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Does Corporate Social Responsibility Work?

CAP event discusses whether corporations can be pressured into good behavior, or if governmental regulation is needed to ensure responsibility.

“Corporations, to their credit, have responded [to public pressure],” Kenneth Baer, co-founder of Democracy: A Journal of Ideas, said, citing advances in corporate social responsibility (CSR) made by Beyond Petroleum, Nike, and Wal-Mart. Yet the more complex question, Baer noted, is: “Is this a sign that CSR policies are really working, or are they the corporate equivalent of putting lipstick on a pig?”

Kenneth Baer moderated an event at the Center for American Progress on Friday that brought together a distinguished panel to discuss the success of efforts to pressure corporations into increasing their corporate social responsibility, and whether public pressure or governmental regulation more effectively promotes corporate change.

Mila Rosenthal, direct of Amnesty International USA’s Business and Human Rights Program did not have a positive take on CSR’s effect. “Is [corporate social responsibility] affecting things on the ground? The answer is not much…We have no good systematic studies that show, overall, things have been improving.” But as Dan Feldman, a partner in the CSR group at the law firm Foley Hoag LLP, noted, “It’s important to remember that CSR has developed in a vacuum of governmental regulation.”

One key question is whether CSR is moving quickly enough to justify holding off on more active government regulation—a point on which panelists disagreed. One point of view is that corporations will use CSR at the minimum, and only as a means to prevent governmental regulation. “CSR could also be a preemption of public regulation,” Aaron Chatterji, co-author of Corporate Social Irresponsibility and a Fellow at the Center for American Progress, explained. Feldman agreed there is a high risk of abuse, commenting that “to ultimately, truly change goes beyond putting out a glossy brochure.”

“At best, [CSR] is only a partial solution,” Chatterji argued. “For [corporations] to adhere by the highest standards when their competitors do not becomes very costly.” Chatterji cited examples of core progressive issues such as health care and greenhouse gas emissions as areas where it clearly was not in the best interests of many companies’ bottom lines to display more corporate social responsibility, despite the fact that these issues would help the whole country in the long term.

Yet some panel members were more optimistic. “We have seen remarkable changes [with CSR] over the last 10 to15 years,” Feldman argued. “[Corporations] can’t be complicit with human rights violations like they were 10 years ago.” David Nassar, Executive Director of Wal-Mart Watch, also pointed out that “[c]hange is incremental. As we move forward every day, I see it as a little bit more…it can also positively affect [Wal-Mart’s] bottom line.” Nassar notes that there has certainly been day-to-day change at Wal-Mart. Just last week, for example, Wal-Mart joined the Center for American Progress, Service Employees International Union, and other progressive organizations in a coalition to work toward universal health care by 2012.

While acknowledging advances in CSR in some fields, Chatterji concluded that the degree to which CSR can drive other long-term progressive goals remains uncertain, and thus urged that “[p]rogressives need to return to their intellectual roots and embrace governmental regulation.”

For more information about the event:

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