b-school, Business, Management, MBA, Microeconomy, Thoughts

Where corporate social responsibility ends and consumer responsibility begins

My fellow student Andrew wrote about CSR, corporate social responsibility, and made me think.

Wikipedia defines CSR as a concept that organizations, especially (but not only) corporations, have an obligation to consider the interests of customers, employees, shareholders, communities, and ecological considerations in all aspects of their operations. This obligation is seen to extend beyond their statutory obligation to comply with legislation.

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That responds to an increased sensibility of society towards sustainable development, as well as social issues. There are many investors that claim that they take CSR into account before deciding which investment to choose. Forgive my scepticism but I’m not sure if that’s only another way to make an exotic fund.

CSR is voguish at the moment. Many write about it, less practice it and even less perceive the consequences of it.

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Anyway, although CSR is increasingly required and demanded to companies, you can’t expect CSR to make them act against their own nature.

Let me elaborate on that. Companies look for profit. That’s their goal and that’s the way it should be if they are to grow or even survive. You can say that they must diverge part of their profit into the society that bought their products in the first place. But, when the nature of the social or environmental problem is related to excessive consumption, I’d even say conspicuous consumption quoting Thorsten Veblen, you can’t expect the companies to help.

It’s true some companies have changed their products to more healthy ones, but, they are not promoting less consumption, reducing their promotion, increasing their price. In fact doing that would be irrelevant because they’d simply be substituted by competitors and market, and consumption, would stay the same.

Many social and environmental issues don’t have their origin -or solution- in the offer, it’s demand: our part.

We customers are on demand’s side. The parents have much more to say about their offsprings’ obesity than the companies have to say. The same about throwing water away or wasting energy. It’s our duty to be responsible consumers, not their obligation to teach us how to consume. And it’s so easy not to be responsible…

And they help us not to be. Let’s be realistic. At the same time, companies also have learned to transform their PR message to profit from our worries. They tell us they -and their products- are greener, lighter, healthier so that we can forget those issues and keep buying. They give us the alibi we need to divert our attention from the environmental issues, health issues, weight issues… whatever. We are already doing something, right? We are helping with our responsible shopping.

It’s the system. Economists can’t account for what they cannot measure. And you can’t measure happiness, or excess of weight, you measure the quantity of candy bars sold. In the same way we do not take into account the contamination we are producing with our low-cost flight. (although we still have the concept of externalities that, as a concept, has many things in common with the concept of CSR).

But, even if the plane left without us, it would still produce (almost) the same amount of CO2, right? Why bother?

Just some thoughts to share

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3 thoughts on “Where corporate social responsibility ends and consumer responsibility begins

  1. CSR, as you’ve already said, is a voguish topic that will be completely forgotten in a question of a few years. I think the emergence of CSR was the consequence of too many years of myopic management (i.e. only looking at the next quarter profits’). In some sense it was a way to say…. “Yeah, short-run profits matter, but values matter too if we want to survive in the long run”. When many people refer to CSR, they’re actually referring to “let’s ensure we will maximize profits in the long run by being consumer-friendly and society-friendly”.

  2. You’re right. That might be a way too. Trying to skip the quarterly results with a good excuse. If that was the case private equity beat the CSR on the long run without having to worry about quarterly results and without having to worry about CSR either.

    Btw, when should we expect an Economing update?

    Best regards and thanks for the post ;)

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