Is CSR ‘Irrelevant’?

Monday’s Wall Street Journal article that makes the case against the idea of corporate social responsibility is provocative food for thought. But just as author Aneel Karnani argues that the reasoning for CSR is flawed, I believe there’s a few flaws in his reasoning. Here’s a couple of examples:

1. Karnani: “Large companies now routinely claim that they aren’t in business just for profits, they’re also intent on serving some larger societal purpose.” While some of this statement rings true, I think Aneel overstates the case. I’ve talked to a lot of CSR leaders, and profits are THE overriding goal. And I doubt if people primarily think of McDonald’s, Exxon Mobil or even Starbucks as economic or environmental saviors.

2. “…in cases where private profits and public interests are aligned, the idea of corporate social responsibility is irrelevant: Companies that simply do everything to boost profits will end up increasing social welfare.” Tell that to the people of the Gulf Coast.

3. “More often, profits and social welfare are at odds, and executives can’t be expected to heed the call for social responsibility at the expense of shareholders.” A number of studies have shown that the public, which includes a few shareholders, better responds to companies that partake in CSR activities. So profits and social welfare—at least in some cases—aren’t really at odds.

These are just a few points in the article that I feel are flawed. But this is not to say that the article has no merit. PR agency Gibbs & Soell’s 2010 “Sense & Sustainability Study,” which surveyed U.S. consumers and Fortune 1000 executives on their views of corporate efforts to improve the health of the environment, found that only a minority of execs (29%) see an overall strong corporate commitment to “going green.” So perhaps the majority of corporate execs might agree with Karnani’s view. What do you think of it?

–Scott Van Camp

  • James St.Clair

    Well written response to the article, and I think its intent was to stir up this sort of discussion as much as to offer any real insights.

    Using only the Gulf Coast as an example, I think an additonal case could be made for CSR as a complementary activity to Risk Management. Lack of adequate commitment to CSR, in the same vein as a lack of corporate commitment to ethics, must be recognized objectively and considered for its impact to reputational, operational or even financial risk.

    Jim St.Clair

  • Scott Van Camp

    Thanks for your comment. I agree with the linkage of CSR and Risk Management. I’ve had Risk Management on the brain this week due to an upcoming story on postmortem crisis analysis. RM principals play a big part in that process.