Anyone for Social Responsibility?
Take two professors from the University of Michigan's Ross School of Business, strategist Aneel Karnani and Tom Lyon, an expert on sustainable science and director of the Erb Institute for Global Sustainable Enterprise, toss them a juicy question and listen to the different viewpoints. The question concerns companies' responsibility to act in the public interest and whether they can profit from it. Their debate, as reported on the University of Michigan's website, revealed both agreements and disagreements.
Early on, Professor Karnani said, "In my view, CSR (corporate social responsibility) is either irrelevant or ineffective and dangerous." Expanding, he conceded that profits and social welfare can be simultaneously increased "where the interest of the company and ... society are aligned." But when they diverge, "it's not realistic to expect companies, who have a fiduciary responsibility to their shareholders, to sacrifice profits for the sake of social welfare."
Across the divide, Prof. Lyon defined CSR as "corporate actions that go beyond compliance with the law," demonstrating how "companies do well by doing good."
Concerns about greenwashing and transparency were points of agreement, especially where lobbying is concerned. Prof. Karnani pronounced CSR "dangerous" because it allows companies to make promises and seem to be responsible, but without any compulsion to fulfil those promises. In other words, CSR encourages "greenwashing."
Agreeing greenwashing "is a serious concern and quite a lot of CSR initiatives are shallow," Prof. Lyon emphasized the importance of ensuring that "what corporations say and what they do are actually consistent with one another."
Government's role is one strong point of disagreement. Prof. Karnani believes there is reason to try and improve government rather than pressuring business, which "should not be able to play a political role, period." Prof. Lyon, while not expecting companies to respond to being politely asked "to do the right thing," added, "the distinctions between these things are eroding even as we speak and the boundaries between politics and markets are very hard to find."
Through it all, points of agreement, specific examples, talk of sticks, carrots and enforcement as well as acknowledgment that rhetoric plays a strong role in the debate, failed to resolve their differences. Which is why, perhaps, the debate continues.
Discussion Questions: To what degree is CSR (corporate social responsibility) an oxymoron for most companies? What's the likelihood that many CSR promises will ultimately be broken due to corporate fiduciary duties?