The concept of Corporate Social Responsibility (CSR) is taught so dogmatically its true implications are often unclear. I suspect this is done intentionally to discourage people from asking questions and unraveling the theory. I was able to glean from various professors at UVIC and abroad (Tilburg University), that CSR is the doctrine of demanding managers of firms to take into account various external “stakeholders” when making business decisions, instead of the classic objective to maximize profits for the shareholders within the bounds of the law. In my opinion, any act of management in this area without consent from the firm’s shareholders is unlawful taxation on the said shareholders, and potentially damaging to society. However, CSR is taught as gospel without further discussion, (believe me—I have tried), despite the scary implications of this proposition. Here I will introduce merely three of the many implications of CSR theory.
First of all, the actions taken on behalf of society by management, (crucially above and beyond the law), are done with virtually zero say from the shareholders, whose money is being used. Broad strokes can be voted upon at shareholder meetings, but the essence of this theory is that companies should be taking these considerations into every decision they make. This means that the managers of firms would act above and beyond the law on behalf of society, in a democratic country, without say-so from shareholders. In no way should anyone besides the Government of Canada be held to these socially responsible standards without consent. If you want to start up a company with CSR ideals, fine, but that should not be the business standard, like the horrifying Global Reporting Initiative.
Second of all, there could be potentially devastating efficiency losses from this being put into practice. By letting businesses seek maximum profit within the bounds of the law, efficiencies of specialization are born. Western capitalism has brought the incredible progress and livelihood it has in large part because businesses are burdened by nothing but the rule of law. Adam Smith said, “it is not from the benevolence of the baker that we expect our daily bread”, it is from their profit motive. The result of CSR would be less of every dollar invested into each company’s specialization, instead invested towards vague social objectives, reducing specialization efficiencies.
Lastly, by unlawfully taxing shareholders to contribute to these various causes, profits would go down, leading to less income to shareholders, less disposable income, and finally less voluntary contributions to non-profits and charities. These are the organizations that do specialize in societal problems. The money being used for a CSR initiative at an accounting firm would go farther at an established non-profit, as a voluntary contribution. The key word here is voluntary. It goes without saying that these voluntary contributions from shareholders would be divvied up to different organizations, many with conflicting views, (i.e. Pro-choice foundation vs. Pro-life foundation). This consequence reveals the narcissism that is needed to develop CSR theory. To hold true, CSR theory necessitates that every shareholder, and society at large, agrees with your view of social progress, and this should not be challenged democratically. (Even scarier is the possibility that you don’t care if people disagree with you).
Whether or not CSR makes a sound case business-wise, the focus should be on the proposed undemocratic actions taken by companies, and the unlawful taxation of people and businesses.
— Written by Will Goldbeck
About Will Goldbeck
Will Goldbeck is a 4th year student at the Peter B. Gustavson School of Business and is currently completing his coop term as the Executive Assistant to Richard Peereboom at Investors Group Financial Services Inc. He is also the co-founder and owner of an events business, Vancouver Flipbook.
Contact: [email protected]