Friday, 5 September 2008

Corporate Social Responsibility scam alive and well

Amongst the legion of scams being perpetrated on the poor old man and woman in the street by activist Marxist groups such as the environmental lobby is that of Corporate Social Responsibility.

Organisations such as Greenpeace and their Big Green brethren worked out that they could more quickly have parts of their agenda implemented by big business by using a public shaming technique.

These activist organisations approach businesses and basically blackmail them into contributing to their cause, as well as making public statements supporting whatever happens to be the latest Marxist cause du jour. Companies will always seek to avoid negative publicity - whatever the source - and so do deals with some of the worst elements of society in the same way that they will settle frivolous law suits in order to avoid going before a jury.
It was the buzz phrase among corporations at the beginning of the noughties but many Australian businesses appear not to be pulling their weight when it comes to their social responsibility.
Companies already fulfill their social responsibility - they employ people, generate the taxation revenue that pays for much of the government's programs and delivers the returns to shareholders that help secure Australians' retirements by providing funds for our superannuation.
The concept of Corporate Social Responsibility (CSR) is that while businesses are focused on generating profits and jobs, they should also be aware of the impact they are having on the environment and the community at large.
Companies already fully comply with all government legislation regarding protecting the environment and, where necessary, communities. Those that don't face heavy financial penalties.

What these activist companies are doing is developing a set of social 'responsibilities' that are parallel to government legislation.
A new study by consultant firm Grant Thornton found that just 52 per cent of the country's top 300 listed companies in the latest profit reporting season published information on their environmental performance or policies.

Furthermore, just 28 per cent provided details on action to reduce greenhouse gases.
Notice that this article has now strayed from Corporate Social Responsibility to 'environmental performance or policies'.

Companies provide this information because they think it enhances their competitive position (or at least doesn't reduce it). Any company that puts its supposed Corporate Social Responsibility before competitiveness and shareholder return is doomed. Not only that but the country is affected, as taxation revenue is reduced.
Grant Thornton director of business risk services Peter Moloney says the results are disappointing, coming at a time when there is considerable debate about climate change.
Why would companies be talking about climate change in the board room other than to work out how to deal with whatever the government implements?
"We actually think that companies that don't get this right will get left behind," Mr Maloney told AAP.
Does Peter Moloney really expect companies to take unilateral action in advance of understanding what their direct competitors are doing thus reducing their position in the market?

The parallel with the Rudd government's plan is clear. Australia's international competitiveness must be reduced under an emissions trading scheme and that must lead to a loss of jobs.
"If you can't demonstrate if you are going for business with other organisations that you have good CSR credentials you can't demonstrate you are taking them seriously and you are less likely to get the business.

"And if you look at the shareholder groups, they are clearly asking for more information in that area at the moment."
They are asking for information because it is a threat to shareholder returns and they need to make decisions about where to invest their money. Any company that thinks the loss of shareholder funds is a good thing has a problem.
The study also found that a mere 36 per cent of companies divulged their HR policies - including maternity leave and diversity, while only 47 per cent reported on their community activities and initiatives.

In Australia, there is no requirement for companies to produce their CSR obligations, whereas in the UK, for example, there are a number of requirements that have to be fulfilled.

"Some of the larger (Australian) companies actually get it and are providing that sort of information, but the smaller ones are definitely not getting it," Mr Maloney said.

"It's obviously time for there to be more guidance."
You mean government control?
He said he was aware that many companies were talking about climate change, but he was not confident that they were approaching it in a structured manner.

"Everyone knows, and they talk about it, but have they got a structured program in place to deal with it? The answer is probably no."
This man is a buffoon. One the one hand he talks about companies not addressing their 'responsibilities' and therefore risk being left behind while on the other he talks about approaching it in a structured manner.

That's what government regulation is for.

These people are profoundly immoral.

They don't care about Australia's competitiveness. They don't care about Australian jobs. They don't care about Australian retirees.

(Nothing Follows)


Andrew said...


I do agree with you to an extent - the primary function of business in society is the efficient production of products and services. Through this function, business provides products and services to other business and consumers as well as income for shareholders, employees, suppliers and taxes which contribute to the funding of roads, hospitals and schools.

I would disagree with any moves to inhibit business from going about its function in an effective manner.

However, I would say that business has a broader responsibility than simply profit maximization. Business controls a large portion of society's productive resources, and it's activities have a large impact (usually positive) upon the communities in which it operates.

With this in mind, I would say that business should seek to maximize the positive aspect of its operations and minimize any negative aspects where realistically possible.

I also believe that business has an obligation to act out of fairness and integrity.

With respect, I would also raise the point that not all of the parties who advocate corporate social responsibility are anti-business. I believe that what the majority are after is a harmonious relationship between business and society.



Jack Lacton said...

Hi Andrew,

Thanks for taking the time to comment.

While your sentiment is fine the actual application is a negative for society, as individual businesses undertaking uncoordinated, inefficient schemes achieve little while at the same time reducing each company's contribution to society.


bruce said...

I understand what people in the Victorian era meant by 'society', but in the 21st century I think the term has become hopelessly ambiguous. Like the words 'soul' or 'spirit'.

Most sociologists, like the archetypal Max Weber, have particular societies shaped by particular cultures in mind which they study. That particularity has become the effective focus of sociology - finding the distinctions between various social formations, as with Dumont's great Homo Hierarchicus study. Attempts to make generalisations about universal 'social facts' on the other hand, have been much less successful and amount to conjecture in a vacuum often inhabited by quacks and anachronistic neo-feudalists.

bruce said...

Which was just my way of agreeing with you Jack, by questioning Andrew's use of the word 'society'.

Not that I really want to get into that can of worms. I suspect Andrew needs to question the assumptions underpinning his statements before trying to engage with you on this.

Y'know I had a shop 5 years ago which made no money but was lucky to break even (before I gladly got the hell out of that nightmare). I noticed there are lots of people, often with government jobs-for-life, who imagine that business is some form of 'raking in' money (I even had friends who came in my shop, schoolteachers. who asked me if the guy across the road was 'raking it in', when I knew his business was sinking like the Titanic). As the number of government employees grows this 'business/anti-business' divide grows into a kind of feudal myth of 'the Great Benefactor' and his serfs, preyed on by 'the greedy'. Fact is, as you point out, without these 'greedy' the 'Benefactor' will collapse.

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