July 08, 2011
Book Review: The Age of Responsibility
by Robert Kropp
Author Wayne Visser argues that corporate social responsibility as practiced thus far has failed,
and describes a world where CSR practices can contribute to genuine sustainability in meaningful
Corporate social responsibility (CSR)—or corporate sustainability and responsibility, as author Wayne Visser terms the concept in his new
book, The Age of Responsibility: CSR 2.0 and the New DNA of Business—has been a growing practice
for at least the last 20 years. Today, signs of its widespread acceptance can be found everywhere:
in the increasing numbers of companies that issue annual sustainability reports, the proliferation
of environmental, social, and corporate governance (ESG) rating and ranking systems, and mainstream
adoption of the United Nations' Principles for
Responsible Investment (PRI).
So why then does Visser, who published his first
book on corporate sustainability in 2002, now write, "CSR has failed"?
"We should judge
the success of CSR on whether our communities and ecosystems are getting better or worse," Visser
continues. "At the macro level almost every indicator of our social, environmental and ethical
health is in decline."
Quoting Joel Bakan, the author of The Corporation, Visser notes
that the original nineteenth-century concept of the corporation was that the entity had "some
responsibility to create something that was in the public good," instead of merely "creating wealth
for the owners." It did not take long for such a lofty concept to be abandoned; and Visser divides
the history of CSR into four stages that have dominated the practice thus far.
age of greed, companies practice defensive CSR by focusing exclusively on shareowner value over the
short-term. The practice, Visser writes, peaked with the bankruptcy of Lehman Brothers and the
onset of the economic crisis in 2008. One of its key ideas is that gains are privatized, and costs
socialized; that is, the social and environmental costs of corporate activity are externalized, to
be borne by society.
In the age of philanthropy that follows, corporate leaders use their
wealth to establish charitable programs to help communities. As laudable as charity by the rich may
be, however, the practice does nothing to address the underlying consequences of business activity.
In effect, corporations are making vast profits via unsustainable enterprises, then allowing a
relatively meager percentage of profits to trickle down to the communities in which they operate.
It is with what Visser terms the age of marketing that we begin to see CSR as it is often
practiced even today. CSR in this context is seen as a promotional tool, belonging to corporate
public relations. In the extreme form of its practice, it amounts to greenwashing. The specific
case study used by Visser for the age of marketing is BP, which for many years was ranked among the
world's most sustainable companies, largely as a result of its sustainability reporting. Too many
investors and CSR advocates failed to take sufficiently into account BP's already poor health and
safety record until last year's Gulf of Mexico oil spill.
With the age of management, in
which companies practice strategic CSR, programs include genuine measurement and establish goals
for incremental improvement in core businesses. The concept of an extensive group of key
stakeholders in addition to shareowners has taken root, and standards against which companies are
expected to measure themselves have proliferated.
Clearly, progress can be traced along
the path from greed to management. To what then does Visser attribute the failure of CSR? For
companies stuck in the age of marketing, the fact that CSR is peripheral to their core business
activities is significant. Furthermore, even today, CSR is practiced mostly by the world's largest
companies. And the fact that markets persist in awarding short-term financial performance calls
into question the economic sense of CSR activities.
Even for companies in the age of
management, Visser writes, "The quality management model…results in incremental improvements that
do not match the scale and urgency of the problems."
In other words, corporate activity is
still destructive. The social and environmental costs of doing business are not borne by the
companies profiting from it, but are externalized and borne by society instead. So what does Visser
offer as a solution?
In the age of responsibility, companies practice what Visser has
termed CSR 2.0, modeling it on the Internet revolution brought about by social media and
user-generated content. Corporate practitioners of CSR 2.0 expand CSR beyond a "tick-box" mentality
and attempt to find creative solutions for problems so large as to seem intractable. They offer
scalability, an example of which is Muhammad Yunus, whose Grameen Bank started with a single $74
loan and grew into a $2.5 billion microfinance enterprise.
Practitioners of CSR 2.0 are
responsive to an expanded set of key stakeholders, seek local solutions to problems that retain
universal principles, and practice circularity by adopting a "cradle-to-cradle" approach to product
design that recognizes limits to resource consumption and waste disposal.
"When all is
said and done," Visser writes, "CSR 2.0 comes down to one thing: clarification and reorientation of
the purpose of business…Ultimately, the purpose of business is to serve society."
Especially with the economic crisis still playing out in the form of 14 million Americans
unemployed, the cynic could consider Visser's solution to daunting problems to be somewhat naïve.
After all, haven't corporations refashioned themselves into predatory seekers of a profit motive to
the exclusion of all else, and have pushed the overwhelming—soon to be insurmountable—social and
environmental costs onto the rest of us?
Yet, as Visser's age of management demonstrates,
genuine CSR practices have become more widespread. Their effects may be too incremental to stave
off environmental disaster and social upheaval, but they do indicate that real work can get done.
Additionally, a handful of companies are committing themselves to the principles of CSR
2.0. While they may amount to no more than the merest ripple in a vast sea of corporate greed, they
do provide templates for future CSR activity. Even after reading Visser's well-researched and
informative book, I have no clearer idea on how those templates might be adopted on a scale to
effect genuine change.