MOFFIN's READING ROOM

CSR

"CSR is no magic wand"

Janina Filek, PhD, Associate Professor at the Cracow School of Economics - a graduate of the Cracow School of Economics and the Jagiellonian University. For many years now a researcher and teacher at the former. Since 2009, head of the Unit for Ethics and Social Philosophy and since 2011 of the Chair of Philosophy. Professor Filek’s main research interests include: in philosophy, the conflict between rationality and irrationality as well as the notion of human thinking structures; in business ethics, ethical aspects of management and corporate social responsibility. She has authored the following publications: “Wprowadzenie do etyki biznesu” (An Introduction to Business Ethics) and “Wolność i odpowiedzialność podmiotu gospodarującego” (The Freedom and Responsibility of Managing Entities). Her contributions have appeared in such periodicals and journals as Kwartalnik Filozoficzny, Prakseologia, Etyka, Znak, and Tygodnik Powszechny. Professor Filek has taken part in many conferences. Since 2003, Disability Support Officer at the Cracow School of Economics. Since 2016, Vice-Rector for Communication and Cooperation at the Cracow School of Economics.

Ireneusz Białek talks to Professor Janina Filek, an expert in corporate social responsibility. 

Ireneusz Białek: In CSR-related discussions and discourse, even at thematic conferences, social responsibility is often confused with charity. Why is it so?

Professor Janina Filek: This is true, indeed, and has its historical grounds. In the 19th-century United States the conviction stemming from Protestantism became popular that if someone was rich, that meant that they were in God’s favour and consequently (simplifying the thing slightly) that they were obliged to share their property with others. A good example of the notion was the formulation by Andrew Carnegie of two principles, of philanthropy and stewardship; the industrial mogul was striving to act following them. One could give many other examples like wealthy industrialists of that time who gave some of their property out to charitable causes or like Ford for better working conditions of the workers at his enterprise. Such a model of philanthropic support became very popular in the US. One must say that in a sense it was even an inspiration for CSR, although even if born in America, the notion really took off only in Europe.

I.B.: Why did things develop that way?

J.F.: Creating their state from scratch, the Americans betted rather on philanthropy and civic organisations supporting social groups in need while strongly believing that everyone shapes their own destiny. Such an approach released the government from the responsibility for creating social solutions and so propped up the liberal notion of a minimal state. Most frequently, the then non-governmental organisations brought together rich people, financial magnates who sometimes wanted to share their property with the needy as they pleased. This is exactly philanthropy and not CSR. In turn, CSR is based on the social responsibility of business operators for what they have already done and for what they could do in the social sphere in the future. Charity seems easier to implement than CSR. 

I.B.: Let us then spell out basic differences between charity and social responsibility.

J.F.: They are considerable, if not major. Charity comes from one’s willingness to share their property. It is an individual decision which can be one-off. Also, it does not entail any sacrifice as if, since when I have a million, for instance, and donate ten thousand to a noble cause, I may even fail to notice that I have less. The implementation of the CSR notion is much more difficult because it assumes that, just like each of us, businesses are responsible for the consequences of their actions (those already taken, but also ones they could take, if properly empowered), and so large corporations also bear such a responsibility. They are then expected to deliver not single sponsoring or philanthropic exercises but long-term actions whereby they will try to avoid negative consequences for local communities, the natural environment or their employees as well as actions with a positive impact on the social and natural environment. CSR entails the continuity of such activities rather than their being single spectacular actions. That is why enterprises which claim to be socially responsible pay a much higher price for any mistake they make than those which did not announce their being responsible. It is clear then that CSR is a more demanding notion but, likewise, the benefits from its implementation exceed those from philanthropic activities, if actions taken by companies become an inherent element of their strategies.

Once at a time, a philanthropist will offer money to an orphanage, disabled children or some cultural institution and is most frequently praised for it. Enterprises, however, must take into consideration various interests of diverse groups, often contradictory, in order to properly balance the interests of all the stakeholders. This calls for a comprehensive approach and consistent implementation. If successful, there will be more benefits than those attained by a philanthropist, but if failed, the loss will be double. A philanthropist, at the same time, is almost always sure of the dividend in the form of a good image.

I.B.: So we know now what is CSR and what is charity. You have said that the notion of corporate social responsibility has been very well received in Europe. Which factors have contributed to it?

J.F.: To me, the most important are the philosophical sources, cultural background, and the notion of democracy and a quality of living related to it. In case of Europe, the CSR explosion took place primarily in a country where market was one of most liberal, that is the United Kingdom. This may be a bit surprising, but I think it can be explained because the British system was and is based on freedom, a precondition for reaching responsibility. In other words, in order to realise one’s responsibility, one must first realise one’s freedom as the sense of freedom paves the way for responsibility.

Additionally, Europe had a strong tradition of assistance and solidarity. The aid movement in the form of setting up and operating shelters, hospitals and nurseries to support those in need has always been strong on our continent, just like evoking such values as justice and equality. The notion of CSR refers to them, too, which is why it found a fertile ground in Europe.

Interestingly, there exists also a political reason which stimulates the development of social responsibility and that is the notion of democracy, born in Europe and transferred to the United States. Democracy has led to a significant reduction in many social inequalities, which ties up nicely with the notion of CSR. Those living in democratic countries know that as citizens they enjoy, just like their neighbours, equal rights in terms of employment, education, but also man-made laws applicable in a given country. If companies as business operators have also become part of social life, the well-grounded question appeared why they sometimes have more rights than citizens of a given country or their neighbours. The principle of equality before law as a cornerstone of democracy leads to the justified question whether it is right for enterprises to be allowed more than each citizen or their neighbours. If, for instance, a citizen does something bad, they will bear responsibility for it, and if a company does something bad, it often bears none as it is large, powerful, and individual responsibility is much diluted in it. It is exactly the democracy-founding idea of equality before law that lets us ask about corporate social responsibility at least in its restrictive dimension. The notion of CSR suggests here assuming that companies also bear responsibility and if they destroy the rules of social life, they are subject to negative assessment. It is then worthwhile for them to feel responsible and avoid destructive actions, choosing such that can be defined as socially responsible. 

Further, in corporate social responsibility fairness is important, which can be derived from business ethics and I would call that a business ethical source of inspiration for CSR. The quality of life, in turn, is such an important factor which stimulates CSR development that it closely linked to education level. If people are well educated, they understand that life in a democratic society entails not just entitlements but obligations, too.

I.B.: Yet in principle CSR is an obligation companies take upon themselves as if voluntarily.

J.F.: Indeed, here it is worth saying a few words about negative and positive freedoms.

Negative freedom means a fight for various entitlements and acting seeking to shake off such restricting bounds or barriers, while positive freedom means that as we have a space where we can decide about own lives, and even more about the lives of others, it can be used in a bad or good fashion. And at this higher level of freedom awareness, companies can decide that if they are, for instance, a large corporation with influence and much financial resources, they could do something good, that is to use that freedom in a positive way rather than just shake off the bounds and restrictions, as is the case at the lower level, the level of negative freedom. The thing is namely that one attains positive freedom always via negative freedom, that is the mechanism of freedom awareness development. It was only existentialists who noticed that if man is free, he becomes responsible for the actions taken in the context of such freedom.  

I.B.: Can then responsibility be also negative?

J.F.: Yes, negative responsibility corresponds with negative freedom, while positive responsibility with positive freedom.

Negative responsibility, called restrictive responsibility, for bad things already done. If an enterprise fails to pay its taxes, it has to be subject to a penalty, or bear responsibility for the act of not having paid the dues to the tax office. Positive responsibility, in turn, appears in the case of actions which could be taken, i.e. for what will turn out good and useful for society, and the enterprise decides to bear it voluntarily. So there is this opposition here: negative responsibility is linked to coercion, while positive responsibility with voluntariness. In the context of the latter firms can be assessed in terms of what they have not done although they could have or various voluntary actions taken by businesses can be evaluated. It is just responsibility that recently have been becoming a curious arena of competitive fights, bringing additional benefits to society as a whole.

I.B.: Which is a very interesting moment in time, as because of such competition in voluntary social responsibility actions by companies many useful things can happen. How to then improve the awareness of positive freedom, so that businesses are willing to embrace positive responsibility, that is to deliver model CSR?

J.F.: There are a few things to discuss here.

Looking at the development of our civilisation one may notice that mankind has on numerous occasions  realised that some of the previously accepted developmental directions could threaten itself and so enlightened humans have initiated searches for solutions that would eliminate such risks. A 20th-century example is the degradation of the natural environment, while one of the solutions provided is CSR, a notion promoting a voluntary self-limitation of corporations as regards actions which lead to such devastation. Now, taking on the obligation to care more about the environment would in that case be one of the solutions equivalent to abandoning the wrong path once taken. Yet to make it happen, society should be aware enough to ask enterprises questions such as whether their operations, even outside the country where it is registered, does not lead to excessive destruction of the natural environment or a negative impact on agriculture. Such questions are not entirely new. For instance, at the time of monarchy domination, some thinkers going way beyond their contemporary problems asked the following question: why should a single man make the authoritarian decisions regarding the entire community while those who are affected by such decisions are unable to decide about anything? Such and similar questions have led to the parliamentary system, today seen as the basis of democracies. At the current stage of societies’ economic development, asking questions in the economic space is equally important and justified; it may also lead to the development of equally fundamental values or a change in the management principles practised thus far.

The market system has undoubtedly contributed to the extension of our individual lives, better material security, healthcare and education, yet it is still imperfect. One of the imperfections is the development of too large corporations, which, if they used only negative freedom, could prove a serious threat even to some governments. The current crisis is probably a good illustration of the process. Incidentally, it has led to a reduction in CSR actions, yet paradoxically it has also shown that they are much needed because financial institutions should not be allowed to do what they please, with the negative consequences of their actions to be borne by societies. That is why conscious consumers should ask questions, and posing them seems to be one of the ways to seek new solutions protecting our civilisation against the threat brought about by ourselves.

Such civic awareness, particularly that of consumer, appears to be very important as it makes one not just ask questions but also take preventive action. If consumers know that some enterprise produces commodities involving human rights violation or negative environmental impact, they can boycott the company and stop buying them.

I.B.: Yet here the price is often the decisive criterion rather than the location or production method.

J.F.: What comes into play here is the quality of life and education level. The higher they are, the better awareness there is and so more rational choices can be made. CSR is no magic wand which can change everything at once, but a set of solutions, which, if developed, could result in good and desirable things in the long term. And society can accelerate the process by forcing enterprises with their shopping behaviour to act responsibly. 

I.B.: Is it not so after all that CSR is a noble idea for rich times or just a Utopia?

J.F.: In some sense it is an idea for rich times, indeed, because in times of prosperity the temptation to act unfairly is weaker and it is easier to convince companies to implement CSR principles than in times of crisis. When a crisis is profound, that is much harder, as is well illustrated by the saying that those drowning clutch at straws. As for a Utopia, I will answer this question with a question. Was what John Locke was saying about liberal democracy not Utopian once, when he contrasted it with the then monarchy, or was it not a Utopia to demand voting rights for women two hundred years ago? In a sense, most enlightened ideas that have become the foundation of the development of humanity were once Utopias. From that viewpoint CSR seems an enlightened Utopia on the basis of which subsequent ideas may develop, sometimes leading to positive social changes.

I.B.: We have so far talked about large corporations, but how does CSR fare at small and medium-sized enterprises?

J.F.: CSR is indeed most visible in large corporations now but even in Poland there are many SMEs which often refer to pre-war traditions one could consider CSR-esque, although the term was not used back then. What I mean is caring for employees, treating them fairly, caring for local communities and helping those in need. Many such enterprises continue actions of that sort until today or refer to them in one way or another. As there are very many businesses like that, the sum of their action is of great social significance. An added value is the fact that those action are initiated at grassroots level and born out of spontaneous enthusiasm, while CSR strategies in large companies are in principle set at the top and come from the corporate HQ.

And so I would say that such small, down-top enthusiasm-driven CSR can be as big in terms of results as that practised by corporations.

I.B.: Why do you think disability remains on the periphery of the CSR debate?

J.F.: The fact that disability remains on the CSR periphery in Poland is a direct reflection of what our society thinks about disability. If it considers that such issues should be left aside, entrepreneurs see them in the same way and do not place challenges related to disabilities in their CSR strategies. This, however, starts to change slowly and there appear some examples of companies which increasingly often include disability in their CSR actions. I must say, however, that this is a slow process as it is linked to improving the awareness of their own employees, which is always a long process, and certain financial outlay on workplace adaptations and such. Other actions traditionally perceived as CSR bring a sooner and more direct profit, however. Still, those who succeed in such an inclusion of persons with disabilities into the CSR strategy will most probably set future standards in that respect.

I.B.: Such actions are increasingly often called CSR plus D1. I would like to finally ask what you, Professor, understand under the term a manager of the future.

J.F.: A manager of the future must first of all be comprehensively educated and must not limit him-/herself to the field of their interest (economy) only. They must understand society and be someone oriented towards the needs of local communities. They also must learn and develop continuously as societies and their needs change all the time. The very name “manager of the future” shows that they must be able to predict the future, and to do so, they must understand presence and, which is sometimes surprising, also the past, that is have a comprehensive knowledge, including historical, philosophical and sociological knowledge.  

I.B.: Thank you.

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1 CSR plus D: the notion of social responsibility including disability.