Resist CSR activism

News that the eco-socialist network, Market Forces, intends to step up its campaign to choke investment in fossil fuel industries came as no surprise to those who have watched with concern the increasing activist pressure on the corporate world.

There is a burgeoning ‘social responsibility’ industry — managers and consultants employed in HR, people and culture and corporate affairs divisions, and in the major professional services firms — that is pushing companies to adopt more and more so-called socially responsible strategies and initiatives.

We are seeing pressure on businesses over a range of matters, from the use of traditional language — such as ‘she’ and ‘he’ — through to manufacturing practices, procurement and areas of investment. Even distribution can be a target, with Lego forced to stop distributing toys through service stations.

There is a legitimate business case for some CSR activities, particularly those related to core business activities and interests.

In today’s more complex business environment and questioning society, well-managed companies should use good commercial judgement to consider their activities’ social and environmental impact on relevant stakeholders in the community; thus helping protect the financial interests of shareholders.

But the notion that to earn an abstract ‘social license to operate’, companies must promote the non-shareholder interests of wider groups of stakeholders in the community, is a way of legitimising the idea that companies should take stances on social and political issues unrelated to their business activities.

This threatens to transform the business of business into politics. The approach being pushed by the CSR industry will inherently, inevitably, and inappropriately, politicise company brands and reputations.

Corporate leaders who might wish to limit CSR to appropriate business parameters are currently unable to be guided by any alternative set of principles, practices or institutional framework to counter the metastasising CSR doctrines and structures.

Inserting a ‘Community Pluralism Principle’ into company constitutions, or into ASX’s corporate governance guidelines, would remind directors and senior managers of the importance of ensuring CSR activities do not distract from the company’s core business purposes and negatively affect its brand by acquiring a reputation for being political.

This would also remind corporate decision-makers that public companies, given their special legal rights and privileges, should aspire to be pluralistic institutions that serve, respect and reflect the views and values of the whole community.

This is an edited extract from an opinion piece that was published in the Canberra Times as Political play: Market Forces proves a force to be reckoned with