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The Good Corporation: FAQs

Firms deliver jobs and goods and services. What’s not to like? We look at some of the things people say against and in defence of these controversial bodies.

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Are firms a force for good?
Of course they are. They deliver goods, provide services, create jobs, pay taxes – and obey the law. What’s not to like? 

But there’s more to life than that, surely?
There is indeed. The problem is: should firms have to be nice, progressive, compassionate, generous? These are all a matter of opinion and even of politics. That’s why firms might need to steer clear of such things. 

Why can’t firms be interesting?
Of course they can. Provided their owners and maybe their employees and customers agree, firms can have any aims they like. But the problem is whether we should somehow force firms to do all sorts ot extra things.

You mean, Corporate Social Responsibility shouldn’t be compulsory?
Exactly. Corporate Social Responsibility is a form of words designed to make it compulsory that firms shoud have wide social ambitions because that’s their “responsibility”.

So what is Corporate Social Responsibility, really? 
It’s become a catch-all for everything society expects of firms. So it wraps up all the old virtues (like not lying, and reporting honestly, and fair and plain dealing) and all sorts of new ones like being positive in the community, trying to save the planet, giving to charity, and having mission statements about being all things to all men, but with a passion.

But isn’t CSR porfitable for firms? 
Sure it is, but that doesn’t make it right. It is quite true that a firm that doesn’t have a “mission statement” which talks about how it cares about society. community, the environment and developing countries would be punished. It would find it hard to get contracts with larger firms and goverments which go in for that sort of thing. But insofar as firms kowtow to the CSR mantra, because their profits require it, that is not really virtue, is it?

And you need CSR or you lose “ethical investment” don’t you?
That’s quite true. Many firms are having to work out how to get just enough CSR to keep “ethical” investors on board, whilst not making promises which make business hard to do and profits hard to earn.

Is it only investors who care about CSR?
Not a bit of it. Firms are keen on “social responsibility” not least because the “brghtest and best” of the employment pool has learned their ethics from Greenpeace and Oxfam and Action Aid and so on. Besides, the firms’ bosses know their own children and grand-children care about this stuff. It begins to feel like you’re not quite human if you don’t buy into the agenda.

And customers too… ?
Sure. Many customers care about “Corporate Social Responsibility”. So that means that at the very least there’s a market for goods which represent something more than just good value, and all the obvious commercial advantages that one might look for,

Surely firms should avoid sweat shops?
Sure, but there’s more to good things than CSR can capture. For instance, CSR says firms should avoid sweat-shops which produce cheap goods in the Third World. This may be quite a good idea, but it’s just as well others will invest in and use “sweat shops” – since these employ people who would rather be there than back at home in their backward villages.

Surely it’s good that firms do Fair Trade?
It would be easier to attack Fair Trade  (and easier to defend it, too) if we knew more about its real effects. We know that some extra money gets to producers: that’s the whole idea. Sometimes it goes to producers who meet various requirements, such as being organic. Sometimes it goes toward local facilities, such as schools. Sometimes it goes to co-operatives. We have very little idea of the real merits of these “add-ons”, and especially we have no idea whether Fair Trade is an efficient way for rich Westerners to fund these developments in the Third World. One obvious problem is with being “organic”: that may or may may not turn out to be a good way of staying profitable in the long run. Another difficulty is that many of the goods which are produced by Fair Trade are in over-supply – coffee is often cited. It is not at all clear that it is wise to subsidise inefficient producers to stay in that business.  

Surely it’s good that firms take an interest in their local community?
It probably is good that firms take an interest in their neighbours. But beware the facts behind the contribution to a local football team or arts festival. They may just as well be seen as a sop to buy off criticism or opposition. Shouldn’t we prefer the firm to deliver better value for its customers and staff? After all, the money for these contributions is diverted from somewhere else, some other corporate aim.  

Surely it’s good that firms give to charity? 
I don’t see why. Why shouldn’t they make as much as money as possible for their shareholders and let them give their money away? The point is this: a firm has no money that isn’t really someone else’s. It’s their shareholders’ money, or their emplyees’, or their customers’.

What would be wrong with a firm rejecting CSR?
Lots do, and do well. Almost any firm which insists on putting price very high on its list of priorities will not be keen to add-on lots of other commitments and promises. So, a “No-Frills” airline won’t be be sponsoring arts festivals. But its passengers may have a low carbon footprint: the airline’s planes may be new (so fuel-efficient), full (so it’s not flying empty space around the globe) and packed (so each passenger’s carbon footprint is relatively small).    

Isn’t obeying the law enough? 
You could argue that the West is heavily-regulated and on the whole, a firm will be doing well to be as virtuous as it’s required to be – and still make money. You can’t fire anyone, you can’t under-pay them, you can’t pollute – etc. But there is a problem with this sheltering behind the law argument. Firms like to argue that voluntary self-regulation ought to be enough, and that implies a degree of negotiation with society – indeed something like an CSR sort of thinking. So it may be tha firms can’t leave things to the regulators, at least not if they want to be relatively free of silly rules.

Isn’t CSR a good idea in lawless countries?
There is a lot to be said for Western firms setting their own high standards when they’re dealing with or operating in countries where anything goes. After all, their customers and investors back home won’t like to hear that their company has been behaving like a cowboy. But this area is deeply problematic. Western standards would hold back economic and social growth in “poor countries”, which are crying out for capitalistic growth.

So how do you get the right CSR balance?
That’s the interesting bit. You could argue that a firm ought to do as little CSR as possible and yet make as big a noise about it as possible. That’s to say: buy the peace and quiet and get the praise and yet pay as little as possible. This is roughly speaking what is happening now. One of the ways this is unattractive is that it risks the charge of hyprocrisy. After all, such a firm is trying to get a reputation for virtuousness whilst actually working out how little virtue it has to invest in. 

How can we get some honesty back?
Firms are a bit stuck. The media and campaigners enjoy beating firms up and bullying them into all sorts of declarations of CSR, and even real changes of habit and practice. And then they claim the firms are going in for “Greenwash”, etc. The best hope is that the debate matures a bit. Then the public will understand that firms can do some CSR, but not a lot. Or rather, some can do a lot – and charge for it and make a business out of it (which would not be virtuous, but would be profitable). Other firms would do less CSR, and say so, and be proud to be offering better value. (That wouldn’t be especially unvirtuous, and it’s time we understood as much).

Are there any signs of good sense in this debate?
Some. The “green”boss of Britain’s Co-op supermarket chain has come out and said that lots of the things like Food Miles with which campaigners had been beating up the supermarkets and consumers aren’t a very sensible guide to what’s good and green about food. So one way the debate can improve is if people talk honestly about the real effects of what they do: often what looks obviously virtuous isn’t, and what looks obviously wicked, isn’t either. 

So why get so worried about the CSR debate?
CSR matters because virtue does. It’s important to discuss is frankly.

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