Corporate social responsibility (CSR) has replaced value creation as the new buzzword of the board room. What corporations would like to say is that they engage in CSR activities for the greater benefit of the community. But why they actually do it is to create a favorable public image to please regulators, lobbyists and other stakeholders. CSR is not charity or social marketing. It always makes business sense. In doing CSR, the primary objective of organization is not doing the welfare of community but to provide welfare of the brand, with a secondary objective of providing welfare to the community.
But this is a win win situation for the short term. Because eventually general mass would understand that this new love for community is just lip service. Organizations main objective was always to maximize shareholder value, not wasting money by creating parks.
But that is so 20th century! In 21st century brands should make it a point to actively try to do better things for community without having a hidden agenda, because that is the only way they will win back general public and remove the “big, bad corporation” image. What companies should never do is hide behind half-truths like CSR. The underlying fault of CSR as a tool was very clear in the strange and curious case of Enron, the Texan energy company that not only brought itself down but also one of the largest accounting firms at that time, Arthur Andersen. Enron was the blue-eyed boy of corporate philanthropy and gave away millions in charity donations to charity organizations and won several awards for its corporate social responsibility work, including a climate protection award from the EPA and a corporate conscience award from the Council on Economic Priorities. In 2001, the world of Enron came crashing down under massive debts after it was revealed that CEO Jeffrey Skilling, who was jailed for 24 years, had orchestrated a giant fraud and a massive corporate ethics scandal. Corporate social responsibility activists and media pounced on Enron and held Enron as sort of poster boy for corporate fraud. How quickly things changed! As Joel Bakan wrote in The Corporation, “Enron’s story suggests, at a minimum, that skepticism about corporate social responsibility is well warranted.” After that fall from grace, Enron never really recovered from the bad publicity as its supposed socially responsible activities became irrelevant since its very existence proved to be a fraud.
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