Blog Post 17: Corporate Social Responsibility: A Luxury or a Necessity

Corporate Social Responsibility: A Luxury or a Necessity?

Corporate Social Responsibility (CSR) has been an up and coming topic of debate. With companies filing increasing CSR reports, consumers are now more than ever directing their decisions through a social, environmental and sustainable mindset. In “The Trouble with Corporate Social Responsibility Reports”, Leslie P. Norton discusses the issues behind the apparent implementation of CSR as well as the misdirection of CSR reports on behalf of major companies. Norton’s analysis regarding the misdirection of CSR reports on behalf of major companies is insightful, yet, Norton seems to ignore important facets of CSR that contribute to its misuse.

Increasing media attention to CSR has pushed companies to publish what they call CSR reports. In these CSR reports, companies outline the environmental and social impact that they have. Norton seems to highly critique CSR reports, for the reason that she believes large companies abuse their power to misdirect consumers when publishing their CSR reports. Norton argues that stakeholders do not get all the information they need from CSR reports of major companies, and that the CSR reports of major companies are “connected only loosely to CSR performance” (Norton, 2019:2). Norton primarily critiques larger companies because she argues that “larger companies have the resources to compile glowing CSR reports … smaller companies don’t” (Norton, 2019:4). Although Norton does discuss important facts regarding big companies’ misdirection of CSR reports, she seems to dismiss the reasons behind it. Norton argues that the sole reason for the misrepresentation of CSR reports on behalf of big companies is due solely to the fact that they have significant resources at their disposal. In reality, the misrepresentation of CSR reports can be attributed to the lack of a clear definition of CSR (Frankental, 2001). In fact, Frankental believes that CSR is simply an invention of PR, and that in order to embed CSR with necessary characteristics such as a system of internal auditing, CSR would need to be clearly defined, independent of PR. CSR reports are indeed misguiding, but solely blaming large companies’ resources for said misdirection is not entirely truthful.

The efficient implementation of CSR within companies also poses an issue. Not only can companies “manipulate” reports, some companies find it unnecessary to even implement CSR. Frankental argues that if companies are to indeed adopt CSR, it must be rewarded by the financial markets (Frankental, 2001). Some companies are beginning to see that adopting CSR does seem to be economically beneficial, as more and more consumers are choosing brands based on their sustainability. However, some companies still believe that they play no part in the negative environmental and social effects that are essentially fruits of their company. In fact, Frankental (2001) defines this as systematic denial of wrongdoing, where he argues that denial serves as a barrier to corporate social responsibility, which “requires openness, transparency, a critical faculty and a willingness to learn lessons from past mistakes”. As CSR is still in development, there are critical issues which must be addressed. However, if CSR “embraces all the stakeholders of a company, if it is reinforced by changes in company law relating to governance, if it is rewarded by financial markets, if its definition relates to the goals of social and ecological sustainability, if its implementation is benchmarked and audited, if it is open to public scrutiny, if the compliance mechanisms are in place, and if it is embedded across the organization horizontally and vertically” (Frankental, 2001), then CSR might just become an effective strategy.

The up-and-coming hot topic of CSR has drawn significant media attention. Although companies seem to be reluctant to adopt CSR, the increasing media attention has increasingly driven consumers to make choices based on the sustainability of brands. This, in turn, has made it more profitable to adopt CSR. However, if CSR reports are to demonstrate the true facet of a company, changes need to take place. A clear definition of CSR, along with a financially rewarding outcome are driving factors for the effective implantation of CSR.

Reference List:

Frankental, P. (2001) Corporate Social Responsibility - a PR Invention. 6 (1): 18–23.

Norton, L.P. (2019) The Trouble With Corporate Social Responsibility Reports. [online] Available from: https://www.barrons.com/articles/the-trouble-with-corporate-social-responsibility-reports-51550066401 (Accessed 04 March 2019).