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Corporate Responsibility - World Changing Practices, or a Dangerous Ethical Precedent?

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Corporate Responsibility - World Changing Practices, or a Dangerous Ethical Precedent?

Many leading companies are beginning to be known for social initiatives that reach beyond what is required by regulators or environmental protection groups. This is called Corporate Social Responsibility (CSR), and it represents a company's initiative to assess and take responsibility for the its effects on the environment and impact on social welfare.

Two powerful examples of CSR include LinkedIn’s monthly “InDay”, where LinkedIn employees give back to the community through employee volunteerism, and Zappos commitment to donate Zappos goods to charitable organizations.

In the process of doing good for the world, CSR has also become a strategy for many organizations to increase the value of their brand and business. While corporate responsibility used to translate to simple charity initiatives, the CSR of today has the potential to create competitive advantage for companies. 

Garratt Hasenstab, Director of Sustainability at the Verdigris Group, listed the following as tangible benefits to CSR initiatives:

  • Clients want to work with a company focused on a healthier and more productive world 
  • Money is saved through operating more efficiently, as a direct benefit of CSR efforts
  • Social good sets an example, inspiring other organizations, companies and individuals to ‘up their game’ when it comes to social and environmental responsibility 
  • The business community is encouraged to seek out a more enlightened perspective on how to pursue inspired business and life

At first glance, corporate investment in the environment, human rights, or the health of staff, clients, and customers, seems like a very positive thing -- and often, it can be. That being said, many critics are concerned that CSR initiatives can actually lead to more irresponsibility over the long term. 

A recent Personnel Psychology study of Fortune 500 companies revealed that, "firms that engage in socially responsible behavior towards their stakeholders are subsequently more likely to engage in socially irresponsible behavior towards their same stakeholders at a later point.”

Think of a pre-December diet, followed by binging during the holiday season. Developing and implementing CSR strategies builds a moral image of leaders and their firm, which can subsequently create a sense of accumulated moral credits over time. These moral credits can cause leaders to feel justified in engaging in less ethical behavior, and being less vigilant in managing the needs of their stakeholders.

In the midst of this dangerous precedent, companies that are building CSR initiatives with a true commitment to social good should take extra steps to avoid falling into less ethical behavioral practices over the long term. 

Here are a few practical steps companies can take to ensure they stay responsible:

  • Hire a CEO that truly cares about corporate responsibility
  • Appoint watchdogs within the company
  • Ensure that CEOs and top executives are aware of dangerous CSR patterns
  • Set corporate boards that won’t allow CEOs to rest on their past achievements
  • Appoint board members to closely monitor CEOs' management of their firms' various stakeholders
  • Be particularly vigilant after a good year in stakeholder relations

Have something to add? We’d love to hear your thoughts on CSR in the comments below!

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