Wednesday, April 2, 2008


Anyone traveling around San Francisco recently cannot help but notice a new advertisement appearing on public transport and bus shelters for a mobile phone service provider called Credo Mobile. The typical advert is orange and dark blue (the color combo screams for attention). A typical phone conversation beginning in the blue section merges into a political "socially aware" statement in the orange section. For example: (in the blue) i'll bring the chips and di (in the orange) preserve forests. On their website they are more explicit with their message: Change your plan, change the world.
Credo Mobile is the most blatant example I have found of the new business of Corporate Social Responsibility (CSR). Credo is founded on the idea of donating 1% of your cell phone charges to "progressive non-profit groups". Most business' taking part in the CSR "revolution" have far less at stake in the new venture - it's tough getting into the cell phone service business - but they still realize that the times are a-changing, and they better lead, follow, or fail. So they make sure everyone knows about their new initiatives, their green product lines, their fair traded produce.
The truth is, all of this corporate do-goodery is nothing new. Companies have been setting aside profits for philanthropy for some time now. The legal precedent for corporations to allocate profits to "socially responsible" causes was set in the infancy of the corporation. One very interesting precedent setting case was in Theodora Holding Corp v Henderson in 1969, where the judge found that corporations should conduct philanthropy, lest "an aroused public" realize the real nature of the corporation and try to change things around (I have to thank Noam Chomsky for informing me of the exact court case).
So now here we are today, facing big problems, and looking for someone, anyone, who can address them. The last years have seen a grossly ineffectual government with little interest in working for public welfare, so naturally, many have turned to the next big power nexus for solutions: private industry. And as outlined before, private industry had just the legally acceptable palliative for our nations ills; at least that is what we are told.
Unfortunately, the future is a little less bright for many reasons. Firstly, there is no substitute for good government. You can have the most socially contentious business in the world, but it is still a business, and a business' only concern is to stay in business, and make a profit. Under the right circumstances this capitalist system can create fabulous wealth, but it creates wealth only for its customers and itself, not for society as a whole. If interests are harmonized, and business interests and societies interests are one and the same, then we have CSR, but most of the time, business interests only serve the interests of a portion of society. Too bad, huh. It could have been perfect. So we need government to represent the stakeholders of society.
Second problem: CSR is usually PR. Remember Theodora Holding Corp v Henderson? Remember assuaging the anxiety of "an aroused public"? Corporations remember as well, and so they dutifully donate to Ballets and Museums and give out free drugs to the poor (see here) so as to present an image of responsibility to the public. This sort of philanthropy, no doubt, can do a lot of good, just as Rockefeller's ill-gotten oil wealth did build a lot of libraries, but the gains of CSR are a little uneven and often not all they are cracked up to be. Voluntarily greening your business is not the same as making green business practices standard, but companies would like to make you believe it is, so you don't pester your congress man or woman for more regulation.
This is not to say that there are some good things coming out of the CSR movement. Consumers are making it clear that they want the products they buy to be ethically produced or grown, and companies are listening. This market driven approach makes up a big part of the change being described as new corporate responsibility.
Yet while there is good news, we must remember that the key (missing) ingredient is government. Programs such as Bank on San Francisco, a public-private partnership to provide free checking accounts to the poor, shows what can be done only through the effort of government. Before City Hall got involved, banks, for all their philanthropy, did not offer free checking accounts to the poor.

1 comment:

Peter said...

thanks for the court case name! (and to Chomsky!)

Theodora Holding Corp. v. Henderson, Del.Ch., 257 A.2d 398 (1969)

Now if i could only find the text of that case online...