Needed: A Real Change in How we Think about Business

There is an odd idea that corporations have responsibility only to themselves, and to their investors. Corporate social responsibility (CSR) is a term used to describe concern by companies for social and environmental impacts, and, ideally, action to improve these impacts. It is defined by the European Commission as “the responsibility of enterprises for their impacts on society “. The manner in which CSR is integrated into company action, and the effectiveness of the actions, depend on the type of business, as well as the attitudes of the companies.

Recently, I heard a speaker, who is responsible for CSR of a major car manufacturer, complain about the complexity of the issues (imagine how many different materials go into a new car, and don’t forget the social aspects of CSR). He further stated their actual goal is to sell the 40,000 cars they manufacture every day.

Stop for a second: 40,000 cars? What happens to the old ones? How many cars can the earth support? You might say, well, these are newer, low-emissions models, but in fact the carbon emissions of the manufacturing process roughly equal the emissions of a car’s lifetime – so you double your car-related carbon footprint by buying a new one before the old one has reached the end of its life.) The problem is similar, only on a different scale, for a company selling yoghurt. A representative of a food company said that he has to defend how his suggestions for improving social impact will sell more pots of yoghurt.

Two out of five European citizens (41%) think corporations have a negative influence on society, while half say their influence is positive. But what does this tell us? In fact, this is such a broad question, it is nearly impossible for someone to reflect their own opinion accurately. Most of us see both positive and negative sides of organizations and business, and our answer to the survey question may depend on whether we are thinking of open cast uranium mines or flower growers.  I am pleased to be able to buy cotton materials to make serviettes and clothes – which comes to me because of the business and processing of several businesses from the producer through to weavers and finally to the retail shop. But I am not so pleased to know about the environmental and social costs in terms of water consumption, pesticide use, land tenure, etc. I expect such an analysis of the impact of business is similarly complex for you.

True corporate social responsibility requires a completely different business model, one that is not based on aiming always to increase consumption and production in order to be successful.

What would that look like?

It would mean giving up the idea that the purpose of corporations is to maximise profit and shareholders’ dividends. It would mean doing away with zero hours contracts in the UK. And perhaps acknowledging the reality of the negative impact of many corporate activities on people’s lives and on the environment. It would mean acknowledging that the shortage of natural resources is a real constraint. A  recent European study found that 500 CSR experts predicted that social impacts of business and problems of carbon emissions are controllable through CSR activities, but the shortage of natural resources is not. This is a real constraint in a way which many corporations do not yet understand: endless manufacturing is simply not possible in a world of finite resources (and finite ability to absorb waste).

Ghost village near Cwmllynfell, Wales: residents suffered from unacceptably loud noise and vibrations from a nearby opencast coal mine n the 1980s. CC, photo by Hywel Williams 2007.

And it means the corporations taking responsibility for the radical change, rather than saying they are impotent.

If we take the finiteness of our resources as seriously as it must be taken, it becomes obvious that the mantra of economic growth is not realistic. This realisation will have major knock-on effects: it will mean reconsidering our assumptions about organisations and people and inequality. We need to reconsider what we assume is the goal of society – is it to maximise the profits of corporations for the benefit of the few, or, as the EU says, human well-being? Focussing on social and environmental impacts as core rather than side aspects to our economic activities would mean a fundamental re-structuring of our assumptions and models. We would need to incorporate true consideration of human well-being, to consider reducing rather than increasing inequality in Europe and elsewhere, to take drastic steps to end human-induced climate change. And we need – at long last – to take seriously the physical finiteness of the resources of the earth.