Monday, November 28, 2011

The best painters in the romantic tradition: corporations

It is hardly a surprise that a broad study of the application of Corporate Social Responsibility shows that it is mostly hot air and high ambitions,  but little actual delivery. 

"The quality of environmental data in sustainability reports remains appalling at times, even today," said Dr Ralf Barkemeyer, a lecturer in CSR at Leeds and one of the team leaders. "In financial reporting to leave out an undisclosed part of the company in the calculation of profits would be a scandal. In sustainability reporting it is common practice. Put provocatively, companies get points for knowing where they want to go, but nobody seems to check whether this is where they are heading. Aspiration replaces performance."

As I write in Garden Earth :

"Not only products, but also companies can be certified for being environmentally friendly or socially responsible. The layman might believe that companies that have a certified environmental management system (ISO 14000 or EMAS) are performing better in the environmental arena than those companies that have no such system. This impression is enhanced by the certified companies, the consultants helping them and the certification bodies selling certificates stating compliance. They use expressions like “environment certified” or “eco certified” (118,000 and 83,000 hits on Google July 2010). These certifications mean not much more than that national legislation is followed; that the company has a system to control its environmental effects and that the environmental impact is monitored. It is also, typically, the worst industries that are keen on letting themselves be certified to these standards. There is less direct value in terms of improved performance from these systems than from eco-labels. Companies, nevertheless, or perhaps exactly because of this, are more keen on these systems. 

It is not negative as such, they still, mostly, perform better than they would without these systems, but it is misleading when they are promoted as making a big difference. In all fairness, there are companies that try. Swedish McDonald’s reuses 90 percent of all packaging: uses up to 90 percent renewable electricity: serves organic coffee and milk and has a ventilation system that adjusts itself to the numbers of visitors thereby saving a lot of energy (and money…) (McDonald’s 2008). Coca Cola aims to be “water neutral” by 2020 and Rio Tinto, one of the world’s largest mining companies, launched its biodiversity strategy in 2004 with a voluntary commitment to achieve ‘Net Positive Impact’ on biodiversity. To fulfil this commitment, the company first aims to reduce its impacts on biodiversity through avoidance, minimization and rehabilitation activities, and then aims for a positive impact through the use of biodiversity offsets and additional conservation actions (TEBB 2010). What this means in reality remains to be seen. 

Corporate Social Responsibility (CSR) or just Corporate Responsibility is another concept that has been adopted by large part of business, cheered by governments and United Nations. The UN secretary general, Kofi Annan, launched a CSR initiative called Global Compact in 1999. In the same manner as companies that produce rubbish get quality certification (ISO 9000) and the worst polluters are certified for their environmental managements systems (ISO 14000) companies committed to CSR are often involved in questionable business. The military contractor BAE shows their responsibility by lead free bullets and less poison in missiles and grenades causing less pollution (Porrit 2007). Scandal companies like Enron and many of the banks that were caught red-handed in the financial crisis 2008/2009 are among the pioneers in CSR. "
Jonathon Porrit commented on that the tobacco company BAT was identified as a "leader in sustainability" 2008, he said in the Guardian 
"Any case of so called leading companies in CSR that includes BAT is a sick joke." He added: "Central to sustainability and business models is fully priced risks and fully allocating capital properly. When any company is systematically mispricing risks and systematically misallocating capital it makes no sense to talk about corporate responsibility. We're going to have to face the fact some of the measures used to judge relative CSR performance are useless."
One reasons for why CSR will never bring substantial changes is that the business plan of corporations include the externalization of costs: The business plan of the factory is to produce externalities

To a very large extent, many of our industrial technologies are about producing "externalities". The industrial capitalist model extracts resources in distant places (destroying other peoples' nature and possibly livelihoods), it has workers do something with them and pay them only part of the added value, the cost of pollution is carried by the local communities, the cost of health care is footed by society, the cost of schooling the workers is covered by society etc. The products are sold at a profit and the waste is someone else's problem.

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