Corporate social
responsibility (CSR) is an expression used to describe what some see as a
company’s obligation to be sensitive to the needs of all of the stakeholders in
its business operations.
A company’s
stakeholders are all those who are influenced by, or can influence, a company’s
decisions and actions. These can include (but are not limited to): employees,
customers, suppliers, community organizations, subsidiaries and affiliates,
joint venture partners, local neighborhoods, investors, and shareholders (or a
sole owner).
CSR is closely
linked with the principles of "Sustainable Development" in proposing
that enterprises should be obliged to make decisions based not only on the
financial/economic factors but also on the social and environmental
consequences of their activities.
Some would argue
that it is self-evidently “good” that businesses should seek to minimize any
negative social and environmental impact resulting from their economic
activity. It can also be beneficial for a company’s reputation to publicize
(for example) any environmentally beneficial business activities. A company,
which develops new engine technology to reduce fuel consumption, will be able
(if it chooses) to promote its CSR credentials as well as increase profits.
Some
commentators are cynical about the true level of commitment of corporations to
ideas like CSR and Sustainable Development, and their actual motivations for
responsible behavior. (Corporations that create the appearance of acting
responsibly just for its public relations value are said to be "green
washing.")
Such
commentators also say, citing Friedman's dictum, that the idea of an “ethical
company” is an oxymoron, since the corporation is by its nature compelled to
maximize its own interest, whatever the external price. Corporate executives
and employees in turn have strong incentives to internalize the corporation's
statutory obligations to maximize profits, sometimes to the extent that they
abdicate their individual moral and ethical obligations as human beings. This
tendency is, of course, encouraged by the desire to keep one's job, and by a
system that judges and rewards performance strictly by bottom-line returns. The
results of this tendency were clearly seen in the many corporate scandals of
the late twentieth and early twenty-first centuries.
So the CSR
movement may perhaps be understood as an attempt not so much to regulate the
activities of corporations per se, as to remind the people who constitute these
corporations that they nonetheless have other responsibilities beyond the
corporate ones.
