Corporate Social Responsibility
March 17, 2006
My past life as a small-time corporate CEO wasn’t overly burdened by pressures from do-gooders and reformers, for which I am grateful. Since my shareholders were mostly employees and friends, it seemed obvious to me that my responsibility was to help create an ethical and viable business model and then do everything I could to make us all rich. While I couldn’t quite pull that off, the company did finally generate a modest spray of cash. The idea of corporate “stakeholders” never did make much sense to me, although I confess there was a period when I gave some lukewarm lip service to it. I think that was when I was briefly exposed to Harvard Business School for a few years in the 1980s. I got over it.
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Professor Elaine Sternberg of Tulane University made a solid case against CSR. She argued that, by giving a hazily defined class of “stakeholders” a say over corporate decisions, “CSR would deprive owners of their property rights.” She noted that, “Business ethics is about conducting business ethically,” [emphasis added] not about pursuing goals extraneous to the company’s mission. And, because business ethics derives from the very nature of business, owner value is enhanced over the long term by ethical business behavior.
Vogel and some subsequent panelists emphasized the need for corporate America to tackle the alleged problem of climate change, a position that presupposes certain conclusions that are far from settled. He said that, while useful in helping tackle some social problems, “There are some cases in which CSR is simply a band aid.” In such cases, government regulation becomes necessary “to change the incentives of business.”
Another way to describe this strategy is for government to intentionally distort the market. And for what? The Kyoto Protocol, one such attempt to “change incentives” to address climate change, is unraveling as you read this, along with many of the scientific assumptions behind it. To argue that businesses must tackle climate change as an impending problem is specious to the point of being, well, irresponsible.
I’ve never met Professor Sternberg, but I think I would like her.
Dave, still wondering how he survived the corporate scene.
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