Corporate responsibility doesn’t cost the earth

The ubiquitous 9/11 retrospectives have rightly taken some stick for concentrating on heroic firefighters, New York’s recovery and the like, while largely overlooking the wider context of what are generally regarded as the worst terrorist strikes in history.

Perhaps it is regarded as a small victory for terrorism if this wider context is examined. But you don’t have to be a rabid anti-American to ask if, one year on, the greatest contribution to world peace that the West could manage is to bomb the living daylights out of Iraq.

There are other contributions we could and should be making and they are to do with the way global corporations go about their business. But, again, it may be that America – the heartland of Western capitalism – is reluctant to be seen to change its trading ways, in case this is taken as a concession to those responsible for the September 11 attacks. That might explain, in part, why President George W Bush personally boycotted last week’s Earth Summit in Johannesburg.

It was far from solely America’s fault that the Earth Summit was, to quote Macbeth on the subject of life, “a tale told by an idiot, full of sound and fury, signifying nothing”. But the summit’s failure to achieve substantial progress on the way developed economies conduct their worldwide business is more significant than any number of documentaries about fearless firefighters.

The alleged imperialism of global corporations is very much at the root of the resentment of the undeveloped economies that breed terrorists. As former president Bill Clinton asked in last year’s Dimbleby Lecture in Oxford, how can we have a global economy when half the world’s population doesn’t belong to it?

In the wake of Johannesburg, Greenpeace pointed the finger more directly at business: “The Earth Summit was on the brink of bringing corporations like Shell and BP to task by making them accountable for the damage they doonce again, governments are caving in and allowing company profits to dictate government policy.”

This world view holds that companies and their profits are essentially bad, both for developed and undeveloped economies. But the truth is that they are the engines of the developed world – the wealth creators without which the Third World would be the first and only world.

The question we have to ask is: who is to blame for Western business gaining a reputation, among environmentalists and leaders of developing economies, for being the root of all evil?

Leaders as powerful as Bush who don’t engage in the debate must take a fair share of the blame. And corporations that do nothing to bear any responsibility for the state of the planet are the obvious villains of the piece.

But companies that believe they are socially and environmentally responsible, yet are ineffectual, are also the quiet despoilers of the earth and a handicap to the one-world progress to which the Earth Summit aspires.

At one level, companies are guilty of delegating corporate social responsibility (CSR) to well-meaning but ineffectual staff in the vain hope that they will appear to be good stewards of society and the environment. CSR is at the same stage corporate communications were until recently – the assumption being that if you have a department with the right title, you must be doing it.

If many environmental activists are dubbed “crusties”, in-house CSR staff are “fluffies”, constantly producing audits of the “triple bottom line” – economic, social and environmental – while offering nothing that contributes to any of these categories. A major part of the problem is that many fluffies deep down believe that capitalism is bad and therefore the companies that they work for are bad. This makes CSR a defensive resource, the purpose of those environmental and social audits being to cover up a destructive and exploitative machine.

This psychology has to change if the declarations of intent at the Earth Summit are to make any progress. The likes of Greenpeace similarly have to alter their mindset about corporate profitability. When they do so, capitalism may be deployed as an agent of development for parts of the world living in abject poverty.

Last year, economist David Henderson produced an excellent paper called Misguided Virtue for the Institute of Economic Affairs, in which he argued that as well as invariably missing the point, CSR was a cost burden that hampered companies’ potential to achieve real progress in creating prosperity in developing economies.

As a counter-initiative to the inertia of much of the CSR movement, a number of global corporations are establishing the World Development Corporation, chartered by the United Nations and scheduled for launch next year, with the purpose of developing projects in local economies that demonstrate the compatibility of profits with social progress.

These initiatives provide hope where the Earth Summit did not. They may also be the start of a demonstration by the corporate world that, a year on from the most dreadful consequence of global economic inequity, there is an alternative to the American bomb culture.