What constitutes corporate responsibility round the world, why companies have duties and how to avoid greenwashing

CR and cultural divergences

Culture, it’s said, is king. Corporate responsibility is no exception. This fascinating study looks into senior executives’ ideas of responsible business in five territories: the US, Japan, Hong Kong, South Korea and Germany. The authors identify various schematics at play. The most significant is whether corporate responsibility is explicit (a conscious policy, as is the case of Hong Kong) or implicit (ie a natural, expected form of corporate behaviour). Within the former, there are two sub-divisions: “stakeholder-oriented” responsibility or “production-oriented” responsibility. And then within stakeholder-orientated responsibility, different audiences predominate in different markets. In all, the paper finds little ostensible evidence for conceptual convergence between different nations. Indeed, as more emerging markets evolve mature business systems, the authors anticipate the diversity of interpretations increasing.

For theorists of systems thinking, however, the paper holds insights around the principle of “equifinality”, described as “the notion of system elements self-organising into autocatalytic sets that function in a stable manner and self-replicate”. In other words, systems can have different internal configurations (based on belief systems, government policy, economic co-ordination and the like) and yet still achieve the same outcome.

The question left hanging is, “what’s the desired outcome?” The answer is social legitimacy; an idea that dates back to Adam Smith’s insistence that economic leaders are guided by moral sentiments. Both Confucianism and Enlightenment thinking make the connection between virtue in society and controlling elites. Executives may separate their values and beliefs into specific realms of meaning or “semantic spaces”, but their fundamental understandings of societal consensus and how to obtain it may not appear as at odds as the data apparently suggests. 

Witt, M (et al), (Winter 2012) “The Spirits of Corporate Social Responsibility”, Socio- Economic Review, 10(1), 109-134.

Justifying business’s role as an agent for justice

Why should multinational companies preoccupy themselves with the four billion people at the so-called bottom of the pyramid? In search of a response, corporate responsibility theorists have typically turned to the work of political philosopher John Rawls.

The author of A Theory of Justice (1971) propounded a dualist conception of moral theory, where political institutions and individual “persons” (including corporations) have demarked duties. Rawls held that individual citizens and associations inhabit two distinct types of society: those that are well ordered and those that are “burdened”.

The individual only has the obligation to help citizens in burdened societies when their own government fails to do so. Expanding this to the corporate sphere, however, invites “distinct limitations”. For example, many of the poor living in well-ordered societies (such as India) fall outside the duty to assist. Secondly, the Rawlsian account only places obligations on transnational corporations owned by those in well-ordered societies. What of those based in burdened societies? Their obligations, it is suggested, remain awkwardly “unspecified”.

As an alternative, the paper suggests an ethical conception of corporate responsibility grounded in “an appropriately modest set of duties” linked to a company’s stakeholder relationships: what theorists refer to as “moral cosmopolitanism”. Drawing heavily on human rights literature, Arnold argues that businesses primarily have “contractualist” responsibilities to those individuals with whom they have relational connections.

The prevalent notion that companies are granted certain benefits on the ground that they respect the rights of others provides a second string to Arnold’s case. “Corporations operating transnationally have duties to respect human rights independently of the ability of host nation governments to police and remedy human rights transgressions by corporations,” the paper concludes.

Arnold, D (January 2013) “Global Justice and International Business”, Business Ethics Quarterly, 23 (1): 125-143.

Don’t greenwash!

The idea of communicating corporate responsibility is a delicate one. Some companies just don’t. When they do, how do they avoid the all-too-common slur of greenwashing? This punchy paper offers a deft summary of research into the communication practices of more than 250 European corporations.

The advice ranges from the reassuring (media outlets are not necessarily “out to get you”) to the remonstrative (don’t underestimate the public; they understand more than you think). Two critical media-management points focus on the need to address big issues head-on and to forget the idea of presenting your company as “picture perfect”. “Stakeholders can be sceptical if everything seems too good to be true,” the authors warn.

The remainder of the recommendations focus less on messaging and more on strategy. Firstly, control the conditions. Some media outlets are more suitable than others for a corporate responsibility story. A 20-second soundbite on a TV talk-show, for instance, is unlikely to do justice to the complexity of water footprinting or carbon sequestration. Secondly, don’t just leave it to the CR or comms department. A dead cert for losing credibility is when the spokesperson says one thing and employees are doing the exact opposite elsewhere. That ties in with the last point: do what you say. It’s not possible to cover up responsibility deficiencies through CR communication. What is that, after all, if not greenwashing?

Illia, L et al. (Spring 2013) “Communicating Corporate Social Responsibility to a Cynical Public”, MIT Sloan Management Review.  

Campus news

Dr Timo Busch has taken up the post of professor of management and environmental sustainability at the University of Hamburg.

Chemical company BASF is teaming up with the University of Michigan to run an annual competition for reducing the environmental impact of campus-based sporting events. The winner will receive a $25,000 prize.

Academic news  Business School Bulletin  Oliver Balch 

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