Wednesday, April 05, 2006

CSR as "mandatory requirement" = extortionism

There was a good article on corporate social responsibility (CSR) in Tech Central Station (www.tcsdaily.com) co-authored by Mr. Stagnaro and Mr. Kogan, entitled "Corporate Social Restriction". The 2 guys got the right adjective: restriction. Although I would add a more appropriate term: extortion.

Making those CSR benchmarks as "mandatory requirements" to be administered by statist NGOs + UN + national governments (or a mafia of statism and interventionism) is tantamount to extortion. You slug it out in a very competitive market, where your competitors are employing various cost-minimizing production techniques (through expensive R&D and innovation, through locating their factories in low-wages countries, etc.), so you must employ more innovative production processes since your consumers want "good quality goods and services at reasonable and competitive prices". You don't please your consumers, you lose them, they buy the products of your competitors. Later on you close shop, forget about "social responsibility", whether realistic or imposed upon you.

If you combine the various national government taxes/charges/fees + local government taxes/charges/fees + environmental clearances/permits/licenses/registrations + payment to third-party groups to make sure that you abide by the "mandatory CSR practices", that's a lot of expenses already on top of your normal production costs.

Taking care of the environment, giving out scholarships and free livelihood trainings to the communities, other social and ecological programs, are something that is up to corporations to undertake or not. These should be voluntary, not mandatory; freely provided, not coercively required.

1 comment:

Cynthia said...

Noy,

You're right on this matter, when it's performance evaluation time at the office, on the portion on "corporate social responsibility" I write "I don't believe in these kinds of programs".

Another objection is, for example, organizations like "Children's Hour" and "Bantay Kalikasan" solicit funds from people like us, and when disbursement time comes, it's the Ayalas and the Lopezes that get all the credit, and "pogi points".

I don't contribute to charities like these but it does not mean I'm heartless. Like you, our family has a mango farm in the province. We've provided employment to the countryside, and increased oxygen in the atmosphere. We require neither government incentives or media mileage to do this.