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The bone-chilling realities of winter on York University's windswept campus at Toronto's northern edge have not deterred about 50 business undergrads from rolling out of their dorms at dawn on a Saturday to listen to lectures about good deeds. The highlight of this day-long conference on corporate social responsibility is a case-study competition involving two teams from York and another from the University of Alberta. Their assignment: Devise a CSR strategy for EnCana, the Calgary-based oil and gas giant that happens to be the main sponsor of the event.
Armed with polished PowerPoint presentations, each team delivers a pitch about why even an oil-patch profit-gusher such as EnCana needs advice on how to conduct its business. One urges it to transform "black gold into green profits." Another throws in a hockey metaphor. The winning team evokes Easter Island, starkly reminding EnCana that a failure to embrace environmentalism would—in the manner of the soon-extinct inhabitants who deforested the South Pacific isle—eventually put it out of business.
The undergrads could be forgiven if their pitches sounded gimmicky; there's lots of that in the metastasizing field of CSR, where consultants and public relations experts have recast corporations as champions of social progress and protectors of the planet. The language of CSR—including alternative rubrics such as corporate citizenship, sustainability or simply corporate responsibility—now permeates business discourse. The corporation, we are led to believe, has morphed from an entity with a single purpose—profit—into a quasi-government that processes all social needs and demands.
Every big company these days professes to have obligations to employees, communities, the environment—and humankind in general—that go well beyond making money. Annual reports, with their yawn-inducing financial statements, have been superceded by earnest CSR and sustainability reports. It's a long way from Milton Friedman, who in 1970 called business supporters of corporate social responsibility "unwitting puppets of the intellectual forces that have been undermining the basis of a free society." Would any Top 1000 CEO dare side—in public anyway—with Friedman today? Not likely.
We're led to believe that this trend is a good thing, that the evolving role of the corporation puts a more human face on capitalism and renders it more acceptable in parts of the world where it's still suspect. Yet the crux of Friedman's argument—he called CSR "a fundamentally subversive doctrine"—is as salient today as it was four decades ago, if not more so. When corporations take on a social role, often at the urging of elected officials themselves, it relieves governments of their responsibilities to mediate social demands. It removes policy-making from its proper forum. Put plainly, CSR is undemocratic.
It is also naive. Corporations, no matter how virtuous they claim to be, still have a hierarchy of self-interest. Practitioners of CSR may claim to attend to a "triple bottom line"—putting economic, social and environmental objectives on equal footing. But who really believes that profits, short-term ones at that, still do not take precedence in boardroom decisions?
Should, or could, it be any other way? In this country, the Canada Business Corporations Act obliges directors and officers to "act honestly and in good faith with a view to the best interests of the corporation." Courts seem to be taking an increasingly expansive view about what this means, concluding that "best interests" are not limited exclusively to those of shareholders. The interests of creditors, employees, clients, communities and the environment are all, courts have suggested, legitimate factors to weigh in any board decision. Critics of this view suggest that, by attempting to satisfy too many (usually competing) constituencies, the corporation will end up satisfying none of them. But that critique is still purely theoretical for one simple reason: There is still little evidence to suggest that shareholder interests come anything but first in the minds of directors and CEOs. Indeed, their jobs depend on it. And any company that did not put shareholders first could itself be subject to legal retaliation.
What is CSR, then? That it is more theory than reality perhaps explains why it has enjoyed such a sweeping consensus: Not just corporations and the courts but also governments, the media and business schools all subscribe. In other words, it's an entrenched ideology.
In some cases, CSR is little more than a tool for green-washing and PR. Take BP. It had rebranded itself as a progressive, renewable-energy company—out with British Petroleum and in with Beyond Petroleum—long before safety shortfalls led to a 2005 explosion at its refinery in Texas. The disaster, which killed 15 people and injured 180, exposed BP as CSR's Potemkin village. In 2006, BP gave itself another black eye when its poorly maintained pipelines in Alaska caused deadly oil spills in Prudhoe Bay. The company pleaded guilty to felony violations and last year agreed to pay fines totalling $373 million (U.S.) in relation to the Texas and Alaska accidents and price-fixing charges. This did not stop Fortune magazine from ranking BP as the world's most "accountable" company, praising it for investing in renewables—even though they represent a sliver of the company's overall expenditure on traditional oil and gas exploration—and for "replacing several executives" involved in the accidents. Is that all it takes to be number one?
