Can CSR be taken at face value?
In response to:
Corporations find ‘responsibility’ sells
Marketplace,® Dec. 11, 2007
Heidi Siegelbaum’s take:
I have nothing against Jack Daniels, though I favor wine myself. Corporate social responsibility represents a range of complex, intersecting influences: the need and desire to support the communities in which companies have a presence, supporting pride, motivation and participation in a demonstrably positive side of corporate life, a desire to improve performance and good will, enhance shareholder value, and yes, sometimes — it is defensive.
But defensive strategies can lead to long term, positively fabulous results as in the case of Nike which initially got into the corporate responsibility game due to pressure related to its overseas manufacturing processes and conditions.
We could approach corporate responsibility and its corollary in Corporate Social Responsibility (CSR) reporting through the whole enchilada lens. “What is the weighted balance of the evidence between what a given company is doing and reporting” and:
- whether the company is making credible investments in environmental, social and long term sustainability programs;
- whether it is spending a disproportionate amount of its money in fighting policy and legal efforts to improve wages, working conditions, and environmental protections;
- how it discloses and performs with respect to addressing climate change;
- whether the company, through its actions, Board directives and reports, is focused
exclusively on wealth creation and little else, besides window dressing — or whether it is
moving towards a newly adopted restorative stance (opens PDF);
- the company’s intangible investment risk, as evidenced by the investment patterns of
socially responsible investors, including a large cache of institutional investors;
- the transparency with which good news is balanced with the bad. Previous Interface
reports on CSR included the emblazoned fold-out “the good, the bad and the ugly” as an
- the magnitude of inconsistency – “where’s the beef” in performance metrics and actions verified by third party audits versus what’s on paper; and
- what non-vested interests have to say about the company, including www.recalls.gov,
Responsible Shopper from Co-op America, and the goody bag of corporate research.
An interesting example is Dole. In a news feed that ended up on CSR Wire, the
venerable clearing house of all things CSR, Dole Food Company was recognized for its corporate social responsibility programs in Costa Rica and Thailand. However, a few weeks earlier, a California jury awarded Nicaraguan farm workers $3.3 million because they were sterilized by chemicals Dole used in its banana plantations. The pesticide, DBCP (1,2-Dibromo-3-Chloropropane) had been banned by EPA since 1985, and according to court documents, Dole had known since the 1960s and 1970s that DBCP was strongly linked to infertility based on epidemiological studies.
So what’s a mother to do? We need not argue against the value of corporate responsibility because any positive action surely is better than its absence, but as in product claims generally, the critical analyst is going to have to spend a goodly amount of time researching the balance of words against action, integrity, money flow and intent… and this is where light will shine upon the thrones of corporate responsibility.
Janne K. Flisrand responds:
I read Heidi’s post with fascination.
I’m a practical investor – I invest money for retirement. And I want to invest in companies that reflect my values.
But honestly, I only hope to invest in companies who oppose my values less often than others, because I don’t have the money or patience or knowledge to invest in individual companies.
My personal experience is one of frustration. I keep hearing about ethical investing, which I imagine means investing in socially responsible companies.
When it’s time for me to write the check, I sit down at my laptop with a cup of coffee to do some research. Over the course of about 90 minutes, I get more and more frustrated. Maybe I find a company that sounds great… but I’m an index fund investor, pretty committed to my low-fee investment firm. I find little relevant to my choices.
Heidi’s resources are great. As December ends, I’m likely to go through my semi-annual ritual of frustration again soon. Maybe with her links, it will be easier… but my expectations haven’t changed. For the moderate-income investor (mantra: reduce fees), the options are pretty limited.
Dennis Markatos-Soriano responds:
Good call, Heidi!
Business is more about verification than trust. When I go to a used car lot, I donâ€™t trust that the car works before I buy it — so I turn the ignition. And when the product is less tangible like the carbon offsets market (I don’t directly see the product of lower global emissions), they have to certify their product via an independent third party. Corporate responsibility is a similar sort of product for investors and consumers.
If I see an ad that says BP is Beyond Petroleum, it makes me feel good. But then when I look at the amount of money it invests in renewables versus producing polluting fossil fuels such as the tar sands of western Canada I realize that they have plenty of room for progress. Actors in the nonprofit sector from Greenpeace to Environmental Defense help to give us information and signals when certain companies commit abuses or go the extra mile to support the Earth and its people. We need such information that cuts through the glitz.
It’s a sign of progress that social and environmental responsibility is hip and a desired marketing tool for corporations throughout the US. But we all have to make sure that the institutional commitment to sustainability is more than a small side office that writes press releases and has little power within the company. Nonprofit allies can help us determine that because, again â€“ quality products are attained through verification mechanisms and not by blind faith in advertisement campaigns.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.