CSR and Development: Broken promises or undue expectations

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CSR and Development Broken promises or undue
expectations?

• Dr. Julia Sagebien, Dalhousie University
• Melissa Whellams, Saint Marys University
• Halifax, Nova Scotia, Canada
• Beyond CSR? - Business, Poverty and Social
  Justice
• London, UK
• May 22, 2006

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Claims and Critiques
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The Blind Men and the Elephant

• What are we looking at? An enormous pink
  elephant - the massive hang over that has
  resulted from the gargantuan binge on
  liberalization, privatization, globalization and
  re-regulation of the late 1990s.
• CaveatFundamental orthodoxy of capitalism not
  questioned.Looking for optimum role for CSR in
  development within capitalism

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Reconciling the DebateThe Parts and the Whole

• CSR as part of Private sector development
• Top down and bottom up
• Mainstream CSR vs. CSR in development
• Stakeholders and generations
• The limits of corporate genetics
• Structure and purpose

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PSD - Top Down
From McKague et al. (2004) The Private Sector
Development Scan of Activities Research.
International Development Research Centre.
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PSD - Top Down (cont.)
From McKague et al. (2004) The Private Sector
Development Scan of Activities Research.
International Development Research Centre.
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PSD - Top Down (cont.)

• CSR and Core Business Activity
• Bottom of the pyramid
• Supply chains
• Closer to market through stakeholder dialogue

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PSD Bottom Up
From Watson et al. (2004). Making Markets Work
for the Poor. Ottawa CARE.
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PSD - Bottom Up (cont.)

• Third Wave Activities
• Microfinance
• Property capital (De Soto)
• Social venturing
• Local enterprise networks
• CSR and philanthrocapitalism

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For Whom do CSR Bells Toll?

• Stakeholders
• Organizational (employees, managers, stockholders
  and unions)
• Economic (customers , creditors, distributors and
  suppliers)
• Societal (stakeholders communities governments
  regulators, non profits, NGO)

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For Whom do CSR Bells Toll? (cont.)

• Generations of CSR (Zadek)

Source Zadek (2001) The Civil Corporation,
London Earthscan
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For Whom do CSR Bells Toll? (cont.)
McKinsey Quarterly Global Survey 2006

• 4 out of 5 agree that generating high returns for
  investors should be accompanied by broader
  contributions to the public
• 1 in 6 agrees with Friedman, that high returns
  should be a corporation's sole focus
• Belief that public expects corporations to take
  on a significant role in handling the new
  pressures.
• 8 think that large corporations champion social
  or environmental causes out of "genuine concern."
  

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For Whom do CSR Bells Toll? (cont.)
McKinsey Quarterly Global Survey 2006 (cont.)

• 9 in 10 - motivated by public relations or
  profitability, or by both concern and business
  benefits in equal measure.
• Sociopolitical/environmental issues real risks.
• Do not adequately anticipate them.
• Admit that they are ineffective at managing this
  and the tactics used lobbying and public
  relations- the most effective ones.
• Finding ways to control issues is so important,
  that management them must start with the CEO.

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CSR, Money Firm Genetics
Genetics of Corporate Purpose
From White, A. (2004, Winter) Lost in
Transition? The Future of Corporate Social
Responsibility The Journal of Corporate
Citizenship, p. 19.
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CSR, Money Firm Genetics (cont.)

• Regulatory environment - tax and investment
  codes, labor and environmental laws
• Pension funds and insurance firms- risk, time and
  consequences of inaction
• Responsible Competitiveness (Zadek)
• Philathrocapitalism - e.g.Google.com, Skoll
  Foundation

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Conclusions

• Corporations are part of the problem and must be
  part of the solution
• CSR in development - to be seen in context of PSD
  and mainstream CSR

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Conclusions (cont)

• Time for a new social contract
• Corporations - market correction and give on to
  Caesar what belongs to Caesar
• Government - carpe diem, reclaim governance
  space
• Activist and civil society - dont let up but do
  recognize advances

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Conclusions (cont.)

• Go beyond primary spheres of concern
• Foster culture of 3rd generation CSR
• Develop innovative mechanism like
  philanthrocapitalism
• Work with tri-sectoral partnerships to re-build
  balanced policy frameworks and regulation
• Redefine the Limits (genetics)
• Pension, insurance, tax and investment code
• Responsible competitiveness

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Conclusions (cont.)

• Key benefits of CSR in Development
• Promotes a value shift even if only a reaction to
  self-interest and risk management
• Provides a language for the common purpose for
  all stakeholders
• Acid test - Latin America