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).

Photo: Getty
Show Hide image

Like it or hate it, it doesn't matter: Brexit is happening, and we've got to make a success of it

It's time to stop complaining and start campaigning, says Stella Creasy.

A shortage of Marmite, arguments over exporting jam and angry Belgians. And that’s just this month.  As the Canadian trade deal stalls, and the government decides which cottage industry its will pick next as saviour for the nation, the British people are still no clearer getting an answer to what Brexit actually means. And they are also no clearer as to how they can have a say in how that question is answered.

To date there have been three stages to Brexit. The first was ideological: an ever-rising euroscepticism, rooted in a feeling that the costs the compromises working with others require were not comparable to the benefits. It oozed out, almost unnoticed, from its dormant home deep in the Labour left and the Tory right, stoked by Ukip to devastating effect.

The second stage was the campaign of that referendum itself: a focus on immigration over-riding a wider debate about free trade, and underpinned by the tempting and vague claim that, in an unstable, unfair world, control could be taken back. With any deal dependent on the agreement of twenty eight other countries, it has already proved a hollow victory.

For the last few months, these consequences of these two stages have dominated discussion, generating heat, but not light about what happens next. Neither has anything helped to bring back together those who feel their lives are increasingly at the mercy of a political and economic elite and those who fear Britain is retreating from being a world leader to a back water.

Little wonder the analogy most commonly and easily reached for by commentators has been that of a divorce. They speculate our coming separation from our EU partners is going to be messy, combative and rancorous. Trash talk from some - including those in charge of negotiating -  further feeds this perception. That’s why it is time for all sides to push onto Brexit part three: the practical stage. How and when is it actually going to happen?

A more constructive framework to use than marriage is one of a changing business, rather than a changing relationship. Whatever the solid economic benefits of EU membership, the British people decided the social and democratic costs had become too great. So now we must adapt.

Brexit should be as much about innovating in what we make and create as it is about seeking to renew our trading deals with the world. New products must be sought alongside new markets. This doesn’t have to mean cutting corners or cutting jobs, but it does mean being prepared to learn new skills and invest in helping those in industries that are struggling to make this leap to move on. The UK has an incredible and varied set of services and products to offer the world, but will need to focus on what we do well and uniquely here to thrive. This is easier said than done, but can also offer hope. Specialising and skilling up also means we can resist those who want us to jettison hard-won environmental and social protections as an alternative. 

Most accept such a transition will take time. But what is contested is that it will require openness. However, handing the public a done deal - however well mediated - will do little to address the division within our country. Ensuring the best deal in a way that can garner the public support it needs to work requires strong feedback channels. That is why transparency about the government's plans for Brexit is so important. Of course, a balance needs to be struck with the need to protect negotiating positions, but scrutiny by parliament- and by extension the public- will be vital. With so many differing factors at stake and choices to be made, MPs have to be able and willing to bring their constituents into the discussion not just about what Brexit actually entails, but also what kind of country Britain will be during and after the result - and their role in making it happen. 

Those who want to claim the engagement of parliament and the public undermines the referendum result are still in stages one and two of this debate, looking for someone to blame for past injustices, not building a better future for all. Our Marmite may be safe for the moment, but Brexit can’t remain a love it or hate it phenomenon. It’s time for everyone to get practical.