New Internationalist

Companies who care?

Issue 407

Jess Worth ventures into the world of Corporate Responsibility and finds it is not just dumb but dangerous

CAM BUENOS AIRES / http://cambsas.blogspot.com
CAM BUENOS AIRES / http://cambsas.blogspot.com

‘Low Carbon, High Profits!’ promised the conference programme seductively. ‘Global warming has reached a tipping point… smart business leaders are keeping one step ahead… are you? GreenCorp will show you the way!’

Working for the NI can take you to some pretty unusual places. But I never expected to find myself at the ostentatious Millennium Mayfair Hotel in London, attempting to conform to the ‘business casual’ dress-code in a cheap suit and unnaturally pointy shoes, and rubbing shoulders with big cheeses from Rio Tinto, Procter & Gamble and Vodafone.

I’d come to GreenCorp – ‘Europe’s first high-level conference examining where climate change intersects with big business’ – to investigate what lies behind the current trend for corporations to present themselves as ethically and environmentally aware.

All the rage

‘Corporate Responsibility’ (CR) is all the rage these days. Any CEO worth their salt will earnestly bend your ear about how important it is to their company. They will no doubt be delighted to direct your attention to their latest not-too-glossy report (printed on recycled paper, naturally) demonstrating slow but steady progress towards the goals they’ve set themselves.

Its inexorable rise over the last decade means the Corporate Responsibility industry is currently worth an estimated $31.7 billion.1 Many universities now teach it. When Fortune magazine selects ‘America’s Most Admired Companies’, this is one of the major evaluation criteria. The British Government loves CR so much they’ve created a minister responsible for it.

Defining what Corporate Responsibility (also called ‘Corporate Social Responsibility’) actually is is a little trickier. A popular, if not particularly pithy, definition seems to be ‘the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’.2

It can take many different forms. Indulging in corporate philanthropy, such as the network of Ronald McDonald houses to ‘improve the health and well-being of children’. Sponsoring awards, such as the Reebok Human Rights Awards. Adopting voluntary codes of conduct covering how workers are treated, health and safety, dealings with suppliers, and so on, such as the UN Global Compact. Reporting on social and environmental impacts. Engaging in dialogue with ‘stakeholders’, such as employees, customers, and local communities.3 Climate change is the latest CR craze, prompting much excitable chatter about energy efficiency, carbon offsetting and ‘product miles’.

Many welcome all this activity as an important step forward in the struggle which has been rumbling away for as long as powerful companies have existed – to put right the various harms caused by the single-minded quest for profit maximization.

Corporate Responsibility has to make money, save money, or shut the pesky campaigners up

I’m afraid I’m more of a cynic. I have spent a good part of the last decade campaigning in solidarity with people in the Majority World whose lives are being devastated by transnational corporations (TNCs). My experiences mobilizing to change the economic structures that allow big business to scour the globe in search of resources to extract and workforces to exploit mean I don’t hold high hopes for the corporate world’s ability to get to grips with these issues voluntarily.

But the avalanche of resources, both financial and human, that are being poured into Corporate Responsibility today is extraordinary. Could it be that the tide is turning? Is there substance behind the spin? In an attempt to find out, I wangled myself a free press pass to the GreenCorp event. At $5,500 a ticket it was a pretty exclusive do. I was, it’s safe to say, taking a fairly large stride outside of my comfort zone…

The selfish green

As I sat through two days of elaborate finger food, painful forced-networking sessions and snazzy PowerPoint presentations on: ‘seizing the economic opportunities of the low carbon economy’, ‘positioning your business as an environmental leader’, and ‘avoiding accusations of “Green Washing”’, one thing was perfectly clear – big companies are ‘greening’ themselves for entirely selfish reasons.

These were neatly summarized by Steve Howard, CEO of The Climate Group – a consultancy working with top firms on their climate change strategies. He reeled off some recent achievements. Swiss Re and HSBC have become the first major companies to go ‘carbon neutral’. (The question ‘what exactly does that involve, Steve?’ received an enigmatic answer. ‘There’s a very strong public recognition of the term “carbon neutral”, just a very low understanding of what it means. As long as the company is clear what it means to them, that’s fine.’) Fox is exploring energy efficiency for its shows American Idol and 24. Nike has built a nine-megawatt windpower installation on its European HQ. I could go on…

‘The business case for tackling climate change is incredibly robust,’ Howard enthused. ‘There is a lot of money to be made. For example, energy companies investing in renewables are looking at great long-term growth. For companies with a less direct business imperative, it’s about protecting their reputation.’

The business case for Corporate Responsibility was emphasized throughout the conference. Chris Tuppen from British Telecom recounted how his company had reduced its greenhouse gas emissions and made ‘huge cost savings’ through common-sense energy efficiency measures. Flic Howard-Allen, the immaculately groomed Director of CR for Marks & Spencer, took us through their ambitious ‘Plan A’ initiative (‘because there is no Plan B’), which aims to ‘combat climate change, reduce waste, safeguard natural resources, trade ethically and build a healthier nation’. It is an approach of ‘enlightened self-interest’, she explained. The initiative has been given a high profile in stores and the reaction amongst customers has been to ‘increase trust in the M&S brand more than any other ad campaign.’ As a result, she smiled, it has been ‘very good for profits’.

While CR advertising might give the impression that companies are acting out of some kind of moral duty, the reality of course is that they only care about the bottom line. It is the legal responsibility of corporations to maximize profits. As corporate researcher Joel Bakan puts it: ‘Human psychopaths are notorious for their ability to use charm as a mask to hide their dangerously self-obsessed personalities. For corporations, social responsibility may play the same role. Through it they can present themselves as compassionate and concerned about others when, in fact, they lack the ability to care about anyone or anything but themselves.’4

This is not to say that the people who work for corporations are psychopaths – far from it. I got the impression that many were really excited about the prospect of not having to put their personal values on hold in order to do their job. But there has to be a business case for it – it has to make money, save money, or shut the pesky campaigners up.

This is not in itself a bad thing if it means companies with massive eco-footprints are genuinely reducing them. But if CR only works for companies that can find a way of making it pay then what it can achieve is severely limited. If we want to stop runaway climate change, end sweatshop labour or redress unjust terms of trade, we need much larger changes than the tinkering of these voluntary initiatives.

Even some practitioners are starting to say this. The cover of Business Week recently carried the story of Auden Schendler, one of the first ever in-house ‘corporate sustainability’ experts. After eight years of plugging away at the skiing company he works for, he has finally thrown in the towel, exasperated. ‘I’ve succeeded in doing a lot of sexy projects yet utterly failed in what I set out to do,’ Schendler says. ‘How do you really green your company? It’s almost f¢¢¢¢¢¢ impossible…’ In March he told the US House Subcommittee on Energy and Mineral Resources that companies won’t make serious progress without the regulation of carbon emissions – a departure from his earlier belief that abundant, profitable green projects will transform the way business operates. ‘The idea that green is fun, it’s easy, and it’s profitable is dangerous. This is hard work. It’s messy. It’s not always profitable. And companies have to get off the mark and start actually doing stuff.’5

Driving greenwash

The biggest problem with Corporate Responsibility, however, is not that it doesn’t go far enough. It is that it’s taking us in completely the wrong direction.

For many large companies, CR is primarily a strategy to divert attention away from the negative social and environmental impacts of their activities, and to continue operating without being forced by governments to change their core business practices. It is no coincidence that the Corporate Responsibility pioneers are companies who have come up against the most brand-damaging public criticism: Shell, Nike, BP, Wal-Mart, Rio Tinto, McDonald’s. In fact, it would seem that the more egregious the industry, the more outrageous the greenwash. At GreenCorp I witnessed some classic examples.

Honda’s ‘Earth Car’: it wasn’t just the wheels that were spinning.

The outright winner had to be a presentation by Nick Fry, the CEO of the Honda Formula One racing team. Nick knows motor racing is ecologically insane. ‘We realized we are in danger of being like dinosaurs if we don’t change,’ he explained. Obviously they are not voluntarily going to abandon flying around the world racing incredibly high-emitting cars. Why, that would be crazy! Instead, their cunning extinction-avoidance plan is called ‘My Earth Dream’ – ‘We all dream of managing climate change. But we can do more than dream…’ Honda have taken the radical step of decorating their racing car with an image of the planet, so they can use it as ‘an awareness tool’. Formula One fans are encouraged to go onto a website and make pledges to change something – anything – about their lifestyle. Their names are put onto the car for the next race.

Is the Honda team able to measure how much of an impact this is having on the climate? Well, no, admitted Fry. They haven’t got a clue. And what about all the people who watch Formula One and as a result want to drive glamorous, high-speed, high-performance cars? Slick Nick didn’t have much of an answer to that one either. But he had brought the planet-plastered car along to the conference for us to marvel at.

This is pure, barefaced greenwash, part of a grand tradition of not-so-subtle diversionary tactics such as (corrupt arms manufacturer) BAE Systems’ lead-free eco-bullets, (destroyer of coffee-farmers’ livelihoods) Nestlé’s brand of fair trade coffee, and (stealer of water from Indian farmers) Coca-Cola’s partnership with WWF to ‘help conserve and protect fresh water throughout the world’.

Flying in the face of reason

The most blatant example at GreenCorp of a company using the language of Corporate Responsibility to avoid serious consequences came from Andy Kershaw. He has the unenviable job of Manager of Environmental Affairs for British Airways (BA), and he spoke bullishly about ‘tackling the challenges faced by “demonized industries”.’ He bemoaned the fact that the aviation industry is ‘under siege’ from environmentalists and the media. This really isn’t fair, as according to him flying is actually responsible for a very small proportion of global emissions and BA are being ‘castigated for providing a public service’. He backed up his case with a series of outdated and misleading statistics. When challenged that aviation has a much larger impact on climate change than he’d allowed, and is the fastest-growing source of emissions, he didn’t deny it. ‘I was just trying to make a point. I won’t use these figures again,’ he said, unconvincingly.

BA, Kershaw claims, is working towards ‘sustainable aviation’. It is part of the solution to climate change, not part of the problem. I almost choked on my complimentary bottled water. How exactly does that work?

Genuine quotes and images from some of our favourite Corporate Responsibility reports.

Not through carbon rationing by governments: BA thinks that is ‘not realistic or efficient’. Environmental taxation? ‘It doesn’t help the environment – it just creates revenue for governments.’ So being a champion for ‘sustainable aviation’ has primarily involved ‘convincing the UK Government of the merits of tackling climate change through a carbon trading policy’. BA, boasts Kershaw, has pushed very hard for aviation to be included in the European Emissions Trading Scheme so that people can carry on flying and aviation’s emissions will be magically ‘offset’ by fewer emissions in other areas of the economy.

The EU Emissions Trading Scheme has been widely criticized for setting emissions limits far too high and not having any effect whatsoever on the amount of greenhouse gas being spewed into the atmosphere. So this sounds suspiciously like BA continuing with business as usual while publicly claiming to be addressing climate change.

This gets us to the heart of the problem with Corporate Responsibility. Is it realistic to expect the CEO of BA to look at the threat climate change is posing to his company’s very existence, throw his hands up and say: ‘Okay, you got me. Flying is really bad for the planet. We’ll just shut up shop and go dig our allotments’? Of course not. They’re going to do whatever it takes to protect their interests. The challenge here is for society to find a fair and realistic way to shrink the aviation industry down to a sustainable level, and for governments to enforce it. If you leave it up to voluntary action by companies like BA, that will never happen.

Avoiding accountability

John Hilary, Director of Campaigns and Policy at War on Want, describes the entire Corporate Responsibility agenda as having been ‘created explicitly in order to get away from corporate accountability and regulation. We regularly hear politicians entreating companies to “embrace Corporate Responsibility, because if you don’t, we’ll regulate”. This is why the CR industry is so pernicious. We need to be reconfiguring the power relations between people and corporations, not just hoping they will do the right thing.’

Doris Lee, writing in Asian Labour Update, is equally critical: ‘CR is neither making corporations help workers, nor being used by labour to push corporations.’ The danger, she argues, is that the promising momentum of new radical ideas and direct action in the Global North will be completely co-opted and lost: ‘CR may contain the elements of a social movement, but increasingly it is a movement determined by capital rather than by labour.’6

Given that corporations have too much power in relation to society, and through the pursuit of unlimited economic growth are precipitating crises in all the natural systems of our planet, it seems obvious to me that we shouldn’t be looking to them for the solutions. The fact that Corporate Responsibility is so popular today is an indication that big business is feeling the heat. But the solutions they advocate and pursue – voluntary unenforced codes of conduct, piecemeal eco-improvements, token philanthropic donations, endless rounds of meaningless ‘engagement’ with ‘stakeholders’ who might otherwise be publicly criticizing them, dubious but lucrative techno-fixes – are actually dangerous diversions.

The real challenge is to rein in these super-powerful mega-corporations and reconfigure our global and local economies before it’s too late. As I discover on page 18, there are many signs of hope. It’s just that, as I suspected, they aren’t to be found anywhere near the Millennium Mayfair Hotel.

  1. According to CR website ‘Corporate Responsibility Officer’, www.thecro.com
  2. World Business Council for Sustainable Development, www.wbcsd.org
  3. Claire Fauset, ‘What’s Wrong With Corporate Social Responsibility?’, Corporate Watch, www.corporatewatch.org
  4. Joel Bakan, The Corporation: The Pathological Pursuit of Profit and Power, Free Press, 2004
  5. Ben Elgin, ‘Little Green Lies’, in Business Week, 29 October 2007, www.businessweek.com
  6. Doris Lee, ‘CSR – Business or Movement?’ in Asian Labour Update, Issue 60, July–September 2006, www.amrc.org.hk/6002.htm

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