Remarks at a reception marking the 10th anniversary of Chambers Ireland’s CSR Awards
Áras an Uachtaráin, 11 November 2013
Distinguished Guests, Ladies and Gentlemen,
Tá áthas orm fáilte a chur romhaibh go dtí Áras an Uachtaráin chun chothrom deich mbliana Dhámhachtainí Chomlachais Éireann um Fhreagracht Shóisialta Chorparáideach a chomóradh. Tá an-tábhacht ag baint leis an léargas go bhféadfadh gnólachtaí, agus gur cheart dóibh, cúraimí sóisialta agus timpeallachta a chomhcheangail lena gcuid oibríochtaí gnó. Mar sin spreagann se muid a fheiceáil bailithe sa seomra seo, ionadaithe ó réimse leathan comhlachtaí – idir mhór agus bheag, idir náisiúnta agus idirnáisiunta – atá tiomanta do ghníomhaíochtaí a dhéanamh, os cionn agus thairis a gcuid oibleagáidí, d’fhonn leas an phobail a chur chun cinn.
[I am pleased to welcome you all to Áras an Uachtaráin, to mark the tenth anniversary of Chambers Ireland’s Corporate Social Responsibility Awards. The notion that firms can, and should, integrate social and environmental concerns in their business operations is a very important one. It is therefore encouraging to see gathered in this room representatives from a wide range of companies – big and small, national and multinational – who are all committed to take actions, over and above their obligations, to enhance the social good.]
The rationale underpinning Corporate Social Responsibility – CSR – is not entirely new. We can trace its origins to 19th century ethical concern for the physical and moral welfare of workers, or to the philanthropy tradition, the idea that a portion of any successful commercial enterprise’s profits ought to be redistributed for common good purposes.
Other uses of Corporate Social Responsibility are of more recent currency, and take into account current challenges, such as the awareness of the impact of economic activity on our natural environment, the world of work in its social setting, the importance of volunteering and the social responsibilities of active citizenship.
But whatever about its roots, there is no doubt that the concept of Corporate Social Responsibility has blossomed over the past fifteen years or so. It would be quite a challenge, nowadays, to find a large company’s annual report devoid of a CSR statement. Corporate Social Responsibility features prominently in the public presentations of senior executives; its implementation is looked over by dedicated staff and consultants; tellingly, it has even made its entry as a taught subject in business-schools around the world. It has found acceptance and is a valuable tool ripe for development and an instrument of potential in social cohesion.
The variety of initiatives implemented by companies as a means of showing their positive contribution to society is reflected in the impressive selection of projects which, since 2004, have been presented for the Chambers Ireland’s CSR Awards. These range from volunteering opportunities for staff, to educational initiatives run in partnership with charities, and to recycling and waste management innovations, or outreach activities targeted at specific groups – first among whom, in this year’s competition, come children and young people. I note that among the projects distinguished by Chambers Ireland in this tenth edition of the CSR Awards, such key matters of corporate concern as the quality of children’s bedtime stories!
The body of ‘good practices’ entailed in Corporate Social Responsibility is an evolving space, and no doubt you stay attuned to the developments of benchmark standards at global level. More than ten years have elapsed since the European Commission published its strategic ‘Green Paper’ on the subject, which outlined the merits of the ‘triple bottom line’ approach, whereby social equity, environmental concerns and economic growth are considered in a holistic and interdependent manner. The Commission is now looking to better align European and international approaches to CSR, with the latter comprising, notably:
- the OECD Guidelines for Multinational Enterprises,
- the UN Guiding Principles on Business and Human Rights,
- the Ten Principles of the UN Global Compact,
- and the ISO 26000 Guidance Standard on Social Responsibility.
Notwithstanding its positive and encouraging evolution, the literature in its business and economics tells us that Corporate Social Responsibility still has its critics, and from both sides. The concept has been challenged by critics of ‘corporate power’ on the one hand, and by advocates of the self-regulating market on the other. The former group regard CSR as the meagre tribute that capitalism pays to virtue. They assert that Corporate Social Responsibility is PR window dressing, an attempt by large corporations to clean up their public image by colonising the moral debate around the social and environmental impacts of businesses. Others, from the other side see corporations as following in an unregulated market and with a single duty to shareholders’ pockets rather than their ethics.
They also criticize the ‘soft law’ approach which underpins CSR practices – moral suasion, the fact that companies are called upon to act voluntarily, according to a set of values which are not legally binding – as undermining the robustness of their responsibility. Interestingly, the two sides of the critique agree, although for very different reasons, on the point that government regulation is called upon to be the legitimate protector of the public good.
The world has changed since the time when the philanthropic owner had complete control over how to best allocate his company’s resources. Today, shareholder ownership, and the reality of mergers and acquisitions, create specific constraints for professional managers – constraints that give a new centrality to the issue of the profit motive.
Indeed, as both strands of CSR critics emphasise, in companies that are run by professional managers, executives are hired to maximise profits; they are legally bound to act in the best interests of their shareholders. Therefore, in circumstances in which profits and the public good are at odds, an appeal to CSR may struggle, because executives are under great pressure not to act voluntarily against the shareholders’ interests. That is why we must admire those who have the courage to take the wider view and the tenacity to bring it to fruition.
On the other hand, those who criticise CSR in the name of the free-market usually put their argument in terms that are quite blunt - strikingly similar - to those used by Milton Friedman in his famous 1970 New York Times Magazine article entitled “The Social Responsibility of Business is to Increase its Profits:”
“The key point,” Friedman wrote, “is that, in his capacity as a corporate executive, the manager is the agent of the individuals who own the corporation, and his primary responsibility is to them … The use of the cloak of social responsibility, and the nonsense spoken in its name by influential and prestigious businessmen, does clearly harm the foundations of a free society.”
Milton Friedman went on to suggest that managers who sacrifice profit for the sake of the so-called public good are effectively imposing a tax on their shareholders by arbitrarily deciding how to spend money that is not theirs in order to pursue philanthropic goals.
For him, these well-intentioned managers are, in that sense, also usurping the role of elected governments. Which, of course, was best kept small. Holding the ring for market freedom in an absolute sense was enough. The only way in which businesses can genuinely contribute to the welfare of the general public is, therefore, through the maximisation of their profits.
Those views – however dispiriting they may seem to all of us here - do still hold in certain corporate managerial circles. Their influence cannot, nor should it be, entirely dismissed.
Thus, CSR has its critics – each of which is coming from entirely different and indeed opposing perspectives. But to hold such overtly critical and reductionist views is, I believe, to miss much opportunity. Employees of companies committed to CSR, the local communities to which they are tied, and the physical environments within which they operate, are invaluable assets for enterprise and the communities in which they are embedded. They are of course most legitimate subjects of corporate responsibility. Neither should Corporate Social Responsibility and government regulation be seen as mutually exclusive. State regulation and the positive changes that are achievable through CSR can work, and do fit, together if we accept the obvious that the social nature of work and corporate activity.
So there is a good case to be made for Corporate Social Responsibility, including a good business case and people like yourselves are making it. Indeed a strategic approach to CSR is increasingly important to the competitiveness of companies. Because it requires engagement with internal and external stakeholders and circumstances, CSR enables enterprises to better anticipate societal reactions and changing operating conditions. It can foster the development of new markets, new design, and create opportunities for growth. By truthfully and earnestly addressing their social responsibility, enterprises also build up long-term trust with their employees and clients as a basis for sustainable business models.
Finally, this question of trust leads me to the moral significance of CSR. Codes of conduct, best practice and procedures mean little unless they are rooted in a deeper ethical consciousness, in a value system that can be shared and understood by all. Any business practices that fall short of what we can call the ‘ordinary decencies’ – are highly damaging both for society and for a company’s public reputation, for its ‘credit’ (that is, both its good name and its ability to borrow money). Managers make real gains from concerning themselves with ethical standards. Social and environmental responsibility is an integral part of good business. I therefore commend you for all you are dong to mainstream this ethical consciousness in the conduct of business.
Go raibh míle maith agaibh go léir.
Thank you for your attention.