Gil Friend is a systems ecologist and business strategist, and is the CEO of Natural Logic, an environmentally-focused strategy, design and management consultancy. He writes a regular blog on issues of business and the environment. Gil has agreed to write occasional essays on sustainable business for our Sustainability Sunday feature, and we are happy to add his voice and perspectives to our site. Take it away, Gil:
This hasn't been the best of times for corporate social responsibility (CSR), and I was thinking that even before those new Enron tapes came out.
The Economist ran a five part piece on CSR a few weeks ago. The first article (linked above, and the only one available to non-subscribers) opens with the provocative line: "The movement for corporate social responsibility has won the battle of ideas. That is a pity..." The author, Economist editor Clive Crook, acknowledges the rise of CSR and the success of the CSR advocates (NGOs, consulting firms, and yours truly alike). He then lays out his concerns, some of them echoing the familiar "the business of business is business," but others rightly challenges the superficiality of much of what passes for CSR:
But what does it all amount to, really? The winners, oddly enough, are disappointed. They are starting to suspect that they have been conned. Civil-society advocates of CSR increasingly accuse firms of merely paying lip-service to the idea of good corporate citizenship. Firms are still mainly interested in making money, they note disapprovingly, whatever the CEO may say in the annual report. When commercial interests and broader social welfare collide, profit comes first. Judge firms and their CSR efforts by what the companies do, charities such as Christian Aid (a CSR pioneer) now insist, not by what they say-and prepare to be unimpressed.
...private enterprise serves the public good only if certain stringent conditions are met. As a result, getting the most out of capitalism requires public intervention of various kinds, and a lot of it: taxes, public spending, regulation in many different areas of business activity. It also requires corporate executives to be accountable-but to the right people and in the right way.
CSR cannot be a substitute for wise policies in these areas. In several little-noticed respects, it is already a hindrance to them. If left unchallenged, it could well become more so. To improve capitalism, you first need to understand it. The thinking behind CSR does not meet that test.
It's a frustrating and occasionally exasperating article for those of us -- both inside and outside these companies -- who support increased corporate social responsibility, but raises some useful questions about the intersection of responsibility and accountability. Moreover, if Crook is correct, and CSR has largely won the war of ideas (in that even the least responsible corporations feel a need to pay lip-service to the notion), this article is a warning that backlash is never far away. CSR advocates should be prepared; the best way to be prepared: deliver durable, measurable -- and profitable -- results.
Other tidbits of the week:
These awards are indeed heartening. But imagine how much more exciting they would be if all the recipients were mammoth corporations doing a lot of good in the world. Imagine Wal-Mart (NYSE: WMT) winning the General Excellence Award, General Electric (NYSE: GE) winning the Social Legacy Award, and ExxonMobil (NYSE: XOM) winning the Environmental Progress Award. Hey, it could happen -- and it would mean the world had become a better place in many ways.
Notably, 29 of the top 100 have made the list five years running -- and that does include some "mammoth corporations."
This Economist article was damning much of the sustainability in business movement as wasteful if not pernicious. What is our collective response? Is Adam Smith wrong? Are we mis-interpreting his idea of acting in our own self-interest?
I believe that the next wave environmental movement is already being driven by consumers, who believe they are acting in their own self-interest, putting their name on waiting lists for wind power and hybrid cars. The future lies not in serving the needs of multiple stakeholders, but in romancing this awakening conscious consumer, and fertilizing (with compost, not DDT) their enthusiasm across the globe. Consumers (primarily American) have driven the economic cycle for the past 20+ years, not monetary policy, not fiscal policy, not even war. Consumers can steer our world to a sustianable alternative until it becomes the only economic choice.