Can corporate social responsibility survive through recession?

In recession, people are actually less forgiving of bad behaviour, writes Philip Monaghan.

All film-lovers will recall the famous scene in Butch Cassidy and The Sundance Kid: our anti-heroes stand at the cliff edge with the prospect of either jumping off into the rapids below or being caught by the chasing posse to face a firing squad. The Sundance Kid (Robert Redford) hesitates, saying he is scared to leap because he cannot swim. Butch Cassidy (Paul Newman) laughs out loud, pointing out that he need not worry – the jump from the cliff will kill them anyway. Both men make the jump and survive.

Many corporate leaders face a similar leap of faith when it comes to integrating sustainable development into their business strategies. Barclays, BP, Enron, Lehman Brothers and NewsCorp all have or had corporate social responsibility (CSR) programmes in place, many of which have been lauded. Barclays and BP have rightly been praised in the past for their leadership roles in the Equator Principles (to enable environmental and social considerations in project financing) and the Extractive Industries Transparency Initiative (to counter bribery and corruption) respectively. Yet the Barclays interest-rate manipulation scandal in 2012 and the BP deepwater horizon spill in 2006 show that despite these best intentions a culture of "making a quick buck" at someone else’s expense can be extremely hard to shake. This has only had disastrous consequences for shareholders and wider society, but led to the ongoing existence of both companies been called into question at one point or another.

So what is the problem? Is CSR still merely a periphery activity in companies despite the hula? Does short-term gain always trump long-term value? Or is it just a few rogue actors within a company bringing the rest down, which is impossible to 100 per cent safeguard against? Maybe. Or perhaps it is because corporate planners and risk evaluators are simply looking at the wrong thing: their resiliency strategy needs rewiring. Misguided business executives assume they can ride out the storm from any high-stake gamble, including an illegal one. Their hunch is that they will not caught because they are smarter than everyone else. That even if they do get caught the market will forgive them if they continue to deliver good investor returns. And that people have short memories. Yet this is a very narrow approach to resiliency, one that is focused on being able to resist immediate shocks and fails to understand the complex system in which a single entity operates. Survival is also about the ability to learn and transforming. During a global recession, people's tolerance of bad corporate behaviour is much lower and their memories much longer. So the political uproar and ferocity of the regulator response on both sides of the Atlantic is no surprise (and hopefully any new supervision will include an overhaul of how credit rating agencies evaluate non-financial risk too).

If CSR is to be relevant for a post-recession world from 2015 onwards, it needs to become infused with resiliency thinking. CSR advocates now stand at the cliff edge at a time of great uncertainty. They can turn back or make another great leap of faith to shape a more responsible capitalism. Not an easy choice by any means, but the right choice for shareholders and society alike.

News Corp, one of many companies with a CSR program. Photograph: Getty Images

Philip Monaghan is founder & CEO of Infrangilis (a consultancy and think-tank on resiliency strategies). He is the acclaimed author of the books Sustainability in Austerity (2010) and How Local Resilience Creates Sustainable Societies (2012).

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PMQs review: Theresa May shows again that Brexit means hard Brexit

The Prime Minister's promise of "an end to free movement" is incompatible with single market membership. 

Theresa May, it is commonly said, has told us nothing about Brexit. At today's PMQs, Jeremy Corbyn ran with this line, demanding that May offer "some clarity". In response, as she has before, May stated what has become her defining aim: "an end to free movement". This vow makes a "hard Brexit" (or "chaotic Brexit" as Corbyn called it) all but inevitable. The EU regards the "four freedoms" (goods, capital, services and people) as indivisible and will not grant the UK an exemption. The risk of empowering eurosceptics elsewhere is too great. Only at the cost of leaving the single market will the UK regain control of immigration.

May sought to open up a dividing line by declaring that "the Labour Party wants to continue with free movement" (it has refused to rule out its continuation). "I want to deliver on the will of the British people, he is trying to frustrate the British people," she said. The problem is determining what the people's will is. Though polls show voters want control of free movement, they also show they want to maintain single market membership. It is not only Boris Johnson who is pro-having cake and pro-eating it. 

Corbyn later revealed that he had been "consulting the great philosophers" as to the meaning of Brexit (a possible explanation for the non-mention of Heathrow, Zac Goldsmith's resignation and May's Goldman Sachs speech). "All I can come up with is Baldrick, who says our cunning plan is to have no plan," he quipped. Without missing a beat, May replied: "I'm interested that [he] chose Baldrick, of course the actor playing Baldrick was a member of the Labour Party, as I recall." (Tony Robinson, a Corbyn critic ("crap leader"), later tweeted that he still is one). "We're going to deliver the best possible deal in goods and services and we're going to deliver an end to free movement," May continued. The problem for her is that the latter aim means that the "best possible deal" may be a long way from the best. 

George Eaton is political editor of the New Statesman.