Who'd have thought that the business community and the environmental activist could ever on something.... CSR is just another name for PR!

This is a very refreshing article. It pokes a finger at the sort of pious nonsense that is cluttering up the field of business from cosy mission statements that state the obvious, to ethical guidelines that have little basis but appearance. The world of business is in danger of being reduced to the Rotary Club. The huge business scandals of the past few years are evidence that this is mostly window dressing. Gilding is right, business should be Darwinian, and the weak should have no place in the market place. That is the reality of business and no cuddly ideology will change its nature. However, I am unsure of Gilding’s optimism that profit will follow responsible practice. The history of large corporation would tend to negate this optimism. The missing argument is that corporations operate under community censure enforced by law. This means, unlike Darwinian evolution, that the strong are not free to do as they wish to enhance their bottom line. While we cannot rely on corporations to have the communities best interest in mind, other than for reasons related to PR , we must rely on the community regulating their activities.

Injecting some balance into the rethoric would make this article less catchy, for sure, but more accurate. The reason we have CSR at all is that current laws that business operates under (and therefore must adhere to) do not match community expectations in many areas. Sustainability is primarily a community concern, not a business concern, since companies have the luxury of externalising the most of costs. Business is reacting to the shift in public opinion faster than politics because it is more vulnerable (see PETA vs Abercrombie & Fitch). Sure, some aspects of CSR are and will be profitable, but others - such as investing in solar - require government intervention because the economics doesn't stack up without subsidies/emmission taxes at this stage.

Essentially, CSR is a form of 'lobbying' business (using fear instead of incentives). As long as community groups have no effective way of lobbying government that mirrors the effectiveness of business lobbying government we are going to continue to see this process in action. CSR as a concept will die one day, when the laws have moved closer to community expectations again. But to believe that business will not fight tooth and nail to stop governments from forcing it to pay for externalities such as greenhouse gas emmissions is a bit naive. So CSR has its place and it will survive the next recession (in some form).

Unfortunately sustainability suffers from the same ambiguities as CSR. Some believe that CSR is about improving the welfare of society beyond the interests of the firm. Others believe that the most successful CSR activities are the ones that fall within the firm’s interest. These words are used interchangeably with business ethics, corporate citizenship, sustainable development, environmental management and stakeholder management and even philanthropy amongst the less mature, adding to the confusion.
Gilding rightly states that motives matter, and the only motivation for CSR should be sustainability. Wrongly, he proposes the markets as the best instrument for doing so. The implication is that because efficient markets and economic growth best serve social goals, business needs only obey the law, respect moral minimums, and respond to the demands expressed within the market.
Wrong. This ‘Milton Friedman’ view, with its reliance on markets, is flawed. The market fails when dealing with externalities such as pollution, unpriced goods such as rare species and scenic vistas, common goods such as clean air and water, and conflicting economic, social and environmental responsibilities.
Even if we could assume efficient markets, it is still economic growth that companies are rewarded for. Sustainability requires a shift in thinking towards economic development (there are limits to growth). This is most clearly demonstrated in developing countries, where the socio-economic needs are so great that to succeed, companies realise that they need to contribute to the development of a healthy and prosperous society.
This is ultimately a question about the relationship between business and society. Should organisations care about the ecological, social and economic environment, as they are dependent on it? This necessitates going beyond a cause-effect relationship, into systemic and synergistic thinking.
The focus of the sustainability debate should be on what the role of the company should be in contributing to a country’s development, rather than growth. The values of society, not only the ‘market’, will dictate the direction that progress takes.