IS CSR MERE WINDOW DRESSING?

Corporate Social Responsibility is subject to much debate and criticism. Some argue that it is sheer window dressing, companies should stick to the aim of profit making and that companies use CSR as a tool to divert attention of stakeholders from much more serious issues while the supporters of the concept think that since organisations have a major impact on the social and physical environments in which they operate, therefore, companies should be held accountable to societies and communities in which they operate. Also, they believe that by engaging in CSR activities, organisations benefit in multiple ways and can enjoy strong relationships and sustainability. In this blog, I will discuss some arguments related to this issue.

Corporations are only responsible to its shareholders
Milton Friedman and others have argued that a corporation's purpose is to maximize returns to its shareholders, and that corporations are only responsible to their shareholders and not to society as a whole. They also support the fact that companies should obey the laws of the countries within which they operate but they assert that corporations have no other obligation to society.

While shareholders are definitely one of the most important stakeholders in any business model, but just think for a second, can an organisation really survive by not paying attention to the interests of other stakeholders like customers, communities, activists groups and employees etc? Those who support this view reject Friedman’s ‘stockholder’ or ‘shareholder’ model in favour of what is usually referred to as the ‘stakeholder’ model where corporate managers need to balance the interests of all the different groups who have a ‘stake’ in the company. These groups might include shareholders, employees, customers, suppliers, the local community and even broader society.

Corporations use CSR to distract the public
Critics of CSR believe that CSR programs are undertaken and publicised to distract the public from the core issues. They also argue that corporations use CSR as a tool for their commercial benefit for example, by building relationships and reputation.

If companies genuinely engage in CSR activities, the benefits will be substantial and visible for example, increase in sales or image or reputation. Thus, if companies are undertaking CSR activities to distract publics, they will themselves stand at a loosing end. Also, effective governmental and international regulations and enforcement can ensure that companies operate in socially responsible manner.

CSR is the responsibility of the government and politicians
There is also an argument that CSR is the responsibility of government and politicians since they are there to ensure the welfare of people and the state so why should companies engage their time and resources to do CSR.

Although government’s primary role is to ensure welfare of the state but there are certain areas where it has been ineffective or incapable of creating and implementing solutions to some of the societal problems. This is where big corporations or multinationals come in to the picture. They have the resources and means to create and implement solutions which benefit their stakeholders.

This can be particularly true in the case of developing countries, for example, where the government of India has been incapable of providing education, food and shelter to children in rural areas, TATA group through its corporate social responsibility initiatives has supported many causes ranging from education, healthcare, reuse, recycling, energy saving and employing people with disabilities etc. Rather the very existence of this group is to provide community support.

Conclusion
CSR as a concept is gaining value and importance. If companies genuinely engage in CSR activities then the results will be substantial and if companies use CSR as a tool for window dressing not only they will loose the potential benefits but will also put their reputation at stake. This is because of the emergence of new media which demands more accountability and scrutiny from stakeholders. Window dressing might work for short term but if corporations want to enjoy long time sustainability, they need to integrate CSR in the way their business is being managed.

Image credit: http://static.technorati.com/10/01/06/2953/community-globe.jpg