Corporate Social Responsibility (CSR) activities “have not made a significant contribution to the achievement of the broader policy goals of the European Union.”
That is the headline conclusion of a massive research effort to assess the impacts of CSR on Europe’s economy, society and environment. Having enthusiastically endorsed CSR in many policy realms, including international cooperation, the European Union must now re-think its position. And quickly too, for the research blows important holes below CSR’s waterline.
The decision to assess CSR impacts took place after the European Parliament in 2007 expressed a certain impatience: “the EU debate on CSR has approached the point where emphasis should be shifted from process to outcome.” Given decades of up-beat messages about CSR not backed by systematic knowledge, amidst a no-nonsense climate for evidence-based policies that are terminated if they don’t produce results, a resolve to verify claims about CSR is justified.
Launched in March 2010, the CSR IMPACT project mobilized researchers in at least 16 university business-and-management schools and business-related think tanks. The European Commission provided a €2,7 million budget. More than 5300 small and medium enterprises and more than 200 large firms based in Europe were surveyed. Additional methods included econometric analyses, case studies, and a Delphi study involving more than 500 experts on CSR impacts. This was Europe’s largest systematic investigation of CSR, and perhaps the largest anywhere to date.
After more than three years in pursuit of the key question, “What are the impacts of CSR on the EU economy, society and environment?” the researchers answered as follows:
“There is little empirical evidence which explains the concrete impacts of CSR activities and programmes on the organizational performance of companies, the wider economy, or the social and environmental fabric of Europe, its nations and regions. By implication, the aggregate CSR activities of European companies in the past decade have not made a significant contribution to the achievement of the broader policy goals of the European Union.”
The researchers seem to have anticipated a rejoinder from CSR’s defenders that, once companies begin to monitor CSR outcomes systematically, a more positive picture would emerge. They discount that possibility by stating: “[W]here outcomes and impacts are measured, there is no convincing evidence that there are significant improvements over time large enough to create change and reach major policy goals.” Indeed, while noting some modest effects in a few specific contexts, the researchers find that “impacts that are attributable directly to what might be labelled CSR practices or activities (that follow from the work of CSR departments) seem relatively minor when compared to the overall impact a company has on society.”
For the researchers, the study’s findings “raise important challenges to long-accepted beliefs and arguments in favour or defense of the traditional approach to CSR. They also suggest potential new ways forward which consign the “old” concept to the history bin.” Far more important, if the EU is to achieve its public goals respecting job quality, the environment and the economy, are public laws and regulatory measures.
Are these Findings Relevant to International Cooperation Policy?
Both bilaterally and multilaterally, European governments have pledged to increase their support to private sector activities in developing countries. They wish especially to engage Europe-based companies, big and small, in partnerships. Those commitments frequently appear with caveats about the importance of CSR. For example, in a recent official opinion on ‘Involvement of the private sector in the post 2015 development framework’, the European Economic and Social Committee urges that “a CSR framework of some kind should be proposed for the development sphere”. Now that CSR has been shown to be ineffective in Europe itself, those private sector development policies with CSR ambitions will have to go back to the drawing boards –- unless CSR’s success is demonstrable in developing country contexts, despite its failure in European contexts.
The researchers express hope that their findings may prove a “watershed in the way that the business-government-society relationship in Europe is defined, measured and monitored”. Yet seven weeks after the publication of the research project’s Executive Summary on 20 September 2013, the business press (let alone the wider media) has paid no attention to the report, and public mention or comment on websites number less than half a dozen.
In Hans Christian Andersen’s story of regal vanity and public cowardice, the Emperor was convinced that only the “hopelessly stupid” would fail to see the magnificence of his new suit. In the case of the CSR impact study, a formidable team of specialists drawn from epistemic communities close to the corporate sector has concluded that for European society, CSR is largely an illusion. In the storybook version, the naïve child declared the naked facts, and changed the public’s mood. Might these powerful research results do the same, and help send CSR to history’s dustbin? Perhaps, but the outcome of the debate is uncertain.
Many vested interests are at stake, and there are risks that business may continue to flee into the future, dressed in new fashions that can awe (but not immediately shock) the public and politicians alike.
The views expressed here are those of the author, and may not necessarily represent those of ECDPM.
CSR now becomes the need of each and every business organization and that should be taken seriously