A critical reflection: is there a role for sustainability in business?

Our discussions of voluntary regulation leading to political corporate social responsibility (CSR) and the limitations of the business case for CSR have most influenced my thinking on business and sustainability.

Friedman’s view that businesses are primarily responsible for making profits for owners/shareholders (Friedman (1970), has been superseded by the argument that corporations are responsible for many stakeholders (Kakabadse et al., 2005).  There is now a social expectation that companies must address sustainability (Porter and Kramer, 2006) and not just maximise profits (Kolstad, 2007).  Government regulation of multinationals with complex supply chains can be ineffective, and voluntary governance has filled this gap, with activists, the media and governments holding companies to account (Porter and Kramer, 2006), in an increasingly transparent  society (Dennett and Roy, 2015).  Replacing government regulations with policies set by corporations is un-democratic (Scherer and Palazzo, 2011).  I was unaware of these implications of self-regulation, but now fear that the influence of pressure-groups and the media, with policy resulting from corporations’ fears of being targeted by pressure groups, or  from companies self-interest, may result in poorly directed sustainability activity (Porter and Kramer, 2006).

Banerjee’s view, that corporations will embrace cost-saving sustainable policies (the ‘business case’ for CSR), but few will go further to invest in sustainability initiatives with no clear short-term economic benefits (Banerjee, 2008), was widely supported in our blog discussion.

Having reflected on these discussions, I feel that stricter government regulation is needed to ensure that businesses do deliver meaningful improvements in the sustainability of their activities.

References

Banerjee, S. 2008. Corporate social responsibility: The good, the bad and the ugly. Critical Sociology. 34(1), pp.51-79.

Dennett, D. and Roy, D. 2015. Our transparent future. Scientific American. March 2015, pp.64 - 69.

Friedman, M. 1970. The social responsibility of business is to increase its profits. New York Times.

Kakabadse, N.K., Rozuel, C. and Lee-Davies, L. 2005. Corporate social responsibility and stakeholder approach: A conceptual review. International Journal of Business Governance and Ethics. 1(4), pp.277-302.

Kolstad, I. 2007. Why Firms Should Not Always Maximize Profit. Journal of Business Ethics. 76, pp.137–145.

Porter, M. and Kramer, M. 2006. The link between competitive advantage and corporate social responsibility. Harvard Business Review. 84(12), pp.78-92.

Scherer, A.G. and Palazzo, G. 2011. The New Political Role of Business in a Globalized World: A Review of a New Perspective on CSR and its Implications for the Firm, Governance, and Democracy. Journal of Management Studies, 48:4 pp.899-931.