In a recent Financial Times article How ‘good’ does shampoo need to be? Gillian Tett questions the recent shift in emphasis in certain leading businesses away from what she describes as the ‘grubby financial realities of business’ and towards CSR.
Tett asks if social and environmental problems, important though they may be, really are the concern of businesses rather than governments
“I think that companies should recognise their wider impact on society, but I also think that it is primarily up to governments – not companies – to set the rules and pursue wider social aims. In other words, I don’t want Unilever to trash the environment with high-margin shampoo, but I expect the government, not Unilever, to set environmental standards, penalise miscreants – and tax Unilever to help the poor.”
According to Tett, who attended a debate at Davos entitled “The Future of Business”, a number of global companies claimed that CSR activities were no longer separate from their core business but were, in fact, driving much of what they do.
Tett is right to query this and for a number of reasons. Governments, not corporates, should set the framework for responsible business behaviour and encourage companies to act within it. It is their responsibility to set the standards and require companies to behave accordingly.
As for CSR activities driving business, while it is true to say that there has been a clear move away from Milton Friedman’s belief that the only social responsibility of business is to make money; the over-riding concern should not be to worry about wider social challenges but to run businesses responsibly. It may make businesses feel good about themselves if they support a school or help a poor community, but it says little about how they actually run their business and achieves little in the way of building trust.
A philanthropic smokescreen no longer works. Increasingly public sector customers and large corporate customers are pushing their suppliers to demonstrate that they are performing ethically. This is being reinforced worldwide by increased regulatory action against unethical and unlawful behaviour. These pressures are starting to push more companies to realise that it is in their self-interest to be ethical. It is also forcing companies to question exactly how their CSR programmes contribute or stand apart from these ethical demands of their customers.
It is clear therefore that the route to a clear corporate conscience and restored trust is not CSR, it’s business ethics.
Posted March 2012
Notes to Editors:
1. Leo Martin and Michael Littlechild, directors of GoodCorporation, are available for interviews, briefings or written comment
2. GoodCorporation is a leading adviser in the field of business ethics, specialising in the assessment of responsible business management and anti-corruption practices.
Sally McGeachie 020 8877 5300 or email@example.com