Does corporate social responsibility really make for socially responsible corporations? We need to understand its impacts if it is to benefit society rather than simply make companies feel good about themselves. This is particularly important if the private sector wants to become a partner in international development.

In recent times, the international business community has warmed to the concept of corporate social responsibility (CSR). The idea that companies can ensure that their business activities are not only profitable, but also beneficial to the communities they are working in, links in with the goals of international development. However, unlike international development, business is not focused on changing people’s lives for the better. A paper in the Third World Quarterly assesses the impact of CSR on businesses and the intended beneficiaries of such initiatives.

Many companies make reference to the Millennium Development Goals (MDGs) but the impact of business on the MDG targets is unknown. Similarly, we know very little about the impact of companies adopting labour standards, for example. In fact, we know surprisingly little about CSR’s overall impact despite the claims about its success made by companies, development agencies and governments.

There are problems in the way CSR impacts are measured. Reports are better at covering environmental issues than social ones. They are only beginning to pay attention to companies’ economic impacts. Furthermore, they give little information about the real outcomes of CSR for the intended beneficiaries, namely poor and marginalised people, the natural environment and local communities.

The author finds that we know more about the impact of CSR on businesses than on the beneficiaries. CSR has had:

• a major impact on behavioural change within companies
• a mixed influence on consumers: customers may sometimes be prepared to pay higher prices for improved working conditions in a company, but others may rate their own satisfaction and the company’s financial performance higher
• a small but significant impact on the investment community, seen in the growth of socially responsible investment
• some success in learning from experience, both in terms of implementation and in what issues can or should be considered.

Supporters of CSR still believe that it will have positive outcomes for development in its own right, although there is little evidence for this. Critics argue that CSR is incapable of tackling the social and environmental consequences of modern business. Nonetheless, the study concludes that:

• Business and civil society can help keep development issues on the CSR agenda.
• They should be careful not to perpetuate preconceptions of what companies should be responsible for and so distract companies from taking note of local priorities.
• CSR is unlikely to adopt international development approaches to impact assessment unless development agencies intervene.

Rather than thinking of the impact of CSR, it might be more useful to think about the value to society and the development of business as a whole. Such an approach would help business manage its relationship with society.

Source(s):
‘Reasons to be Cheerful? What we know about CSR’s Impact’, Third World Quarterly, Vol.28, No.4, pages 683-695, by Michael Blowfield, 2007

id21 Research Highlight: 28 March 2008

Further Information:
Michael Blowfield
Programme for Industry
University of Cambridge
1 Trumpington Street
Cambridge CB2 1QA, UK

Tel: +44 (0)1223 332772
Fax: +44 (0)1223 301122
Contact the contributor: mick.blowfield@cpi.cam.ac.uk

University of Cambridge, UK

University of Cambridge, Programme for Industry, UK

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