Is Social Responsibility really the Business of Corporations?

Björn Edlund, former Vice President Communications at Royal Dutch Shell plc and one of the speakers at World PR Forum, writes about the social role of business:

“Milton Friedman, the hard-line Chicago School economist, is known for a phrase he coined to remind businessmen what he felt their real job was – “the business of business is business”.

This phrase sits at the core of a debate still simmering in society and within businesses even 10 years after the UN Global Compact (UNGC) was created, a move that institutionalized “business” as a societal force next to “government” and “civil society”.

In this past decade, Corporate Social Responsibility (CSR) has also grown as a range of activities in the space between corporations and their stakeholders. This space has become a fertile field of action for academics and consultants, as well as a vital part of the ecosystem sustaining many NGOs and community groupings.

Friedman fuelled an fundamental debate in this area 40 years ago, with an article in The New York Times Magazine.

His story, headlined “The Social Responsibility of Business is to Increase its Profits”, laid out in stark language his case against what he saw as misguided, unproductive, even dangerous talk by business leaders about the social role of corporations.

“Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades,” Friedman wrote.

Forty years later, his anti-socialism seems oddly anachronistic – if for nothing else than simply because the Cold War world became, at the Millennium, the Flat World of globalization, and lately the Skewed and slightly Scary World of Global Markets.

But it is worth dissecting Friedman’s mantra, if only to assure ourselves that as PR professionals, we act with sufficient rigor as advisors about sustainability and the role of business to companies and institutions. Are we fully aware of the sensitivities involved?

I think those of us with an interest in sustainability have an ongoing need to debate whether business has a social role, and if so, what it consists of.

Using the Friedman test, perhaps we can discover if we as today’s dominant “intellectual forces” embracing the concept of CSR may have blanked out negative consequences or failed to see outright stupidities (otherwise only visible in painful hindsight).

After 20 years of working for 11 CEOs in three global corporations, I can reaffirm that each generation of corporate leaders, each new CEO, feels a real need to orient themselves as to the role of business in society, and the specific challenges of their sector and their company.

As executives, they seek to articulate, implement and measure for their own reassurance how the company sees and carries out its role in society. The modern CEO is also open to discussions about how good CSR performance is part of better business performance.

It is interesting to observe that it is only once she or he is named CEO that an executive often fully experiences this need to think about the wider societal responsibilities of the business.

Sadly, companies too often miss opportunities to develop the “societal competence” of up-and-coming leaders along their career path, from their first job as plant manager onwards. Fast-track executives too often grow up “protected” within their specialty, with a sprinkling of international assignments added.

But what about Friedman’s mantra, as a way to steer these discussions?

The first “business” in “The business of business is business” can be read as “purpose”, “role”, “responsibility”, “objective” or “mission”. Its meaning gels around the concept of “aim” (“The aim of business is business”) .

The second “business” is more open to interpretation. The broadest view, often heard in CSR circles, is to read this as a company, its employees, suppliers, customers, shareholder and all its stakeholders. The most narrow view would be employees in circumstances who are under the control of executive management.

The third “business” is, in my view, the key. “Profit”, “economic performance” etc on one end of the spectrum. On the other, if we follow the dominant, accepted CSR logic and define the company as spanning the whole value chain, we get to the triple bottom line.

And in real life, after a brief macho tussle around the executive conference table (“why are we getting involved with x y and z, that’s not going to sell any As or Bs?”) , where the debate in a modern company will shift.

With any luck, the question takes on a more pragmatic twist. Can performance be measured along the triple bottom line of economic, environmental and social impact? What is a good set of tools to assess how a company performs as a societal entity?

In the charming engineering language of the extractive industry, CSR becomes NTR – for non-technical risk. Anything that is not geology or engineering is non-technical: politics, social norms, movements against possibly polluting or environmentally invasive ways of working – anything that causes delays in a project.

And, to answer the question posed in what I called the Friedman test, this is where business reality has proven him wrong.

It is only by understanding how societies function, and by placing the company, through its stakeholder relationships and overall communications, at the centre of society that business can fulfill its full purpose.

Corporations need to understand this role, and communicators – who bring the world into the business as well as the company out into the world – have a bridge-building mission. That’s a large part of the attraction of our profession.



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