Tuesday, February 9, 2010

CSR: A Primer for Skeptics and LOST Fans

CSR does not only mean Customer Service Representative. To a wide variety of politicians, nonprofits and corporations, CSR means “corporate social responsibility”. This term, alien to many, represents an even more foreign idea: that corporations owe something to society that they must take responsibility for.

“Amelia, I don’t care. I didn’t even really read the paragraph you just wrote. I just skipped to the quote here. Are you going to watch the LOST finale?”

Probably. LOST is an interesting show. To summarize the incredibly complicated plot for people protected from US media, LOST is a program that documents a plane crash on a tropical island. Borrowing heavily from Lord of the Flies by William Golding, LOST is a dramatic recounting the survivors’ lives on the mysterious island, using a point of view that rotates by episode. The island magically fuses a variety of ecosystems to maximize the number of predators that can threaten the survivors. Plus, survivors face previously unknown monsters, hostile natives and a shadowy corporate puppet master behind the whole thing.

The part of LOST that indicates the importance of CSR is the corporate puppet master- the Hanso Foundation. This foundation is the financing organization behind the Dharma Initiative, an academic project that attempted to create a utopian society on the island where the plane crash occurs years later. Just as the Dharma Initiative made poor choices for the world that effect later generations on the island, CSR is the movement to encourage corporations to operate their businesses in ways that do not incur harm to later generations.

“Hmm. Ok; but the Hanso Foundation was designed to help the world. The website says so.”

The problem with the Hanso Foundation, and the starting point for any CSR campaign, is that Hanso did not disclose anything they did. Consumers are supposed to trust their good intentions despite evidence to the contrary. Indeed, the secrecy and uncertainty surrounding the Hanso Foundation and the Dharma Initiative stokes much of the show’s drama. In real life, consumers do not want this drama. In real life corporate secrecy harms the ‘perfect information’ economic theory relies on to derive meaning from consumer choices. When consumers do not have perfect, or even good, or even any information, they are purchasing based on price and marketing only. Price and marketing do not inform consumers of the affect a company and its products have on the world. Consumers may change their buying preferences if they had better information about how companies and products affect the world.

“So if Hanso disclosed information about their organization, what then?”

If Hanso disclosed its data, it would be at the beginning of the transformation into a foundation that is socially responsible. Hanso’s disclosure would help consumers better choose whether to buy the products that make it rich and powerful. Consumers could create laws, as governments, to protect themselves if they felt that Hanso’s hydrogen bomb experiments posed too much risk. Hanso would not be able to make decisions for people without their permission, but may be able to make products that better fit consumer needs. Disclosure would mean that Hanso would have to change their organization to consider other people that are affected by it. This idea is sometimes called Stakeholder Theory.

“But what would happen to LOST if Hanso didn’t cause all this destruction?”

Based on Season 6 it seems possible that there is a version of the world where, if Hanso had rigorous CSR policies, no one would have ever been stranded on the island and no hydrogen bomb would ever go off. So basically… CSR can save the world.

“So CSR can save the world and it starts with disclosure?”

That’s right. At its most basic level, CSR is the corporate recognition that business practices have measurable effects on stakeholders that the corporation is responsible for.

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