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Make a profit, make a difference

It's in everyone’s best interest that businesses pursue Corporate Social Resonsibility seriously and honestly, argues Zoe.

Submitted 12/11/2007 By Zoe Views 15981 Comments 5 Updated 1/16/2008

Post-it notes: $3
Stapler: $12
Laptop: $1400
Saving the world: priceless


Corporate social responsibility, known as CSR, is the newest requirement for any respectable business. CSR activities are extremely diverse and aim to implement ethical practices which impact positively on customers, employees, communities and the environment. CSR goes hand in hand with ethical consumerism and has Bill Gates as its patron saint.

While multinational corporations are turning over yearly profits which exceed the gross domestic product (GDP) of many nations, CSR is emerging as a viable way to change the world. In reality, it may be the only way.

The sluggish reaction of the Australian government to respond to the mounting evidence of climate change saw former prime minister John Howard emphasising caution—‘it is imperative that we do not take action [on climate change abatement] which puts us at an unfair disadvantage with the rest of the world’. Faced with the immensity of global warming, many multinational corporations have proved more willing and able than governments to implement strategies to reduce environmental impact.

With international operations, profit margins and public visibility, corporations have a unique opportunity to clean up their act and gain kudos for it at the same time. Ethicist Attracta Lagan argues that ‘Business will determine the quality of the air we breathe, the fuel we burn, the food we eat and the water we drink’. Right now, business has the potential to improve or undermine standards of living all around the world.

In the past, corporations have cultivated résumés full of CSR faux pas. In 1999, BHP caused an environmental disaster in Papua New Guinea when tonnes of arsenic, copper and zinc were dumped in the Ok Tedi River, contaminating fish and changing water currents. For compensation, BHP offered to pay a measly $A22.50 a month per affected family. Since then, BHP’s approach to sustainability has been revamped with a new PR slant imbued with tentative confidence—‘We are well aware of the costs of getting it wrong; but more importantly, we recognise the value that can be created by getting it right.’

In India in 2003, Coca-Cola’s water bottling factories depleted groundwater resources, resulting in polluted water, reduced agriculture and health problems for the local people. Officially, Coca-Cola denied the environmental ramifications and instead emphasised how many jobs had been created— ‘local communities have welcomed our business as a good corporate neighbour.’ Even though many companies are beginning to pursue CSR, few manage to pull it off convincingly.

Westpac is currently the belle du jour of Australian CSR and has a slew of international awards to prove it. The Australian bank’s CSR activities are diverse–there are free classes in responsible finance for those in debt, a business loan scheme for indigenous people and a partnership with Landcare to offset carbon emissions. Combined with a slick TV advertisement featuring penguins huddling on the edge of a precipice, Westpac’s CSR approach is loud, proud, and most importantly, effective.

Some companies eschew social responsibility altogether, maintaining that businesses exist to make a profit, not make a difference. In 1970, Milton Freedman argued that ‘there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase profits.’ Yet as the distribution of wealth becomes more uneven, this narrow view of business has passed its use-by date.

CSR can be concerned with philanthropy, environmental sustainability, or building relationships with local communities. Specifically, this can include providing jobs for the chronically unemployed, investing in green technology or funding education initiatives. Professor Colin Mayer says the demand for CSR stems from disillusionment ‘about the ability of government to address questions of poverty and development… increasingly government itself is looking to the private sector to help it with solutions.’

CSR makes good business sense, above and beyond the positive publicity it can generate. The World Business Council for Sustainable Development recently reported, ‘It is directly in our interest to avoid operating on a polluted planet in which billions are too poor to afford the products we create.’ The way to a business’ heart is evidently through its wallet.

While businesses pursue CSR there will be glossy reports and pompous media releases following close behind. Yet the potential of business to initiate social and ecological improvements is undeniable. It is in everyone’s best interest that businesses pursue CSR seriously and honestly. In the future businesses will be held to account not just by shareholders, but by all people, everywhere.

How do I know this?

AAP 2007, ‘Villagers sue BHP Biliton for $5bn’, The Age, 20 January, http://www.theage.com.au/news/business/villagers-sue-bhp-billiton-for-5bn/2007/01/19/1169095978975.html

Albrechtsen, J 2006, ‘Moral coercion hoax’, The Australian, 29 March, http://www.theaustralian.news.com.au/story/0,20867,18639477-601,00.html  

BHP Biliton 2007, Our Approach to Sustainability, http://www.bhpbilliton.com/bb/sustainableDevelopment/
ourApproachToSustainability.jsp
 

Burton, B 1999, ‘BHP admits Ok Tedi mine is environmental disaster’, Asia Times Online, 13 August, http://www.atimes.com/oceania/AH13Ah01.html  

Carter, J 2007, ‘Report card on corporate social responsibility: Can do better’, The Sydney Morning Herald, 28 April, pg.35.

CEO Forum Group2007, Making Corporate Social Responsibility Work: Starbucks Australia’s Charlie Baker, http://www.ceoforum.com.au/article-detail.cfm?cid=6326  

Crook, C 2005, ‘The good company’, The Economist, 22 January, http://www.economist.com/surveys/displayStory.cfm?Story_id=3555212  

Financial Times Information Ltd 2007, ‘Govt lags behind in climate debate’, The Canberra Times, 31 March.

Friedman, M 1970, ‘The Social Responsibility of Business is to Increase its Profits’, The New York Times Magazine, 13 September, http://www.colorado.edu/studentgroups/libertarians/issues/
friedman-soc-resp-business.html
 

Gettler, L 2007, ‘Businesses need social conscience’, The Age, 18 June, pg. 8.

Global Exhange 2005, “Most Wanted” Corporate Human Rights Violators of 2005, http://www.globalexchange.org/
getInvolved/corporateHRviolators.html
 

McKibben, B 2006, ‘Hype vs. Hope’, Mother Jones, Nov/Dec issue, http://www.motherjones.com/news/feature/2006/11/
hype_vs_hope.html
 

Pappas, G 2007, ‘CSR is not just a corporate fad’, The Age, 3 May, pg.5.

Slattery, L 2007, ‘Private solutions for public problems’, The Australian, 14 November, http://www.theaustralian.news.com.au/story/0,,22754427-12332,00.html  

Srivastava, A 2003, ‘Communities Reject Coca-Cola in India’, India Resource Centre/CorpWatch, 10 July

The Coca-Cola Company. 2004, The Coca-Cola Company Addresses Allegations Made About Our Business In India, http://www.thecoca-colacompany.com/presscenter/viewpoints_india_situation.html  

World Business Council for Sustainable Development. 2006, ‘From Challenge to Opportunity: The role of business in tomorrow's society’, http://www.wbcsd.org/plugins/DocSearch/details.asp?type=DocDet&ObjectId=MTgyMTM

Discuss Now

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NWOKILLER 24-Dec-2007

I wonder how long it will be until the US dollar collapses because of the Federal Reserve system.

I wonder how the world will cope since there is no gold or silver behind the Fed...



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joker 15-Dec-2007

When I said material wealth wasn't all that important - I was trying to say that I believe immaterial things in life are more important. My opinion. To me, friendship and love are way more important that anything that money could buy. The happiness I get from sitting in a park with friends chatting about anything is priceless.

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funnelweb 15-Dec-2007

Honey, I am sorry you think of 'corporate' as 'heartless suits'. Companies are an economic with the task of maximising efficiency of its resources for the benefit of its shareholders, and to do so it must act within the realms of the law. Socially responsible is a community expectation, but an ambiguous notion nonetheless, but a company perceived by the community to be irresponsible will suffer through its reputation.

Someone here said 'material wealth' isn't all that important? Tell that to the shareholders at an annual general meeting. As a shareholder what I am after is increased value of my investment and a higher dividend. What does that mean to use money for good - Adam Smith once said that if we act in our own self-interest we promote the greater good, intentionally or not. Politicians are there to set the legislative framework and ensure markets remain competitive, and we're all there to operate within that realm, efficiently utilise resources and promote the greater good.

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joker 12-Dec-2007

I think there's a stereotype that corporates are "heartless" - and are on a life mission to pursue wealth! It's true that many probably are, BUT there are also some "suits" who aren't..

I also agree that some companies do have a hidden agenda behind 'making a difference' - but at the end of the day, I think if they are using their money/power for good - it doesn't really matter whether they have an ulterior motive or if they're genuinely serious about being socially responsible.

I reckon companies will continue pursuing CSR as more people start recognising the issues that we face and feel something needs to be done. I think community/corporates/government are very much interrelated and as community belief/ideals/values change - the greater the influence that society has on corporates/government and thus, more pressure is placed on them to be socially responsible.

Hopefully, the "heartless suits" will find out that material wealth isn't all that important.

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Honey 12-Dec-2007

Interesting opinion piece. When i think corporate, i think heartless 'suits'. It's hard to imagine companies 'making a difference' without thinking that they have an alterior motive such as increased exposure for the company (aka media releases).

But with the new initiatives, companies are now encouraged to 'make a difference'. What i'm trying to say is that it's not about the intentions but whether it's being done or not.

Right?

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