Report: CSR Largely a Myth

September 23, 2005 ( - Faced with a choice of acting socially responsible or generating profits, companies will ultimately opt for the latter, according to a new article.

According to a news release, the corporate social responsibility (CSR) movement — which assumes that companies can do well by doing good – is lulling the public into a false sense of security. That was the warning from Deborah Doane, author of the featured article in the Fall 2005 issue of Stanford Social Innovation Review.

Big companies are rewarded for how well they generate earnings, not necessarily social benefits, Doane said.

“CSR as a concept simplifies some rather complex arguments and fails to acknowledge that ultimately tradeoffs must be made between the financial health of the company and ethical outcomes,” argued Doane.

In the article, Doane contended that four key myths of CSR prevent the movement from effecting fundamental change:

  • The market can deliver both short-term financial returns and long-term social benefits
  • The ethical consumer will drive change
  • There will be a competitive “race to the top” over ethics among businesses.
  • In the global economy, countries will compete to have the best ethical practices.

Among alternatives to CSR that Doane proposes is a change to the legal structure of the corporation both in Europe and the United States, so that company directors would view as company stakeholders not just shareholders, but communities, employees, and the environment as well.

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