Corporate Social Responsibility

Interview

Excerpts from a New Statesman interview with Daniel Litvin - author of Empires of Profit: Commerce, Conquest and Social Responsibility

"What exactly is corporate social responsibility (CSR)?

In essence, CSR is a voluntary effort by companies to behave ethically partly in the hope that this will boost profits. For example, it can involve a range of things including philanthropy; putting policies in place which respect employees; and behaving well towards customers and suppliers. These sorts of things, so the thinking goes, will help companies deliver good returns over the long run.

What are the origins of CSR?

As a term or phrase CSR is only about 20 years old. But as a concept it is several hundred years old. The first large companies of the modern era like the East India Company did many inexcusable and nasty things including waging war but they also often helped build schools, hospitals and other infrastructure in the parts of the world they invaded.

Bring us up to date -- which companies are keen on CSR these days?

Well, the days of invading territories are long gone. But, to give just a few examples, modern day British retailers like Marks & Spencer and Sainsbury’s claim to operate with an ethical dimensional by raising their environmental standards, for example. And companies like McDonald’s, which claim they are making their food healthier, are often doing so as part of a CSR programme.

Are there certain sectors which are keen to promote CSR more than others and, if so, why?

Traditionally it's been the companies that have historically been under pressure either from the public or from politicians that have taken these issues the most seriously. The giant oil and mining companies like Shell and Anglo American have been very keen on CSR for over a decade now.

Similarly, in clothing and footwear companies like Nike and Reebok have boosted their CSR efforts because of all the allegations, fair or not, about sweatshop labour from their overseas suppliers. Pharmaceutical companies like Glaxo SmithKline have also come under pressure to invest more in CSR because of issues like pricing of AIDS drugs in Africa.

So no one does it out of altruism or benevolence then?

Well, doing it out of benevolence and because there is a lot of public pressure are not entirely inconsistent, in my opinion. The latter can encourage the former in companies. It's not always like that, of course. For example, a lot of the smaller fair trade companies have been set up as social enterprises which are intended primarily to produce benevolent effects but which also, they hope, make money.

But overall is CSR more the province of larger rather than smaller firms?

Large firms tend to have bigger budgets to allocate to CSR departments. And, of course, it's no coincidence that firms like, say, Shell or McDonald’s have global brands to protect. But I would argue that even if they don't have a global brand it is very important for small companies to protect their reputation. It won't do them any good and it will tend to damage their business if they are seen to be exploitative of their employees, for example." (http://www.newstatesman.com/business/2009/01/companies-csr-social)