society (or less!) acknowledges a problem.
This has played out in dozens of categories. These leading companies often do the pubic education, and role modeling, etc., critical to get, eventually, 51+% of society to see the issue and to see the opportunity for fixing it.

2 - Similarly, we fully encourage people to act as citizens as well as responsible consumers, investors, etc., that is to "vote their votes" as well as "vote with their dollars". But very often there is no realistic option (or very few) for individuals - as a citizen - to _effectively_ tackle a problem. It's often all or nothing. You get the legislation you want, or get a treaty signed, or you don't. It's often a high stakes game that plays out over many years.
In contrast, as a consumer or investor, etc., you can immediately have an impact. Basically, responsible opportunities in the marketplace allow people to make an impact in increments of one person or househould at a time. This should be understood not as SUBSTITUES for civic action, but rather as tangible, INTERMEDIATE actions while the civic process goes on (and on and on).

3 - It's naïve to assume that our society (at least here in the US, Reich's primary audience) is going to address anytime soon, let alone fix, the broad array of problems that the CSR community is tackling.

For example, some of us in the coffee industry have been trying to address the poverty of millions of small-scale coffee farmers for 20 years, specifically by voluntarily committing to paying farmers higher prices, and by supporting farmer co-operatives. While we _wish_ the US gov't, or better yet, international bodies like the International Coffee Organization, could and would legislate higher prices, etc., it has been abundantly clear for almost 20 years that this will not happen, maybe not in our lifetime. Therefore the only option left is private sector initiative.

So far progressive coffee companies + advocoacy groups + faith-based groups have helped to "reform" about 6-10% of the US coffee supply. It's not enough, of course, and falls short of the comprehensive solutions that laws, theoretically, could offer. Yet, when in fact political/legistlative fixes are impossible (as is the case here) that 6-10% represents a significant improvement in the lives of maybe two hundred thousand coffee farmers worldwide, maybe more.
Also, its relevant here that what began as the efforts of a handful of very small companies and organizations eventually created a new dynamic that slightly, but measurably, raised the moral bar in this multi-billion dollar industry. For most companies it eventually ceased to be an option to do business the same old way. They had to at least make some effort on behalf of farming communities. Yes, those efforts are often token, but they are adding up, and taken together it is far more than was going to happen during this time via any legislation.

Similarly, some of these privately initiated reforms are beginning to take hold in other international & national agricultural markets, most of which had an equally low-to-no chance of getting government attention anytime soon.

Why Reich is Right!

Robert Reich makes a very important and salient point. It is the role of democratically-elected government to decide upon and act in the public interest.

We should expect corporations and their executives to act legally, ethically, transparently, proactively, etc. But they must act in the interests of the stakeholders they must keep directly engaged in the purpose of their enterprise.

If we expect corporations to decide upon, and act in the public interest we go down the path of creating a corporate state; perhaps a benign corporate state, but a corporate state none the less.

Failed government often creates a call for corporations to assume the burden of acting in the public-interest. But the correct solution is to fix those governments; not ask corporations and their executives to fill the void. Corporate executives can certainly advocate for better government, but they should not assume the role of governments.

Rod White
Associate Professor
Richard Ivey School of Busienss

I am a strong believer in not just companies being socially responsible, but that individuals should be too. We all have touched the environment one way or the other; and i believe that most of the time, the consequence/s of our touch, has been devastating. For us to now stand aloof, especially corporate organisations, is definitely evil. We need to be seen to try and put back, or restore to the society the consequences of our activities on the environment. I think it is imperative that we put back something out of all we have taken from the ennvironment. Corporate bodies must not only do so, they must be seen to be doing so consciously.
Thanks

Academicians appears to have serious penchant for contrarian views and Reich appears to be one of them. How can you not do something for the society as a good corporate citizen, to whom the business owes a lot. Yes; you may mark certain percentage of profit say 5% to such goals.
Rajat Bakshi
Retired Professor

The eminent prof has missed it this time.To whom much is given, much is expected.The problem is that what so many firms term Corporate social responsibility could have been more beneficial if it was targeted at people that really need it and organized so that costs of handling the CSR are not embarrassingly way off tangent