By Robert Kropp
Author Wayne Visser argues that corporate social responsibility as practiced thus far has failed, and describes a world where CSR practices can contribute to genuine sustainability in meaningful ways.
Corporate social responsibility (CSR)—or corporate sustainability and responsibility, as author Wayne Visser terms the concept in his new book, The Age of Responsibility: CSR 2.0 and the New DNA of Business—has been a growing practice for at least the last 20 years. Today, signs of its widespread acceptance can be found everywhere: in the increasing numbers of companies that issue annual sustainability reports, the proliferation of environmental, social, and corporate governance (ESG) rating and ranking systems, and mainstream adoption of the United Nations' Principles for Responsible Investment (PRI).
So why then does Visser, who published his first book on corporate sustainability in 2002, now write, "CSR has failed"?
"We should judge the success of CSR on whether our communities and ecosystems are getting better or worse," Visser continues. "At the macro level almost every indicator of our social, environmental and ethical health is in decline."
Quoting Joel Bakan, the author of The Corporation, Visser notes that the original nineteenth-century concept of the corporation was that the entity had "some responsibility to create something that was in the public good," instead of merely "creating wealth for the owners." It did not take long for such a lofty concept to be abandoned; and Visser divides the history of CSR into four stages that have dominated the practice thus far.
During the age of greed, companies practice defensive CSR by focusing exclusively on shareowner value over the short-term. The practice, Visser writes, peaked with the bankruptcy of Lehman Brothers and the onset of the economic crisis in 2008. One of its key ideas is that gains are privatized, and costs socialized; that is, the social and environmental costs of corporate activity are externalized, to be borne by society.
In the age of philanthropy that follows, corporate leaders use their wealth to establish charitable programs to help communities. As laudable as charity by the rich may be, however, the practice does nothing to address the underlying consequences of business activity. In effect, corporations are making vast profits via unsustainable enterprises, then allowing a relatively meager percentage of profits to trickle down to the communities in which they operate.
It is with what Visser terms the age of marketing that we begin to see CSR as it is often practiced even today. CSR in this context is seen as a promotional tool, belonging to corporate public relations. In the extreme form of its practice, it amounts to greenwashing. The specific case study used by Visser for the age of marketing is BP, which for many years was ranked among the world's most sustainable companies, largely as a result of its sustainability reporting. Too many investors and CSR advocates failed to take sufficiently into account BP's already poor health and safety record until last year's Gulf of Mexico oil spill.
With the age of management, in which companies practice strategic CSR, programs include genuine measurement and establish goals for incremental improvement in core businesses. The concept of an extensive group of key stakeholders in addition to shareowners has taken root, and standards against which companies are expected to measure themselves have proliferated.
Clearly, progress can be traced along the path from greed to management. To what then does Visser attribute the failure of CSR? For companies stuck in the age of marketing, the fact that CSR is peripheral to their core business activities is significant. Furthermore, even today, CSR is practiced mostly by the world's largest companies. And the fact that markets persist in awarding short-term financial performance calls into question the economic sense of CSR activities.
Even for companies in the age of management, Visser writes, "The quality management model…results in incremental improvements that do not match the scale and urgency of the problems."
In other words, corporate activity is still destructive. The social and environmental costs of doing business are not borne by the companies profiting from it, but are externalized and borne by society instead. So what does Visser offer as a solution?
In the age of responsibility, companies practice what Visser has termed CSR 2.0, modeling it on the Internet revolution brought about by social media and user-generated content. Corporate practitioners of CSR 2.0 expand CSR beyond a "tick-box" mentality and attempt to find creative solutions for problems so large as to seem intractable. They offer scalability, an example of which is Muhammad Yunus, whose Grameen Bank started with a single $74 loan and grew into a $2.5 billion microfinance enterprise.
Practitioners of CSR 2.0 are responsive to an expanded set of key stakeholders, seek local solutions to problems that retain universal principles, and practice circularity by adopting a "cradle-to-cradle" approach to product design that recognizes limits to resource consumption and waste disposal.
"When all is said and done," Visser writes, "CSR 2.0 comes down to one thing: clarification and reorientation of the purpose of business…Ultimately, the purpose of business is to serve society."
Especially with the economic crisis still playing out in the form of 14 million Americans unemployed, the cynic could consider Visser's solution to daunting problems to be somewhat naïve. After all, haven't corporations refashioned themselves into predatory seekers of a profit motive to the exclusion of all else, and have pushed the overwhelming—soon to be insurmountable—social and environmental costs onto the rest of us?
Yet, as Visser's age of management demonstrates, genuine CSR practices have become more widespread. Their effects may be too incremental to stave off environmental disaster and social upheaval, but they do indicate that real work can get done.
Additionally, a handful of companies are committing themselves to the principles of CSR 2.0. While they may amount to no more than the merest ripple in a vast sea of corporate greed, they do provide templates for future CSR activity. Even after reading Visser's well-researched and informative book, I have no clearer idea on how those templates might be adopted on a scale to effect genuine change.
