Corporate Social Responsibility in the Present Age

CSR was always of Secondary Importance

Even during the best of times when business is booming and the liberal attitudes towards society spurred on by well-meaning stakeholders, corporates find that they cannot discharge their CSR or Corporate Social Responsibility obligations due to a variety of reasons including a reluctance to share their profits or contribute more towards social and environmental causes.

Indeed, corporates worldwide since the 1970s have been shying away from their CSR initiatives despite pressure from activists and shareholders mainly because the dominant strand of thought or thinking is that the responsibility of business is business as enunciated by the Late Chicago School Economics professor, Milton Friedman.

Thus, it is the case that even during periods of economic expansion, corporates used to contribute towards CSR efforts grudgingly.

CSR in the Present Age

Which brings us to the present age when autocrats and pro business-friendly politicians are in ascendancy worldwide which means that corporates do not have any incentive or inclination to contribute towards CSR activities.

Indeed, under President Trump, much of the regulatory framework governing corporates put in place over the decades is being rolled back leading to many corporates merely wishing away their CSR obligations.

Further, with the present age characterized by low profits and excess cash reserves which by itself mean that corporates are hoarding or holding back investments in new ventures, CSR has been bypassed by many of such corporates who have little interest or inclination to contribute towards their CSR obligations.

Indeed, with the activists losing ground as well as with regulators actively aiding and abetting corporations, there is little pressure on the corporates to “do something” towards society.

Thus, what we have is a Perfect Storm of trends that suggest that corporates would no longer be obligated to do their bit and instead, what we have is a shirking of responsibility towards social and environmental causes.

What This Means for Society

So, what does this mean for the broader society and societal stakeholders in general? To start with, this means that consumers would find their consumer protections against unfair business practices rolled back as well as with their recourse to laws and regulations curtailed.

Next, it means that on issues such as climate change, there will be little incentive for corporates to take action or to limit their environmentally unfriendly activities. Indeed, now they can go back to claiming that pollution and degradation of the environment caused by their business operations are externalities which they need not pay for.

Third, it also means that the communities of displaced and affected people due to the corporate expansion and growth would find little help by way of compensation from either the corporates or the governments.

Also, funds for the development of society and the societal stakeholders at large would dry up, and this includes grants and funding for NGOs or Non-Governmental Organization. Indeed, among the biggest losers of the present retreat from CSR are the NGOs who were already reeling under the impact of the state breathing down their necks and the present age would mean that they would lose whatever little funding they were receiving from the corporates.

Lastly, the poor and the marginalized would find that benefactors and benevolent funding for their education and other activities would be severely curtailed leading to them being more marginalized or the trend of marginalizing the marginalized.

Hope in the Form of Well-Meaning Business Leaders

Having said that, it is also not the case that we can tar all the corporates with the same brush as far as CSR is concerned and that we can say that there are no well-meaning and conscientious corporate leaders.

Indeed, the present age of dwindling CSR contributions also has wealthy and super-rich capitalists such as Bill Gates and Warren Buffett donating their wealth for social and environmental causes and the trend of leading industrialists such as NR Narayana Murthy advocating causes such as capitalism in a compassionate manner.

Thus, it is the case that something is indeed being done as far as social and environmental causes are concerned and hence, all is not lost yet. Of course, the fact is that the mixed bag of dwindling CSR and increased activism by business leaders indicates several things.

First, it shows that most Western governments have allowed the corporates to continue in a less CSR environment while at the same time, pledging monies to populist and people-oriented causes. In short, what this means is that it would take some more time before the present situation of contradictory and conflicting trends crystallize into something more concrete by way of action as far as CSR is concerned.

Second, this also means that governments have absolved the corporates of any CSR obligations while at the same time, allowing private individuals to take the lead in bettering the lot of society in an individual and rather than collective manner.

Restore the Balance

Lastly, it is our view that the balance between profit-making and CSR needs to be restored and towards this end, a unified and collective effort is needed from all stakeholders including corporations, governments, activists, and more importantly, the business leaders.

Thus, we await the renaissance in the way in which corporates and CSR would again align with each other and in our experience, this can happen both in a top-down as well as bottom-up manner.

To conclude, the present age is full of turmoil and chaos, and hence, it is indeed the case that citizens and all stakeholders act before it is too late.

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Corporate Social Responsibility