A business’s only responsibility is to produce profits. To what extent do you agree with this statement?
Corporate Social Responsibility (CSR) is a concept that challenges the conventionally-held belief that the sole purpose of a business is to create profit. Proponents of CSR urge that the role of businesses must go beyond increasing their own profit margins: they must contribute to causes such as human rights, animal welfare and/or the environment – or at the very least take strong measures to do no harm in these areas. The term “corporate social responsibility” emerged in the 1960s. And in recent years, there has been an outpouring of CSR programs and reports. This can be seen in large-scale corporations like McDonalds and Nike, but also among smaller companies that are just starting out (Crane 2008). For example, consider the rise of “social entrepreneurship”. Governments have also begun encouraging CSR practices and NGOs actively work to elevate standards of ethics and hold firms accountable through strategic partnerships (Crane 2008). However, because CSR is a relatively new concept, it has also been a matter of debate. There are people in the business community, as well as in academia and the general public, who feel that CSR makes unrealistic or misplaced demands on businesses. They might ask the following question: “Do firms have social responsibilities in the first place?” (Crane 2008, 5). This essay seeks to answer this question through an examination of both sides of the argument.
Reasons against CSR
Of course, although CSR is a growing practice and is becoming more deeply embedded in some of the most powerful corporate structures, there are still a lot of companies (both big and small) that have not followed. There are companies who have made no effort to demonstrate that they care about social or environmental causes. Furthermore, there are companies who have made vague commitments to CSR but carry out their policies half-heartedly or lack transparency in their efforts. The main reason for this resistance toward CSR is because these companies believe first and foremost in the pursuit of profit. As American economist Milton Friedman writes in his book Capitalism and Freedom, “there is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” According to his reasoning, to be socially responsible means simply to “[engage] in open and free competition without deception or fraud.” Indeed, those who oppose the CSR model do not imagine a world without any laws governing their practices, but rather do not see their obligations toward society going beyond that (Friedman 1970). This means that humanitarian and environmental concerns go unaddressed by business, which opponents of CSR believe is actually better for society, since governments and NGOs are perhaps better suited to address those issues.
Reasons for CSR
I believe that businesses should still be absolutely committed to social responsibility, and that “social responsibility” goes beyond turning a profit within the boundaries of law. The truth is that “legal” is not always synonymous with “ethical” – a company could be obey all the rules of law yet still be acting in a morally indefensible way (Balderlomar 2016). Furthermore, international laws prohibiting human rights violations, such as child labor for example, can be considered weak laws, due to the difficulty of enforcement, and therefore usually are not encompassed in what a company considers to be “the rules of the game” as Friedman would put it. Therefore, corporations must conduct their operations through a lens of ethics rather than only law. There is also an economic benefit to CSR practices – it enhances the company’s image, increases public confidence and encourages more consumption.
This is especially important in light of the trend of “ethical consumerism”. For example, Starbucks is an extremely successful world-renown business whose brand is built on being socially conscious and sustainable. In their website’s “Responsibility” section, under Recycling and Sustainability, they write “We know this is important to our customers, to us and our planet. In fact, we get more customer comments about recycling, particularly our cups, than almost any other environmental issue” (Starbucks Website 2017). Making their cups recyclable and providing recycling bins in stores keeps their customers happy and therefore turns a higher profit. To illustrate this point, a 2015 study shows that 84 percent of consumers globally say they seek out responsible products whenever possible (Cone Communications/Ebiquity Global CSR Study 2015). This demonstrates how CSR and profits are not mutually exclusive, but mutually reinforcing. In regards to the argument that corporations have no business in creating societal change, one needs only to consider the wonderful contributions made by businesses in the areas of humanitarianism and environmentalism. These measures can succeed through collaboration with governments, NGOs and community leaders, and by hiring specialists or consultants.
To conclude, I want to emphasize that although businesses will almost always primarily be motivated by creating revenue, they do also have social responsibilities. In fact, as corporations play larger and more important roles in our society (for example, influencing politics and our media), their character as “social” entities becomes more evident and their social responsibility therefore only becomes greater. Ethics should be the focus rather than trying to adhere to only the most enforceable laws. As Anita Roddeck, founder of the Body Shop, said, “The business of business should not be about money. It should be about responsibility. It should be about public good, not private greed.” A more compelling argument for business owners who are concerned about how CSR will affect their bottom line, could consider the following quote from Peter Robinson, CEO of Mountain Equipment Co-op: “Ethics is the new competitive environment.” Consumers care increasingly about where their products come from, how it was made, how big its carbon footprint is and what the company is doing to solve the world’s greatest problems. Perhaps this sounds like a tall order. But corporations worldwide are doing their best, and not only are these ethical businesses seeing large profits, but they are truly making a difference.