Corporate Social Responsibility Movement

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Allen White:

Transnational corporations, the engines of global capitalism, have become the target of efforts to create an economic system both socially just and environmentally sustainable. The unprecedented power and impact of these leviathans on society and ecology raises critical questions: What is corporate purpose? To whom should corporations be held accountable? And how, in fact, can that be accomplished? To these weighty questions, recent civil society and governmental efforts—under the rubric of “corporate social responsibility” (CSR)—have offered a tepid response: prod corporations to self-regulate. The inadequacy of self-regulation has become starkly evident: the interests of shareholders remain supreme, while those of workers, communities, and the environment remain subordinate. Moving beyond CSR to “corporate redesign” politics is an urgent strategic necessity for a Great Transition.

CSR arose in response to the idea that the only social responsibility of the corporation is to generate profits. [1] By contrast, until the nineteenth century the justification for chartering corporations, at least in principle, was to fulfill a public purpose, such as building a road, bridge, or canal, rather than private enrichment, per se. Although the public interest view of the corporation saw a mid-twentieth- century revival during economic depression and war, by the 1970s, business-friendly ideological, economic, and political forces coalesced to remove fetters on corporate conduct. The corporate manager, no longer beholden to any remnants of social mission, became the agent of investors, whose interests trumped other stakeholders. Neoliberal and neoconservative forces rallied behind a policy agenda that eliminated barriers to profit—privatizing state services, rolling back regulations, weakening the counterpower of labor, and forcibly opening new markets abroad through free trade agreements.

The concept of corporate social responsibility (CSR) emerged as regulatory strictures weakened and adverse corporate impacts on people and planet swelled. This response reflected a conviction that the soft power of public pressure from civil society could replace the lost hard power of regulatory action in fostering conscientious self-regulation and good corporate citizenship. The CSR umbrella was broad, including an array of initiatives in the international arena, the private sector, and civil society.

Internationally, the seminal 1987 World Commission on Environment and Development called for “sustainable industrial development”; the 1992 Earth Summit identified business as a critical actor for achieving social and ecological sustainability; and the 2000 United Nations Global Compact urged corporations to adopt better practices on human rights, labor, the environment, and anti-corruption. CSR also inspired efforts within the private sector, notably the World Business Council on Sustainable Development, Business for Social Responsibility, Business in the Community (UK), and Instituto Ethos (Brazil). These organizations helped lay the groundwork for a new “C-suite” position, the Chief Sustainability Officer.

Finally, as states sat on the sidelines, a multitude of civil society organizations (CSOs) advocating human rights, environmental protection, fair trade, and anti-corruption focused on corporations as targets and potential partners. Research institutes and academic scholars provided critical analytic support for such CSR campaigns. Standards organizations established broad frameworks for measuring and reporting corporate performance and advancing accountability through disclosure and certification. [2]

By the early 2000s, the CSR movement had become a significant voice for a version of capitalism where labor, community, and the environment mattered as much as shareholders. Multilaterals, civil society, business groups, and standards organizations all played a role in broadening the definition of corporate purpose beyond the narrow confines of profit maximization and shareholder value. The language of “corporate citizenship,” “shared value,” and “sustainable business” spread in the media and public discourse.

However, the optimism of the early CSR movement began to dissipate as corporations failed to adequately address the depth of their responsibility for climate disruption, species extinction, income inequality, human rights violations, and job insecurity. As attention turned to the tenacious structural conditions that reinforce corporate misbehavior, the mainstream CSR approach showed itself to be just tinkering with corporate priorities rather than fundamentally rebalancing them. The report card was in: the collective benefits of incremental improvements by countless corporations paled next to the scope and urgency of concurrent crises. Skeptics correctly inquired, if so many CSR practitioners are doing better, why are aggregate CSR indicators pointing in the opposite direction?" (

The Answer to the failure of CSR: The Corporate Redesign Movement

Allen White:

"Facing these powerful deterrents to corporate reform, some civil society activists have considered more holistic and fundamental solutions that transcend CSR’s incrementalism. With that qualitative shift, the search was on for a bold, transformative vision of the core purpose of the corporation. For those attuned to this larger challenge, CSR had run its course. It was past time to focus on altering root causes deep in the DNA of corporate design.

In essence, corporate redesign turns on the premise that the prevailing corporate form is constitutionally incapable of harmonizing its conduct with requirements for long-term, systemic social-ecological well-being. It argues that issue-specific CSR must give way to a comprehensive agenda for structural change in ownership, governance, and incentives. Only through a deep shift in their purpose and structure can corporations be reinvented as forces for long-term social betterment.

The redesign movement has spawned growing public debate and experimentation within corporations. For example, the organization B Lab promotes a voluntary certification process entitling a company to quality as a “benefit corporation” (or “B-Corp”) that is chartered to balance the interests of multiple stakeholders: workers, customers, suppliers, community, and the environment. [4] B Lab also has had success in introducing the option of chartering as a benefit corporation in the legal codes of 36 US states. With roughly 3,000 certified B-Corps worldwide, the effort has achieved impressive results among small- and medium-size enterprises. To elevate its impact, B Lab must effectively court larger corporations, such as the 80,000 that dominate global commerce.

By introducing the concepts of boundaries, limits, and norms, redesign philosophy has also inspired innovations in corporate accounting and reporting. Such concepts allow assessment of company-specific performance in the context of broad, aggregate environmental and social benchmarks at local, national, and planetary scales. However, only about five percent of all corporate sustainability reports incorporate such contextualization, and even fewer have offered quantitative measurements. Slow progress reflects the challenge of overcoming inertia in financial accounting authorities, even when they purport to be champions of CSR reporting.

Redesign has also made modest inroads into the investment community. Socially responsible investing has evolved from a narrow exclusionary strategy (e.g., shunning investment in tobacco and weapons producers) toward integrated assessments encompassing multiple sources of capital—natural, human, and social, as well as manufactured and financial. This effort could become a significant instrument and prod for developing a holistic view of corporate purpose. Even now, environmental, social, and governance (ESG) factors regularly figure into the investment strategies of many mutual funds, sovereign wealth funds, banks, insurance companies, and university endowments, with some $20 trillion channeled into firms identified as relatively strong ESG performers.

What is the long-term potential for socially responsible investing? In the best scenario, investors would drive corporations to adjust their purpose statements and governance structures. However, this effect can become widespread only if asset owners and managers swap the rampant short-termism in capital markets for longer time horizons. Although we can hope for some movement on this front, the vision of some enthusiasts that socially responsible investing holds the key to systemic change remains a naïve “greenwish.” The transformation of finance capital into an agent of redesign demands a fundamental shift in its own goals, time horizon, and analytics. Without such change, enforcers of shareholder primacy are unlikely to become the agents of their own undoing.

The transition from CSR to a redesign paradigm is slowly taking root, but remains limited. Meanwhile, time is running out. A bold transformation strategy commensurate with the magnitude of the crises awaits realization." (