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CSR is Not C-S-R
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Regular readers will know that, over the last month, I’ve posted 3 blog entries critiquing the term “corporate social responsibility” (CSR). I’ve asked, rhetorically, whether the “C,” the “S,” and the “R” make sense. I’ve argued that, no, in each case the word those letters stand for fail to capture the range of issues devotees of “CSR” typically think are important. Basically, the conclusion is that “Corporate Social Responsibility” isn’t (just) about corporations, isn’t just about social questions, and isn’t just about responsibilities.
Now, this isn’t to say that there’s no topic at all that would suit the term “CSR.” If you really are just interested in corporations (and not other kinds of businesses), and if you really are just interested in their obligations (and find questions of rights, permissions, values, and virtues relatively uninteresting), and if you really are only interested in corporations’ outward-looking, specifically social obligations, well, then I guess you really are talking about CSR. But I suspect the number of people — and the number of companies — whose interests are that narrow is pretty small.
So, this all seems to imply:
- If you want companies to think carefully about the full range of normative (ethical) questions related to commerce, don’t ask them about CSR.
- If you want business students to be prepared for the decisions they’ll one day face as manager, don’t teach them courses in CSR.
- If you’re interested in learning a bit more about the ethical challenges faced by business, don’t read a book with “CSR” in the title.
- If your company wants to manage effectively the full range of ethical issues it’s likely to face, and not just one subset, don’t hire a “CSR” consultant.
Now, clearly I’m trying to be a bit provocative. You could have good reasons to do each of the things I’m warning against above. And many companies and consultants who use the term “CSR” use it, I’m sure, as a mere term of convenience, and are fully aware that it’s only a very rough label for the full range of ethical issues in business. But if you care about the topics I’ve covered in the last 3 blog entries on this topic, and if you happen to find yourself talking to a company or consultant (or professor) who’s excited about CSR, you might want to ask a few questions about what they mean by that.
Finally: Why the “R” in “C.S.R.”?
You probably saw this coming.
In mid-July, I asked Why the “C” in “CSR”?. Two weeks later I followed up with, Why the “S” in “CSR”? In both cases, my complaint was basically that the words the letters stand for (i.e., “Corporate” and “Social”) are too narrow to capture the topic at hand. So, am I now going to question the R-as-in-“Responsibility?” Yes, here endeth the trilogy.
The “R” in “CSR” is there because CSR grew out of an interest in the idea that companies, especially the biggest and most powerful ones, have some obligation, some responsibility, to do right by the communities they are part of. But the notion of “responsibility” is inadequate to capture the range of questions about which CSR advocates are typically (and ought to be) concerned. Such as:
- Questions about rights, such as “Is there a right to freedom of commercial speech? Does that right extend to corporations? Or does free speech only apply to individuals acting in their private capacity?”
- Questions about value, such as “Are there some things that ought not be market goods? Which ones? Why?”
- Questions about the virtues appropriate to the world of business.
- Questions about what kinds of actions are permissible, even if not morally praiseworthy.
- Questions about what kinds of actions are ethically desirable, even if they would not count as being a responsibility.
Now, each of those types of questions involves, at least tangentially, other questions that are about responsibility. But the questions above certainly cannot be reduced to questions of responsibility.
Of course, maybe people interested in CSR aren’t interested in those questions, or think such questions somehow are not central. But that just means that, whatever CSR is about, it isn’t about a whole range of the most interesting normative questions about business.
Wyeth, ‘Ghost-Writing’ and Conflict of Interest
Conflict of interest occurs in (roughly) any situation in which someone is expected to exercise judgment on behalf of others, but in which that judgment is liable to be biased by some “other” interest (often, but not always, a private financial interest). Is COI a worry because those “other” (often financial) interests always corrupt judgment? No. Absolutely not. Most people tasked with exercising judgment on behalf of others are persons of integrity. People often — perhaps usually — are able to put their personal interests aside and exercise judgment properly, when their role requires them to do so. No, the problem with COI is not that it always brings corruption. The problem is not that the person on whose behalf judgment is being exercised might not be served well (though that can certainly be an issue). The problem is that in situations involving COI, our faith is shaken — sometimes just our faith in the objectivity of a particular decision-maker, but more often, and more seriously, our trust in an entire institution.
For a great example of a company totally missing that point, see this story by Natasha Singer, writing for the NY Times: Medical Papers by Ghostwriters Pushed Therapy
Newly unveiled court documents show that ghostwriters paid by a pharmaceutical company played a major role in producing 26 scientific papers backing the use of hormone replacement therapy in women, suggesting that the level of hidden industry influence on medical literature is broader than previously known.
The articles, published in medical journals between 1998 and 2005, emphasized the benefits and de-emphasized the risks of taking hormones to protect against maladies like aging skin, heart disease and dementia. That supposed medical consensus benefited Wyeth, the pharmaceutical company that paid a medical communications firm to draft the papers, as sales of its hormone drugs, called Premarin and Prempro, soared to nearly $2 billion in 2001….
Here’s the part, from a Wyeth spokesperson, that demonstrates a complete misunderstanding of Conflict of Interest:
Doug Petkus, a spokesman for Wyeth, said the articles on hormone therapy were scientifically sound and subjected to rigorous review by outside experts on behalf of the medical journals that published them.
…which, of course, entirely misses the point. The point, the reason why critics decry the practice of ghost-writing, is not that we think the articles that result are necessarily inaccurate. They may (may) be fully scientifically sound. But who knows if they are? That’s the point. Ghostwriting corrupts the institution of scholarly publication upon which physicians rely to make the best decisions on behalf of their patients. It literally does not matter, even a little, if Wyeth is correct in claiming that the papers it paid to have ghost-written are 100% sound. They’ve cast doubt upon an entire body of medical literature, and on the scientific foundation of medicine itself. That is the point.
The Pay Czar’s Ethical Dilemma
Here’s an update on a not-so-new topic. It’s got lots of good stuff in it. Distributive justice. The public good. The weight of contractual obligations. The consequences of government intervening in (indeed, micro-managing) private enterprise. And so on…
From David Segal, for the NY Times: $100 Million Payday Poses Problem for Pay Czar
In a few weeks, the Treasury Department’s czar of executive pay will have to answer this $100 million question: Should Andrew J. Hall get his bonus?
Mr. Hall, the 58-year-old head of Phibro, a small commodities trading firm in Westport, Conn., is due for a nine-figure payday, his cut of profits from a characteristically aggressive year of bets in the oil market.
There is little doubt that Mr. Hall is owed the money under his contract. The problem is that his contract is with Citigroup, which was saved with roughly $45 billion in taxpayer aid….
I’m not sure I’ve got much that’s new to say on this topic. (Recall that I argued back in the spring that AIG should pay its controversial bonuses.) Segal does a good job of laying out the terrain, in the story above. I think really it comes down to the fact that Hall earned the money: he did what he promised to do, and so the money is owed to him. He didn’t ask for the bailout. (If you think he didn’t earn the money — perhaps because no one deserves that much money — feel free to suggest a generalizable principle for what that kind of work is really worth.) But hey, whether basic norms about meeting contractual obligations ought to hold in a situation like this really is a question of public policy, and this is just a business ethics blog. The question more relevant for this blog is the business question, namely whether the bonus should have been promised in the first place. Is $100 million too much? Well, that depends on whether the company involved, Phibro, is well-managed. It could be that it’s run by dummies making silly promises to pay silly bonuses for work that someone else, equally talented, would do for less. But minus evidence to that effect, surely the default has to be to let the company live up to its promises.
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