SOCIAL RESPONSIBILITY:CSR isn't about how you spend the money you make. It's about how you make the money you spend, writes Fintan O'Toole.
Last week, at an Ernst and Young conference on corporate social responsibility (CSR) in Croke Park, I asked David Bassau what motivated him, at the age of 35, to give up his thriving business career in Australia and become, instead, a worldwide pioneer of micro-credit who helps to create two million jobs in poor communities every year,
He had, he said, a role model. To my great surprise he named the brash media mogul Kerry Packer. Bassau, a quietly-spoken man in his late sixties who has devoted most of career to being what he calls a "social capitalist", seems the antithesis of Packer, and it was hard to imagine that he could have learned much from such a rapacious tycoon.
He told me about a phone call that he had received one evening in 1974 while he and his wife were bathing their two young daughters. Bassau's construction company had built Packer's palatial home. He heard Packer's voice on the line barking the question: "Are you the f---ing builder?"
A latch on a cabinet was not working and Packer demanded that Bassau should get his arse over to the house and fix it. He drove over and did as he was ordered. But he also decided that he was not put on earth to be another Kerry Packer, and that God had intended him to use his business and entrepreneurial skills to help others. He went on to co-found Opportunity International, which supports small businesses in developing countries, mostly in Asia, and uses market skills to allow poor communities to improve their lives.
Bassau's presence at the CSR conference was almost as disturbing as it was inspiring. His basic idea is what he calls "the economics of enough" - the belief that, after a certain point, it makes no sense to go on accumulating personal wealth. But the appeal of CSR as a concept of growing importance in the businesses world, is based on the economics of more - the notion that behaving ethically helps a business to sell more stuff and make more profit. The question that hovers in the air is whether CSR is a fundamental re-thinking of the goals of business or just a new kind of branding.
There is no doubt that ethics are increasingly attractive to consumers. A UK study released last week by the Co-operative Bank and the Future Foundation showed that British consumers now spend more on ethical goods and services than they do on cigarettes and alcohol. In 2005, the latest year for which figures have been compiled, spending on ethical goods and services in the UK came to almost £30 billion (€41.45 billion), while the retail market for cigarettes and alcohol stood at £28 billion (€38.69 billion).
Speaking at the conference, Kellie McElhaney, director of the Centre for Responsible Business at the University of California, Berkeley, stressed that real "CSR is not about how you spend the money you make. It's about how you make the money you spend".
The real test of CSR is, perhaps, a company's willingness to lose money in the short term by refusing to engage in practices that harm its workers, the environment or the communities and societies in which it operates. Aidan Heavey of the Irish multinational Tullow Oil said, in discussion, that his company has turned down significant money-making opportunities which would have involved the paying of bribes or the bolstering of unsavoury regimes. But Bassau suggests that the ethical decisions that have to be made may not be black-and-white. "If thousands of people are dying of thirst, and the guy who controls the water pump is demanding that you pay him five dollars, you pay the money."
An interesting dichotomy emerged between Bassau's pragmatism on the one side and the insistence of the media and telecommunications entrepreneur Denis O'Brien on the other, that business people have been far too reticent about confronting political wrongdoing. McElhaney says that decisions made for good ethical reasons can sometimes have bad consequences, as when pressure on Nike to stop using child labourers had the unintended effect of children forced to leave its factories ending up as child prostitutes.
Even these tensions and contradictions, however, tend to suggest that CSR is being taken increasingly seriously as an issue that companies have to engage with morally and intellectually. That engagement will have to grapple with a number of tricky questions. Can the legal tax avoidance strategies that most companies and business people adopt as a matter of course be squared with CSR?
Can investors and stock-markets learn to balance the long-term gains of sustainability against the short-term losses that may be a consequence of "the economics of enough"?
Are there areas of activity - like health and education - that corporations should decline to take over from the state on the ethical grounds that they are not best served by market mechanisms?
Corporations may not be able to answer those questions yet, but if they are asking them seriously it may be a sign that businesses are moving beyond developing their brands and learning to make a mark.
