Its been a long while since I posted anything and perhaps its fitting that starting up again I'm highlighting an article from this summer that has so recently ended. A couple of weekends ago, I sat down with a pile of reading that had accumulated over the summer. One of the gems in the pile was an article asking some tough questions on Corporate Social Responsibility or CSR.
Konrad Yakabuski, a columnist with the Globe and Mail, wrote wrote the article for the July/August Report on Business Magazine, hinting at his point of view in the title - The Kindness of Corporations. While I have spent many years working on "sustainability" and often CSR, for energy companies and others, I thought that Mr. Yakabuski presented a very accurate view of the inherent contradictions and conflicts associated with CSR as it is currently espoused by everyone from multi-national corporations to NGO's and academia.
He gets right to the point, stating early in the article that CSR is undemocratic and its proponents naive.
"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."
At the heart of his argument is a realistic look at the hierarchy of interests of companies and in particular their managers and directors.
"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."
Perhaps the most blatant example given concerning this conflict of interest relates to the actions of Canada's largest independent oil and gas company, Encana. Mr. Yakabuski highlights the contrast between what the company says in its CSR report with its actions .....
[Encana's 2006 CSR Report] "on display at the York event, highlights EnCana's efforts to engage native communities and develop carbon sequestration technologies. "Acting in a conscientious and reliable manner is as important to sustaining our business as the profits we earn," CEO Randy Eresman asserts in the report. Conscientious and reliable? Late last year, EnCana sent a menacing letter to non-profit groups and charities in Colorado. It warned they risked losing its financial support if they failed to speak out in EnCana's favour at public consultations on oil and gas drilling. Tougher state rules, the letter indicated, might adversely affect "the company's ability to partner with organizations such as yours that meet the needs of the community on a daily basis." The groups took the letter as an ultimatum: Support our lobbying efforts or lose your grants. Somehow, this bit of power politics didn't end up in EnCana's CSR report. Such contradictions can be found everywhere among the CSR-practising flock."
(Not to pick on Encana, Mr. Yakabusli also gives an example involving BP.)
With this example and later in the article, Mr. Yakabuski hits upon a key weakness of CSR and CSR Reports: that is the lack of accountability for what is proffered in these reports. While standards such as the Global Reporting Initiative have emerged, these are relatively toothless, as are the various ratings of companies on sustainability (e.g. the Global 100 Most Sustainable Companies). The notable gap he identifies is with respect to companies political lobbying. Notwithstanding what they say in the glossing publications, what are they saying to governments and what are they really supporting.
At the end, Mr. Yakabuski offers the following conclusion ....
"if democracy is to mean anything, corporations must answer to governments, not the other way around. That balance has gotten out of whack. It's not good for democracy, or for capitalism."
I am certain that I am not doing the article justice but its accurate and its well worth reading.
Enjoy.
