Global Development Institute Blog

By Tomas Frederiksen

This post critiquing an article in Harvard Business Review article caught my attention recently. I’m catching up on old reading here but this article rehashes the perennial debate about ‘the business case for CSR’. The HBR article basically argues we’re asking too much of CSR if we’re asking it to make money:

“There is increasing pressure to dress up CSR as a business discipline and demand that every initiative deliver business results. That is asking too much of CSR and distracts from what must be its main goal: to align a company’s social and environmental activities with its business purpose and values. If in doing so CSR activities mitigate risks, enhance reputation, and contribute to business results, that is all to the good. But for many CSR programs, those outcomes should be a spillover, not their reason for being.”

The response of CSR consultant Richard Hardyment is that “This is dangerous talk” and accuses HBR (not the authors, oddly) of “winding back the clock”. That if such arguments are entertained seriously all the good work of those arguing that there is a business case would be undone. If nothing else, this demonstrates a lack of conviction that the business case is a solid one that can stand some testing and scrutiny. One of the best (titled) articles on the subject makes the argument that the fact that the business case has been debated for so long (they survey decades of research) without conclusive evidence being presented only further undermines the argument for its existence.

There is a quite remarkable volume of literature about whether CSR initiatives make money or not, and the response summarises many of the arguments, but in my experience, the business case is a central if difficult to quantify argument. And when I say central, many think that, without it, CSR initiatives in the mining industry are pretty much dead in the water. However, things are a little more complex than a simple black/white argument.

In Aseem Prakash’s pioneering work on companies going ‘beyond compliance’ in the US pharmaceuticals industry, such policies were often adopted without a clear business case being presented. In my own research in the mining industry, the language of ‘risk’ fills this gap between fuzzy, complex social world and hard numbers on the balance sheet. If you have to give away a massive mine as BHP did with OK Tedi in 2001 then CSR initiatives (and tailings management) were clearly a sensible investment. If you can get away without doing this and skirt the potential high costs of conflict, then there’s not really a ‘business case’. It’s not black and white and cannot be given a final answer, however much we may wish one. The ‘business case’ remains quite elusive and in David Vogel’s words, “niche”.

The tone of the response seems a little hysterical to me and stirs up my skepticism about whether there is something of the emperors new clothes about the universal push for CSR. The question of whether there is a business case is a perfectly legitimate one to be asked by any scholar (even those who choose overblown article titles like ‘The Truth About CSR’). That it is an uncomfortable one for those who’s livelihoods depend on it should surprise no one.

This post was first published on Tomas’ Mining and CSR blog