It is perhaps another sign of the age we find ourselves living in that as big companies pay fewer and fewer taxes into the coffers of the states where they are based – or that, as they euphemistically put it, “outsource” production lines, or client support centres to other less regulated and therefore cheaper destinations -such corporations seem to enthusiastically embrace a modern day form of misanthropy: Corporate Social Responsibility or CSR.
Or is it not misanthropy? Should we perceive CSR as just another one of the multiple stepping-stones in the on-going battle to redefine the public and private spheres of our everyday life in the polis? Or should we welcome it as much as we do an individual’s (oft-times secretive) act of kindness? Or is CSR nothing but a clever way for companies to survive in the long run? In order to answer some of these questions we must first go back to the nineteenth century, then fast forward to present times.
Were any of us to wake up in any of the highly industrialised cities of nineteenth-century Northern Europe, two things would immediately and violently slap us in the face: the pollution and the squalor. The stench, I am sure, would come a close third. We would find little or no social net for the burgeoning urban population. William Beveridge’s “Five Giant Evils” – Want, Disease, Ignorance, Squalor and Idleness – would be ever pervasive.
As a matter of fact, it was the very lack of interest or the inability of most entrepreneurs back then to provide their workers with more than just a salary, that first led to the emergence of a mutualistic-inspired social insurance model and later, because of the lack of universality of those schemes to the foundation, seventy years ago, of what we now recognise as the social welfare state.
The universality of the social state coupled with an ever-enlarging basis of entitlements has led to the current debate, especially in Europe, about how much can private companies sustain.
Across the Atlantic the same type of evolution happened, but with a difference. The State did not take the same level of responsibility for the welfare of the people, nor did its citizens make the contributions that would have been required, had they lived in Europe. In fact, the tradition in the US in this respect has been based on two basic principles: the state (with huge variations across state lines) will provide some people with the most basic services up to a certain point, while successful people will support, through their companies, foundations, or other entities, the arts, the poor, health, education and other causes that they may perceive to be worthy, and in a way that they see fit.
Herein lies what may be one of the main distinctions between random or systematic individual acts of kindness and corporate acts: their publicity and self-promotion. As Saul Bellow put it: “Public morals are a kind of no man’s land, in which anyone can claim to be sheriff.” Too often the sheriff ends up by being the one with deepest pockets. This connects directly to how companies say they justify allocating resources to their CSR activities.
The schism between the two sides of the Atlantic has, to a degree, diminished during the recent years of austerity on the old continent. Not only have ill-informed Europeans yearned for the kinds of budgets that some academies, museums, or hospitals have in America, but Washington DC has, during the Obama presidency, extended the social network that its poorer citizens use, mainly with regard to health services. Were any of us to wake up today in one of the booming Chinese urban sprawls, or in one of the sprouting sweat shops in Madagascar, Indonesia, or Bangladesh, the pollution, long work hours, and absence of healthy, safe conditions would shock us as much that of Victorian times. The biggest shock would, however, come when we realised that the very companies which invest so much to promote CSR values back in Europe and across the Western world are the same ones that – once they leap across to different continents – are ready to turn a blind eye to what one would assume were their core commitments. Hence the recent, tragic fire in Bangladesh where there not enough exits and no fire escapes, and where inflammable materials were improperly stored – conditions similar to those I saw in Macau as a teenager, where it just so happened a lot of high street brands were being produced in what were inexcusable conditions.
Hence also the fact that in some factories in China there are reports that bars have been installed in windows to prevent suicides. It is, after all, less costly to add these than to reduce work hours or provide better salaries.
This brings us to one of the very first points about CSR. If a company is serious about it, then it needs to make its pledge as enforceable in its swish headquarters in the northern hemisphere as in its subsidiaries or suppliers in the southern one. In other words it needs to embrace globalisation of CSR as enthusiastically as it did globalisation of free trade.
The other key principle of CSR is to pay your taxes and not avoid them using shady loopholes or dodgy tax heavens. This is a principle again somewhat similar to one, against which we as citizens are judged. As Ed Milliband said in this year’s Google Big Tent event, invoking his father, who did a stint in the Navy: “He used to talk about those days in the Navy, where people of all backgrounds, all walks of life, came together for a common purpose (…) one nation.” Milliband’s goal – as usual rather obscurely expressed (unfortunately for the Labour Party) – was to try and persuade Google’s boss to pay more tax. Why are we allowing some of these Goliath companies, who are among those that claim to place CSR values at the core of their business practices, to avoid an obligation that we as private citizens cannot?
The Observer’s Will Hutton puts this more eloquently: “Cameron and Osborne’s quest to limit the now rampant corporate abuse of tax havens is not because they believe that the state is a force for good whose services everyone must legitimately pay for – that taxation is a badge of citizenship. It is because they are against cheating and if big companies don’t pay their taxes then taxes are higher for everyone else.” Hutton goes on to add: “You may think the difference is irrelevant, but crucially it offers the tax cheats a perfect line of defence (…) companies have no moral responsibility to respect the spirit of the law.” Or, as Google’s Eric Schmidt says: “It is the government’s responsibility to change the law.” One shouldn’t allow Google, or any other company, to say how much they have contributed to such and such causes, or the millions they have given away, until they show us how much they have paid in taxes. I guess what I am arguing is that a company cannot be serious about its social responsibility standing without paying its fair share into the costs of the state where it operates. The debate should, therefore, not be about how effective CSR is. Because it usually is – smart companies wouldn’t invest if it weren’t. When, twelve years ago, I started developing one of my social responsibility programmes in Portugal, a designated driver project -“100% Cool Driver” – to dissuade younger drivers from drinking and driving, more than 1,500 people died annually on the country’s roads. Now that number has come down to less then 700. Still 700 too many, one could argue, but undeniably a good result, which is attributable, among other factors, to the project I run. The debate should, nevertheless, be on whether one should allow a company’s CSR programme to replace a company’s contribution to the state.
Mutatis mutandis, would we let someone off the hook for his or her taxes if they argued that they had already helped an elderly person cross the road, or been recycling for many years, or never used air conditioning? Are we not creating the potential for an atomisation of social services by allowing companies and not the state to determine priorities and strategy? It would thus be useful to set some ground rules for CSR for it to allowed to be called that.
The first rule should be that for a company to reap the significant benefits of CSR (in good will, or in diminished regulatory pressure), it must meet all its tax obligations to the state, in a full and fair way.
Secondly, CSR should be certified. It is not the same thing to give away a percentage of profit on sales of some product or service to some worthy cause as it is to support a hospital or education programme. The former is social marketing (at best a ramification of CSR). The latter indeed is CSR.
Thirdly, only private companies should fund CSR. Without prejudice of participation by public, or official entities, this input should not go further than information and services. Moreover, funding should be commensurate with profits to demonstrate how serious and committed companies are.
Finally, CSR activities can and ought to be monitored and evaluated independently, something that most companies would welcome.
Canadian writer Robertson Davies said some years ago, at the Edinburgh Festival, that in his many travels he could usually judge the level of development of the country he had just arrived in by the advertisements he saw by the roads, or watched on TV. I would rather Mr Davies had included in this formula the quality of the tarmac of the roads he took to his hotel, or the way he was taken care of in a Hospital’s A&E, had he fallen ill, or how many of his hosts were able to converse with him in a foreign language which they were able to learn in a public school.
Sustainability and CSR are interconnected concepts that may indeed be a force for good, as long as they not only not replace the state, but also do not justify the state’s unsustainability.