corporate social responsibility: green revolution or greenwash?

Corporate Social Responsibility  —> This is the final paper from which the following blog post is transformed. To read this paper, click the link here. Otherwise, continue below:

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Corporate social responsibility is the idea that businesses should consider the social and environmental impact they have on the communities in which they operate, and voluntarily act to optimize this impact above and beyond the requirements of law. In the post-Washington Consensus world, where the power of multi-national corporations and trade agreements have grown rapidly at the expense of states, CSR networks have developed as a way to fill the power gap left by a significantly weakened regulatory attitude towards businesses. Since the UN Secretary General Kofi Annan introduced Global Compact, the UN Corporate Social Responsibility program, at the World Economic Forum at Davos, in January of 1999, the concept of CSR has grown throughout Europe and the United States. In response to the need for greater accountability and transparency in businesses claiming to be socially and environmentally responsible, certification and label organizations have developed that measure the extent of a company’s commitment to ethical global citizenship. These initiatives include the Global Reporting Initiative, the AA1000 Assurance Standard, the Social Accountability 800, and the Fair Trade and Fair Labor associations, among others. In the past decade, the American press and top corporate executives have embraced the idea of CSR with open arms, and almost every company now includes CSR in their annual reports, proudly exhibiting their environmental waste management efforts and community contributions. CSR has become a big business sector, with new consulting companies arising to show companies how to adopt CSR in their operations, or at least appear to do so, and business schools all over the United States creating CSR departments and incorporating ethics in all of their teaching. However, although the intent of CSR is certainly a good one, there is increasing doubt with regard to the efficacy of the concept.

Critics of corporate social responsibility come from both ends of the political spectrum. On the conservative end, neoclassical economist Milton Friedman argued that “the business of business is business” and nothing more; that it’s the job of the public sector to provide for the public good, while the only objective of the private sector should be the private good. [2] Echoing Friedman’s arguments, on November 28, 2006, Betsy Atkins, the CEO of Baja Ventures, a venture capital firm, wrote in Forbes Magazine that “the corporation’s goal is to act on behalf of its owners. The company’s owners–its shareholders–can certainly donate their own assets to charities that promote causes they believe in…. But it would be irresponsible for the management and directors of a company, whose stock these investors purchased, to deploy corporate assets for social causes.”[3] Both Friedman and Atkins conceded that though it is the responsibility of business to be honest in accounting, not deceptive or fraudulent, if a CEO decides to go further than that, he would be cheating someone of his or her rightful profits: “Insofar as [the CEO’s] actions in accord with his ‘social responsi­bility’ reduce returns to stockholders, he is spending their money,” wrote Milton Friedman, “Insofar as his actions raise the price to customers, he is spending the customers’ money. Insofar as his actions lower the wages of some employees, he is spending their money.”[4] The main problem with private enterprise taking on public interest, Friedman believed, is that leaders of private enterprises are not elected democratically by the political process, thus the choices they make are in effect tyrannical taxes inflicted on stockholders, customers, or employees; furthermore, the public good is not a CEO’s area of expertise and not part of his or her job description, so he or she probably does not know how to do it well. Friedman believed that corporate social responsibility is undemocratic because “the businessman – self-selected or appointed directly or indirectly by stockhold­ers–is to be simultaneously legislator, execu­tive and, jurist.”[5] He wrote in 1970 that the only rational kind of corporate social responsibility is the public relations kind, which might entice enlightened consumers and thus improve profits; indeed Milton believed that such marketing-based CSR is the only proper and responsible kind of CSR.

In many ways, the recent boom of corporate social responsibility in the American market has played out to Friedman’s expectations. Critics of CSR from the other end of the political spectrum complain that too many companies only pay “lip-service”[6] to CSR and publicity is not commensurate with action. Companies as notorious as the Dow Chemical Company, Shell, and Ford have invested millions in campaigns to appear more socially responsible without actually doing much to change their company’s operations; British Petroleum, which renamed itself BP in its “Beyond Petroleum” campaign, spent several million dollars more on their advertising than on any real alternative energy developments.[7] Nestle labeled a coffee product Fair Trade even though less than 1/10 of 1% of its product line is actually Fair Trade, and 75% of surveyed consumers did not know that Nestle’s Fair Trade label only applied to one product and believed that Nestle as a company was more socially responsible than it was in reality. [8] The online news magazine, Greenbiz.com, stated that “The overwhelming majority of environmental marketing claims in North America are inaccurate, inappropriate, or unsubstantiated, according to a comprehensive survey released today.” In a study of 1,018 consumer products bearing 1,753 environmental claims by the nonprofit organization TerraChoice, “all but one made claims that are either demonstrably false or that risk misleading intended audiences.”[9] “What’s at risk?” questioned the non-profit Equal Exchange, “Corporate marketing machines making token use of Fair Trade certification can lead consumers to mistakenly associate some whole brands with Fair Trade. A false image of reform can undermine public pressure for real change.” [10]

James Kanter wrote in the International Herald Tribune on January 26, 2007, that “many environmentalists…worry that companies that sign up to a green agenda for image reasons alone are creating the impression that voluntary pledges and new technologies make stiffer environmental regulations unnecessary,” and this risked “creating a false image that we can leave it up to business to solve our climate problems.”[11] What Friedman and critics on the right regard as the only responsible kind of CSR is exactly what critics on the left, such as Greenpeace, Body Shop entrepreneur Anita Roddick, and democratic theorist Robert Reich regard as the most irresponsible shortcomings of CSR. Greenpeace defines this public-relations oriented CSR “greenwash” as the process whereby “transnational corporations (TNCs) are preserving and expanding their markets by posing as friends of the environment and leaders in the struggle to eradicate poverty.”[12] Greenpeace and Reich believe that it is the very nature of corporations that make them incapable of truly helping the environment or fighting poverty. “Despite their new rhetoric,” Greenpeace wrote, “TNCs are not the saviors of the environment or of the world’s poor, but remain the primary creators and peddlers of dirty, dangerous, and unsustainable technologies….Despite their stated commitment to environmentalism, TNCs typically continue to justify their current activities, and new investments, with a cost-benefit assumption which fails to include the vast majority of environmental costs.”[13]

One main problem is that the basis for CSR lies in a convenient falsehood, that environmental consciousness is always good for business in the long run; because the logic of CSR relies on enlightened self-interest rather than true communitarian thinking. Reich argues that where CSR works in this marketing-based line of thinking, it is simply “smart management,”[14] and does not testify to any real social responsibility, and it shows that there is a limit to the amount of environmental good that corporations can do, for when the two inherently misaligned interests, private profit and the public good, oppose each other, inevitably companies must choose private profit. Joe Bakan, the writer of the documentary “The Corporation” stated that the job of a corporation is to make a profit, and that corporations can not be held responsible for the damage they create on public resources, however they can be sued by shareholders for not making enough of a profit; thus the role of corporations is inherently shaped by American laws that do not allow them to place their corporate social responsibilities above the bottom line.[15] In the words of Greenpeace, “The International Charter of Commerce finalized its Business Charter for Sustainable Development about a year before the June 1992 Earth Summit….with a convenient but unfounded assertion that there is a natural convergence between the needs of environmental protection, sustainable development, economic growth and profitable market conditions for business.” Greenpeace believes that this convergence is short-lived and superficial if not completely bogus. According to The Economist in a book review on September 6^th, 2007, Robert Reich stated in his new book, Supercapitalism, “that companies ‘can not be socially responsible, at least not to any significant extent.’ and that CSR activists are being diverted from the more realistic and important task of getting governments to solve social problems.”[16] In another article on January 20^th, 2005, The Economist staff reporter wrote that CSR as the only means for addressing public issues would be dangerous because companies will address issues as they become popular with the public but unlike the public sector, they do not have a long-term commitment to solving public problems; furthermore, publicity measures “will distract attention from genuine problems of business ethics that do need to be addressed,” such as proper accounting of company expenditures; this is because “private enterprise serves the public good only if certain stringent conditions are met. As a result, getting the most out of capitalism requires public intervention of various kinds, and a lot of it: taxes, public spending, regulation in many different areas of business activity. It also requires corporate executives to be accountable—but to the right people and in the right way.” [17]  The words of Robert Reich mirror the words of Greenpeace’s exactly:

Beneath the glossy public relations campaigns and the superficial environmental initiatives of the TNC’s lie destructive production processes and products that are at the heart of the global environment and development crises. Ozone-destroying chemicals, extremely toxic pesticides, and nuclear reactors are a few of these. No corporate environmental department tor green advertising can make a TNC whose lifeblood depends on such products and processes a friend of the environment….Clearly, the TNCs’ agenda…is more greenwash than green….Millions of people around the world, having borne the brunt of and organized against TNC depredations…realize that corporate claims on environmental issues often have no basis. Their experience demonstrates what common sense tells us: TNC’s are not primarily interested in environmentally sound, socially equitable development and cannot be relied upon to police themselves in environment and development issues. Control of TNC behavior must come from participatory governmental processes, the force of local and national laws, and the power of international commitments.[18]

Even former CSR poster child, Anita Roddick, who started the Body Shop, which alongside Ben and Jerry’s in the late sixties, embodied the principle of that businesses contributing positively to society, opposes the massive modern transformation of CSR. In an interview with the website BigPictureTV on September 16, 2006, Anita Roddick stated that she didn’t “think it was working” because “it’s been taken over by the big management houses, marketing houses…it’s a huge money-building operation.” She explained that the movement in the sixties was motivated by progressive thinking and grassroots movements, that it’s very different from “the economic language, which is about control” that dominates CSR today, where “everything has to be about the market economy.” She explained that early social entrepreneurs “took our eyes off the ball and when we put it on the ball again, we saw that everything has been hijacked.” Whereas early entrepreneurs believed simply in contributing positively to their communities, modern CSR advocates have created complex yet false systems equating CSR with profit but “they never told you…the truth that nobody wants to discuss: that if it gets in the way of profit, [businesses] aren’t going to do anything about it.” And by confusing the two different objectives and phrasing it as one bottom line, the true purpose for CSR is undermined. Anita Roddick most eloquently said on Big Picture:

So we still have rapacious businesses, we still have businesses in bed with government, we still have governments’ inability to measure their greatness by how they look after the weak and the frail, we still have governments’ only measure of success as economic measurements, and we still have businesses that can legitimately kill, can legitimately have boardroom murder, can legitimately have a slave economy, so that all of us…who are wealthy are guaranteed a standard of living that we are used to. And we have the complicity of the media, which dumb us down consistently by saying that nothing is more important than entertainment and celebrity…and you’ve got to keep purchasing. So I think Corporate Social Responsibility has got to have a little bit more courage, and nothing will happen unless financial institutions are changed, so that we are not measured by this one standard…this unimaginative bottom line…but [one] that does include human rights and social justice ….and we start listening to the real forerunners of the planet, the environmental movement, the social justice movement to help shape our thinking, then something will change. But for me…corporate social responsibility as it is….I don’t think it works, and that’s a shame, because it’s controlled the language; it’s hijacked the language. [19]

Latin American economic historian John Coatsworth, Director of Columbia University’s School of International and Public Affairs, agrees with Anita Roddick’s analysis, that in order for CSR to really change the way businesses operate, the ideas must be deeply incorporated into their core missions, so that corporations can really operate on the principle of double or triple bottom lines, rather than superficially kowtow to the ideas in marketing.[20] However, Coatsworth didn’t believe that CSR is at all detrimental to society, but rather that much more has to be done for corporations to truly internalize the values of CSR. Sarah Phillips and John Coatsworth agree that CSR as a movement is very positive; however the role of government and activist groups should not be undermined or co-opted; that a replacement of the public and nonprofit sectors by voluntary CSR would be dangerous.[21] All sectors have to work together in the effort towards sustainable development, which means greater governmental regulations alongside greater transparency in business and greater consumer empowerment. Likewise, The Economist dismissed Reich’s point of view in its staff review of “Supercapitalism,” instead favoring the words of Simon Zadek, the boss of AccountAbility, a CSR lobby group: “The ‘whether in principle’ conversation about CSR is over….What remains is ‘What, specifically, and how?”[22] Business Week puts the responsibility on consumers to figure it out. Reporter Sarah Rich wrote, “Saavy advocates of sustainability know that business is not the enemy of the good….In fact, business can be a vehicle for doing better in the world, and making a comfortable living with a guilt-free conscience as well. But in an increasingly crowded green business sphere, knowing who’s authentic presents a challenge….It’s now up to consumers to develop a radar for spotting duplicitous brands.”[23]

Throughout the history of American environmental politics, businesses have repeatedly taken on the ideas of more radical citizen activist groups, professionalized those ideas, and pushed the responsibility of greater environmental health onto the hands of citizen decision-makers. Anita Roddick lamented the “obsession with measurement” of contemporary CSR, which is dominated by social accounting agencies, marketing firms, and management consultancies.[24] Historian Susan Fleder also argued that “citizen successes at protection of resources and establishment of public reservations often came at the expense of other groups in society.”[25] Shifts in power from citizen activists to science and business professionals result in narrowing of “the scope of many reform initiatives…to technical matters that could be readily monitored by specialists and that posed little challenge to the status quo.”[26]

Similarly, in the urban occupational health movement, historians David Rosner and Gerald Markowitz wrote that corporations initially resisted any reforms to improve working conditions that would increase costs, but finally responded after occupational health advocates like Dr. Hamilton exposed the dangers of phosphorous, lead, and other workplace hazards to the American press, and after public awareness and new laws began to threaten the profits of the industries. When they began to take action, all of their policy measures were directed to co-opt any further protest by the workers. Rosner and Markowitz wrote: “Paternalistic benefit programs were often adopted by management as a means of increasing management’s control over the work force….Corporate leaders, still conscious of the significance of popular opinion in the creation of workers’ compensation laws, also feared that future reform efforts might be more radical. Hence, they sought means by which to gain greater control over the movement to make the workplace safer.”[27] Thus, the paternalistic benefits that corporations provided served primarily corporate interests, and minimum workers’ protection and rights were adopted to the extent that they would preserve corporate profit. The cost-cutting measures were treacherous. Company doctors and nurses who provided healthcare to workers could be corrupted to testify for the company’s interests at workers’ peril.[28] Rosner and Markowitz show that the beneficial workplace reforms that businesses adopted at the peak of the urban occupational health movement were actually adopted by way of compromise:

First, the new business-led efforts emphasized the responsibility of the workers themselves, rather than that of industry, to prevent accidents. Second, they narrowly defined the problem as one of safety rather than health. Third, they saw professionals, rather than workers or reformers, as the prime source of change and thus sought to take the discussion of safety and health out of the public arena.[29]

Winning the battle for greater workers’ protections in the Progressive Era came at the cost of losing workers’ and activists’ political voice. Can parallels be drawn between the Progressive movements for occupational health and the modern Corporate Social Responsibility movement? Are businesses undertaking the voluntary labels of “corporate social responsibility,” “fair trade,” or “green” to co-opt more radical movements led by local activists who demand that all businesses be held responsible for the effects they have on stake-holding communities? Is putting the burden on consumers to choose socially responsible products and companies, and paying for the extra price of doing good even when the application of this cost is dubious, in effect taking the responsibility away from businesses to ensure that their products are safe and fair when it should be the responsibility of government to enforce better environmental and wage laws for all? Is the emphasis on technical measurements for CSR undermining or bolstering the general message of the movement? Is an alternative vision of monetary value possible, one that places money within the context of yet-unquantifiable human and natural well-being, instead of the other way around: forcing welfare to be measured within the mathematical brackets of GDP?

The modern CSR movement addresses many more issues than the occupational health movement, and certainly many genuine benefits are taking place. In the past decade, McDonald’s has made many drastic changes to its classic menu by eliminating the unhealthy “Supersize” option, by providing healthier salad choices and promoting exercise, and by using recycled materials for much of its packaging. But what is the impact of CSR on the voices of environmental and social justice activist groups? CSR researcher Matthew Hirschland argued in his book, Corporate Social Responsibility, and the Shaping of the Global Public, that indeed most CSR actions on the part of companies do not run very deep. In the case of shareholder activism, the process required for a group of shareholders to address a concern to the Executive Board is exceedingly complicated, requiring more shareholder support than is often possible, and the final product of these shareholder petitions are easily vetoed by the Executive Board without further opportunity for recanting. Furthermore, these negotiations always take place behind closed doors, where companies agree to certain clauses in exchange for secrecy.[30] Thus, even the highly-acclaimed Shareholder Responsibility Initiatives (SRIs) come at the cost of corporate transparency.

One example of the costs of corporate co-option is the transformation of the organic movement from a small-scale local farming philosophy to a large-scale international corporate enterprise. Michael Pollan wrote in the Omnivore’s Dilemma, that when Walmart began to sell huge amounts of organic foods imported from all over the world, it was obvious that the original vision of the movement was over. Large, energy-draining transportation networks nullify some of the environmental benefits of organic farming. Furthermore, the line between organic and non-organic is blurred by dubious corporate practices, required for efficiency-oriented big businesses, and walking in the supermarket aisles of a store like Whole Foods, it’s impossible to tell which stories are real and which are fairytales. [31]

Is an alternative world possible? What will historians decades from now say about global environmental politics in the early 21^st Century? This depends on the efficacy of today’s activists to continually challenge the status quo so easily adopted by mainstream businesses. As Fleder noted about the 1960’s, it is the role of citizen activist groups on the margin to introduce new ideas and push for better practices. When the movement becomes professionalized, what can citizen activists do to challenge the metrics and bring the movement to a higher level, one that truly embodies the original principles, that demands environmental justice as well as corporate response to fashionable issues? Perhaps the answers really lie with radicals like Dave Foreman, who exclaimed in his book, Confessions of an Eco-Warrior, that mankind should, in certain issues, adopt a more atavistic connection to nature, an animal rationality that accepts the emotional logic of the essential connections between people, living organisms, and the Earth.[32] Perhaps a de-professionalization is necessary, or a new way of looking at the world that incorporates the “priceless things,”[33] the human relationships, the natural connections into the metric of materialism and welfare as measured by GDP. Perhaps a double or triple bottom line can be engineered, but these multiple bottom line must not solely stick price tags on “priceless things” and convert the human experience to more of the same financial metrics, but truly negotiate a new manner of measurement that incorporates these values at the core.

Works Cited

Atkins, Betsy. “Is Corporate Social Responsibility Responsible?” Forbes, November 28, 2006.

Bakan, Joe. “The Corporation,” Big Picture Media Corporation, June 4^th, 2004.

Bruno, Kenny. “Introduction to Greenwash,” Greenpeace International Publications, 2004.

Equal Exchange Organization. “On Fair Trade ‘Fig Leaves’” www.equalexchange.com/press-releases

Flader, Susan. “Citizenry and the State in the Shaping of Environmental Policy.” HIST 3424 course website.

Foreman, Dave. Confessions of an Eco-Warrior. California: Three Rivers Press, 1993.

Friedman, Milton. “The Social Responsibility of Business is to Incease its Profits.” The New York Times Magazine,

September 13, 1970.

Glater, Jonathan D. “’Greenwash’: A Way to Say Hogwash.” New York Times, May 17, 2006.

Greenbiz.com. “Most Green Marketing Aren’t True, Says News Report,” November 19, 2007.

http://www.greenbiz.com/news/news_third.cfm?NewsID=36271

Hirschland, Matthew. Corporate Social Responsibility and the Shaping of Global Public. New

York: Palgrave Macmillan, 2006.

Johnson, Geoffrey. “’Greenwashing’ Leaves a Stain of Distortion.” LA Times, August 22, 2004.

Kanter, James. “Buyers Beware: There Are Shades of ‘Greenness.’” International Herald Tribune, January 26,

2007.

Pollan, Michael. Omnivore’s dilemma : a natural history of four meals. New York: Penguin, 2006.

Rich, Sarah. “Are You Being Greenwashed? The green bandwagon is well and truly rolling. But what is genuine – and what’s green spin?” Business Week, March 29, 2007.

Roddick, Anita. “Corporate Social Responsibility?” Big Picture TV: Talking Heads, Talking Sense.

http://www.bigpicture.tv/videos/watch/310dcbbf4

 

Rosner, Davd. “Guest Lecture,” Columbia University, 4 October 2007

Rosner, David and Gerald Markowitz, ed, Dying for Work: Worker’s Safety and Health in Twentieth-Century America. 1987. HIST 3424 course website.

 

The Economist. “In Search of the Good Company.” September 6^th, 2007.

The Economist. “The Good Company.” January 20^th, 2005.