Are corporations practicing kindness that can kill? Is BP too devoted to appearing green and ‘beyond petroleum’ to get down to the tricky work of deepwater drilling for oil? What about Massey mining concern and the disaster from April? And perhaps Wall Street Banks were too focused on gender equality not to study the bubble they were pumping up? So suggests Chrystia Freeland in a column in The Washington Post this past week. Surely corporate leaders can walk and chew gum, no?
The logic of her argument is that corporations are about making money in their industries, not getting tangled in expressly social/public concerns. When they divert attention to such concerns – noble though they are – corporations can lose sight of their fundamental goals:
But the gulf oil spill and the financial crisis have taught us, rather brutally, that the heart of the relationship between business and society doesn’t lie with the charitable deeds that companies do in their off-hours but whether they are doing their day jobs in ways that help — or hurt — the rest of us. While BP was winning plaudits for being the first oil company to accept global warming as a scientific fact, the old-school Texas oilmen at ExxonMobil were unfashionably unapologetic about their core mission: to produce oil. Chastened by the Exxon Valdez disaster, however, they also became religious about safety standards. With hindsight, that attention to safety turns out to have had much greater social value than any number of creative CSR [Corporate Social Responsibility] drives.
The tenor of her argument is that, in fact, corporate leaders can not walk and chew gum at the same time. She also cites the “10,000 Women” program launched by Goldman Sachs to hire women into higher positions at financial firms as laudable as an ambition, but distracting to the main concern of finding high-return investments for their clients. Had they done the latter, presumably they would have seen the dangers in the derivatives market and negotiated their way out of the looming crisis.
But what if some of those newly hired women had been just the ones to see the looming danger? What would preclude a project to boost CSR also benefiting the bottom line? So counters a blog post from Matthew Bishop and Michael Green at. They are authors of the recently published book . For them, the evidence suggests greater commitment to CSR would go hand-in-hand with long-term profitability, rather than the short-term profiteering that BP, Goldman Sachs, and others have been practicing of late:
It is our belief that a firm that had been more attuned to society and more committed to engaging with it constructively – the main goals of the CSR or corporate citizenship movement – would have been far less likely to make the basic mistakes that Goldman Sachs did, the costs of which are only starting to become clear. As we have said many times, the firm would have done far better, even in PR terms, if it had paid far smaller bonuses and given away far more of the money. A more core strategy, for the longer term, would be to use its undoubted financial skills to do good, for example by helping to develop the nascent social investment market.
Rather than justifying Chrystia’s dismissal of CSR, the failings of Goldman Sachs and BP underscore the need for firms to take their engagement with society more seriously, and to put being on the right side of social progress at the core of their long-term profit-making strategy. A firm that did this would not cut corners with safety or show so little gratitude to taxpayers for helping it survive.
The work of corporations can certainly be to maximize profits for shareholders, but those profits usually come from consumers of their products and services. Those consumers surely can be turned off if some real, viable, accountable, CSR is not evident. Admittedly, consumers might need a few quarters to judge whether they still want to give their money to such corporations, but such is precisely Bishop’s and Green’s point: thinking longer term can be a kind of corporate social responsibility in itself. Will BP discover that its future profits are washing away because it did not make responsible decisions at the well-head – irrespective as to whether the decisions were responsible at the corporate or the social level?