Rob Katz

The Myth of CSR

A controversial title, to be sure. The Myth of CSR (PDF), published in thismonth’s issue of Stanford Social Innovation Review, identifies a keytruth about corporate social responsibility while failing to take the next step. Deborah Doane hits quickly on CSR’s underlyingfallacy: “ultimately, trade-offs must be made between the financialhealth of the company and ethical outcomes. And when they are made,profit undoubtedly wins over principles.” Bravo, Deborah!

After that, the article takes a turn for the worse, although I don’tnecessarily disagree with it. Doane identifies 4 “Key CSR myths”:

  • Myth 1: The market can deliver both short-term financial returns and long-term social benefits.
  • Myth 2: The ethical consumer will drive change.
  • Myth 3: There will be a competitive “race to the top” over ethics among businesses.
  • Myth 4: In the global economy, countries will compete to have the best ethical practices.

Are these really “myths” – or have we not seen enough proof to make them reality? There’s a big difference. But its Doane’s conclusion that gets me – she suggests corporate law reform that would require US and European corporations to recognize communities, employees, and the environment as stakeholders. Nothing new there.Doane and her CSR colleagues should wake up to the BOP. Take Myth 1, for instance. Case after case shows that the market CAN deliver financial returns AND social benefits – just look at some case studies or browse the Activity Database for hundreds of examples. A soon-to-be released What Works case study will document how SHEF is delivering essential medicines to unserved rural areas in Kenya – and doing so profitably.

Is CSR a myth? Your call. Will opportunities to serve low-income communities profitably drive corporate profits in the next 50 years? I’m willing to bet on it, and no amount of feel-good CSR legislation is going to change that.