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Bad BP and the Good Corporate Social Responsibility Fairy

David Ritter - 30th July 2010

Once upon a time... there was a jolly corporation that lived in a big building in a busy city. The corporation had a nice shiny logo, lots of splendid windowed offices and a big bright front door. Business was good. It was a happy corporation. Then one day some people came along and said ‘you bad, bad corporation, you’ve been polluting the environment and outsourcing to slave labour in the third world.’ Then the corporation was not a happy corporation any more. It was a sad corporation. But then one of the people said ‘why don’t you ask the Good Corporate Social Responsibility Fairy to cast a spell that lets you be nice to the environment and your workers.’ So the corporation asked the Good Corporate Social Responsibility Fairy to cast a spell, and sure enough the magic worked and the corporation started being nice to the environment and its workers. The people went away satisfied and the corporation was happy again. The corporation even found that by treating workers and the environment well that its profits went up, which made it happier still. So everyone lived happily ever after…

It is a nice story. But unfortunately, unlike in the fairy tale, corporations do not have the feelings of real people. They do not experience emotions or make moral judgments. As prominent public policy commentator Robert Reich bluntly stated in a recent opinion piece about the BP Gulf of Mexico disaster, it is pure ‘anthropomorphic fallacy that accords human attributes to giant corporations’:

Corporations aren’t people. They have no brains, no consciences, no capacity for intent or guilt. Every one of their moveable parts can be replaced, just like BP’s former CEO Tony Hayward was replaced. Corporate accountability and responsibility are meaningless concepts. Corporations exist for only one purpose: to make money.

As Reich notes, we’ve seen this ‘anthropomorphic fallacy’ at work around BP and Deepwater Horizon. The fearful consequences of the developed world’s oil addiction including climate change, pollution, choked up cities and disastrous foreign policy are appalling and well known - but they are all also abstract. In contrast, BP – particularly as personified in the infamous and apparently callous Tony Hayward – is a perfectly formed villain. The British in British Petroleum even gave the wrongdoer a clear national identity, making the anthropomorphized corporate fiend even more readily hateable as the detested other by the wronged US public.

Harvard psychologist Daniel Gilbert has offered the insight that one of the reasons why it is hard to tackle massive abstract global problems like climate change lies in our evolutionary psychology. Climate change is not a person that repulses us, but an abstract in which we are all complicit to varying degrees. It is much easier to mobilize around individual villains or hate figures. 

In one sense of course, there is nothing wrong with the characterization of BP as the baddie: the company is, after all, responsible for the monumental catastrophe in the Gulf of Mexico. However, Robert Reich’s point is that a corporation is neither bad nor good but an amoral institution mandated to pursue profit:

If we want corporations to act differently, we have to force them to do so through laws that are fully enforced and through penalties higher than the economic benefits of thwarting the laws.

This argument is not radical, but legalist. It also in no way suggests that there are not conscientious people within every organization business who will use their personal influence and authority in pursuit of decent goals.  Nor is it to deny that some business models are inherently less damaging than others: BP could indeed still pursue profit maximisation through investment in renewables rather than fossil fuels.  However, there is no evading that the legislatively prescribed function of corporations is to maximize returns, which has the blunt consequence for public policy and for citizens that if you really want business to do something that will cost it money, you need good regulations to make it so.

It is sometimes contended that the triple bottom line is innately good for profitability over the longer term, with the implication that it is genuinely in the commercial interest of corporations to pursue reasonable CSR measures. Under this line of reasoning you don’t have to get around the profit imperative, because what is ‘good for people and the planet’ must also be good for business. Unfortunately, the view that CSR and higher returns are, ceteris paribus, mutually reinforcing is a normative claim rather than a conclusion that is persuasively grounded in empirical evidence.

In an age of globalization, regulating transnational corporations is a technically and politically complicated matter: some would say a mission impossible. Corporate lobbyists themselves will forever use arguments around capital flight as a stick to beat would-be regulators. Meanwhile, the corporate hold on democratic governments grows ever tighter, particularly in Washington, as this excoriating piece by Eric Akerman recently argued in the pages of The Nation.

No wonder that rather than seeking to reclaim democracy in the face of entrenched corporate power in order to solve systemic abstract problems, we so often prefer to focus on loathing the likes of Tony Hayward and to believe in the fairy tale of CSR.