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CR on the Hotseat

It should be unnecessary after so many years of the corporate responsibility (CR) "movement" -- if it is right to call it that -- to have to jump to its defense and provide arguments for why CR makes a difference. But the harrumphing of the troglodytes has started again, this time under the pretext of determining whether our wretched global economy will cause companies to re-think CR actions and investments.

In one of those dismissive, glib pieces favored by business journalists when writing about CR, Stefan Stern of the Financial Times (registration required) writes from Davos "Thank goodness, now the recession’s here we can forget all that nonsense about corporate social responsibility (CSR) and get back to trying to make some money." Canada's own Terence Corcoran followed suit in his remarks to a recent panel on CR reported in one of Canada's national newspapers.

Communications professional Paul Seaman takes up the discussion in his blog and comes down somewhere in between supporting the preeminent goal of business to make profit yet recognizing that "Traditional values and professional ethics will become highly valued virtues and the true measure of corporate responsibility."

More often than not, the critics use ideology rather than evidence to back up their arguments. They ignore books like Lynn Sharp Paine's exhaustive study of the financial benefits of responsible conduct called Value Shift (Sharp Paine is the John G. McLean professor of business administration at Harvard Business School), or a recent study published in MIT's Sloan Management Review called Does it Pay to be Good? The conclusion of this study by two professors at Canada's Ivey School of
Business about consumer behaviour and sustainability:

Yes customers will pay a premium for ethically produced goods. Conversely, they will punish companies (by demanding a lower price) that are not seen as ethical. The punishment exacted is greater than the premium customers are willing to pay. Companies need to be 100% ethical to be rewarded.

Detractors like Stern and David Henderson (author of Misguided Virtue: False Notions of Corporate Social Responsibility) also don't seem to be able to make the connection between the frequent lapses in ethical judgment of some senior executives and the idea that "profit" at any cost -- without the filter of some moral or ethical framework (a basic tenet of corporate responsibility especially as it relates to governance)-- can be a precursor to greed. And look at what unrestrained greed has wrought today.

Will there be a step back from good governance, social engagement, committed citizenship, defense of human rights, product innovation driven by environmental concerns, willing social and environmental problem identification and resolution, and efforts by companies to control their GHG emissions? I doubt it.

Why would companies set aside years of building reputation capital (an intangible with enormous financial value) for a short-term retreat from responsible conduct? Why would senior executives look on now as an appropriate time to set aside public concerns, when trust in many of them has eroded even further over the past six months and led to precipitous government and regulatory action?

Bruce Sewell, posting on Intel's CSR blog from Davos, (disclosure . . . my company's client although I don't work on the account) made this observation about the mood of the meetings: "Gone was the patina of entitlement, replaced instead with a palpable sense that at some profound level this collection of bankers, regulators and politicians had failed to read the writing on the wall, and for that omission the world as we know it will pay a stiff price."

The CR "movement" can only benefit from a flight from entitlement, from some sense of guilt about transgressions, from a recognition that a "stiff price" may be exacted from those who don't take care to act responsibly . . . or are dismissive.

False Apologies and Greed

'Just as good as . . . '