What’s wrong with CSR?



Sir Geoffrey Chandler (formerly a senior executive with Shell and then founder of the Amnesty International Business Group in the UK) stated in 2003:

“[CSR] implies that business … has no inherent social utility, but requires a sanitising “add-on” – something which enables it to “give back” to society, a sentiment frequently heard on the lips of corporate leaders apparently unaware that this suggests that their own core activities are parasitic, which, without appropriate policies and principles relating to the whole of their impact, they may indeed be.”

Many of us miss Sir Geoffrey’s leadership and must ask ourselves how much has changed in the past years? Corporate social responsibility (CSR) has grown into a global industry, with companies and CEOs lining up to show how they contribute social and environmental value to some of society’s most pressing problems. This, of course, is a good thing—better than the Milton Friedman vision of business operating in a context totally removed from society (although he too believed in mandatory rules of the marketplace). This movement of course, has made a positive contribution, however, there is much – good and bad – that currently sits under the umbrella of CSR: from self-serving public relations to philanthropy, and from supply chain compliance to working on shared social value projects. So asking a question such as “do you think CSR is a good thing?“ is like asking “do you think newspapers are a good thing?” It depends a lot on the content. This diversity of things that are included under the CSR banner, and the lack of a clear definition, means the label “CSR” too often obscures and does not clarify any activity’s relationship with the social contract.

The purpose of this critique, developed in Chapter Three of my book, is not to condemn the vital work of many others, or myself for that matter, but to show the size of the conceptual gap that needs to be filled if we are to explore the social responsibilities of non-state actors seriously and the value that the social license concept might offer in this context.  For anyone who might find some of my criticisms of CSR a little too direct, remember I am criticising myself here also – I have worked in CSR for nearly 20 years. My intention is to point to where I see problems and offer a way forward.

 CSR lacks a clear definition, purpose, or end goal

There are many definitions of CSR. Sometimes, when I am teaching, I put on the Powerpoint presentation the official (but unattributed) CSR definitions recognized by the Brazilian, Chinese, and Indian governments, as well as that of the European Union, to see if the students can guess which belongs to whom. It is a fun exercise—try it sometime, perhaps for the whole of the G20. The idea of business doing good for society has been interpreted in line with the political context of each of these economies and the societies they reflect. There is no internationally recognized definition of CSR, which in itself tells you something.

CSR is not a requirement

When push comes to shove, business unit managers in the vast majority of companies are rarely fired for not meeting CSR targets (unless they are the CSR manager themselves). They might be marked down on their scorecard during appraisal, but not fired. However, if they seriously breached health and safety, workplace discrimination, or the personal privacy of an employee, they might well be fired—and rightly so. But this is not seen as CSR? Why? Herein lies the contradiction in how many businesses still regard CSR. If CSR is about what is voluntary, then it is always on the edge of what one must do, and if health and safety or equal opportunities are something one must do, then it can’t be CSR. But why would some of the most serious social impacts a company can have not be seen as corporate social responsibility. It is a responsibility, it is social, and it is most definitely within a corporation.

CSR is not core to the business model

Porter and Kramer are also talking about CSR nowadays or the need for an improved version of it. So whilst civil society has criticized CSR for its lack of accountability, business schools have criticized it for its lack of focus on innovation and the creation of value. The concept of “shared value” is a compelling one and has attracted the attention of a number of leading CEOs. The role of business innovation in terms of tackling societal ills, in particular in healthcare, or the opportunities brought to the world by the internet or mobile telephones, suggests that there is much that shared value can deliver as a concept. If the “Shared Value” construct helps to bring CSR closer to core business models, then this is a good thing also. But if business is serious about the delivery of public goods, it is entering the social contract. What is missing from much of the discussion on shared value are the consent-based and justice-based expectations we might have for businesses. As I will seek to explain, true shared value will not be possible without social license.

So why is social license a better way of understanding social responsibility?

So why do I think social license might be a more useful concept than much mainstream CSR when trying to define what is going on, and what will need to go on for organizations to be responsible societal actors in the years to come? In my view, social license offers the following advantages

  • It describes a set of relationships by which it is the relationship between individuals in society that sits at the center and the duties they confer to the state. Non-state actors need to be clear about whether they are part of the social contract (i.e. civil society) or not (i.e. organizations whose primary purpose is not social), and then interact on social issues accordingly.
  • Social license cannot come into being unless the organization which seeks to secure it is perceived to have enough legitimacy and trust, and the specific activities involved cannot proceed with sufficient consent from those who are impacted or have a stake in the consequences of the activity. Importantly, this requires clarity about an organization’s position in relation to the social contract.
  • As a facet of the social contract, social license requires a number of consent-based and justice-based phenomena to be present—balancing the needs and views of specific communities with international norms, in particular, internationally recognized human rights.
  • Unlike CSR, social license relates to specific activities and not to organizations. Therefore it avoids platitudes such as “company x is good at CSR” or “company y is a good company.”
  • Social license cannot be “self-declared”—it describes an equitable balance of interests which allows an activity to continue and to thrive, but it is dynamic and can always be withdrawn. Organizations can work to achieve the underpinning requirements, the result of which will hopefully be securing the social license for a particular project or activity. But social license cannot be managed or controlled directly by any single organization. This also reflects the reality that even a local community cannot necessarily hold the right to veto against a particular activity if it is clearly in the interests of all others.
  • Social license avoids tiresome generalities about whether mandatory or voluntary approaches to CSR are better. Social license focuses on the impacts of specific activities and the associated behavior of all involved. By focusing on the outcomes, it allows discussions about how best to get there—what needs to be required by law and what does not.

My book takes these arguments further, but I recognise it is just the start of a more profound discussion we all need to have and to share reflections about what is wrong with CSR, or at least old-fashioned understandings of what CSR is. Nor I do I believe so a second that Geoffrey would have agreed with all of my arguments but he would want us all to continue to challenge each other and to advance collective thinking and accountability.




























What is the social license?

The social license in a nutshell


After reviewing a number of existing definitions and critiques of “social license to operate”, Chapter Two of the book makes the following observations about “the social license”:

  1. The social license relates to the activities of any organization. It cannot be directly managed or self-awarded, rather it is the accumulation of a number of factors that will be explored in greater depth in the book. It is these factors that organizations can manage, not the social license itself.
  2. It is much easier to notice the absence of the social license than its presence. The presence of the social license might be described as an equitable balance, or harmony, between different interests that allows an activity to continue and to thrive. However, as it is dynamic, it can always be withdrawn.
  3. The social license relates to what an organization does as opposed to what it is—i.e. it relates to the activities of an organization.
  4. The social license should be understood in social contract terms and therefore different types of organization will acquire the social license in different ways for their activities because they have a different relationship to the social contract. The classic distinctions are: for governments, by being accountable and effective servants of the social contract in society; for civil society, it is about strengthening the accountability of government or the strength of the social contract itself, and for business (whose primary purpose is not social) it is about not weakening the social contact or exploiting existing weaknesses—and finding ways of building capacity within the existing social contract without replacing it.
  5. Later in the book, I test the hypothesis as there is some evidence that on some issues, such as internet governance, dealing with remote communities or international public–private partnerships, business is being granted a much wider social license and is treated as if it were a social actor such as an NGO or even a government.
  6. The social license does not replace political license or legal license, in fact quite the opposite is the case. However, both legal and political licenses have limitations and they are increasingly reliant on the social license.
  7. The limitations of existing political and legal license need to be understood in an international context and against international norms such as human rights. Modern interpretations of social contract theory have made much use of human rights and so too does this approach to understanding the social license.

It is for this reason that Chapter Two starts with the latin epitaph “Nemo judex in cause sua” (no one can be judge of their own cause). The first two pages also focus on the Niger Delta story and quote part of Ken Saro Wiwa’s statement before his execution in 1995: “I predict that the scene here will be played and replayed by generations yet unborn. Some have already cast themselves in the role of villains, some are tragic victims, some still have a chance to redeem themselves. The choice is for each individual.”

So whilst I argue throughout the book that no organisation can award itself a social license, it can very much manage or influence many of the underpinning factors which result in its presence or absence. The book explores what some of these factors are drawing on a range of experiences.





The start: Why The Social License?

I wanted to write a book about the current state of affairs at the business-society interface and wanted a fresh approach – not one following the tramlines of existing ‘corporate social responsibility’  (CSR) thinking or another book on business and human rights, there have been several excellent books already written on the latter (not least by my colleagues at the Institute for Human Rights and Business). I wanted to come to the issues afresh and from first principles as much as possible. I am therefore wholly to blame for the arguments set out in the book and this blog.

The enduring vision I have of why I work in this area is that of the evolution of the marketplace – a point Anita Roddick was lucid on. Several hundred years ago, and still in physical markets in many parts of the world, buyers and sellers operate in close proximity – they know each other, where each other lives and are likely to meet on a weekly or daily basis. There has been and still is, in such market places, a greater sense of interpersonal accountability. This is not to say that there were not long complex supply chains in past ages (obsidian, for example, was traded over thousands of kilometres over thousands of years) and also there were clearly abusive practices such as slave labour, but customers were much more actively involved in making judgements about the quality and reliability of not just the product but also the behaviour of the seller. Contrast this with the world of the past 20 years, where global value chains are hugely complex and where the humans involved (be they workers, investors, customers or consumers)  are very much disempowered in their ability to  influence the way the business of business is conducted.  We need new tools, awareness and laws to bridge this gap which has externalised the true social and environmental cost of production. At a instinctive level, the book is a reaction to the dehumanising effect of much of what we now call the global marketplace.

I was also interested that the term ‘social license to operate’ was emerging in many different places around the world and for different reasons. True, it remains a term still associated mainly with the extractive industries, but it I hear it elsewhere – within constitutional think tanks in Kenya, for example, or US-based beverage  companies. It is an attractive term because it is suggestive of a rationale about why any non-state actor should engage in social issues, particularly why an organisation whose primary stated purpose is not social (i.e. a business) should do so.  Unlike CSR or even human rights, it is an outcome and not just an objective. That said the term ‘social license’ was not clearly defined and was at risk quickly moving into the category of ‘self-declaratory CSR’ – as John Ruggie would call it.

So the book tries to pin down the ‘social licence’ concept and in a way relevant not just to business, but all other types of organisation. The pinning required something of a conceptual framework, more perhaps than a non-academic book should attempt (particularly when written by someone who is very much not an academic).  I had the work of all my colleagues in the business and human rights field as ballast – which reminds us that a human-centric approach must be about impact and impact in human rights terms. And that accountability is about redress and remedy, but it is also about prevention as well as transparency. This I had ‘in my back pocket’ so to speak and those of you that read the book will see it becomes an important feature of the later chapters. But I needed to get there – and particularly for the more skeptical reader who might think that ‘social licence’ sounds nice but is just a fashionable buzz word, and that human rights and business have little to do with each other.  Therefore I evoked the thinking of some of the greatest in making some superficial but important links back to social contract thinking of 200-300 years ago. It is not so easy to dismiss social contract theory as fluff given the influence it had on shaping democracies and ideas of civil society in many parts of the world.

It seems I am one of the first in the world to define social license in social contract terms, and you can judge to what extent I pull this off. The social contract experts who have seen my book have been polite and kind, but I knowingly dip my toe into what are very deep waters. However, there is much of what I seen in the writing of those such as Locke, Hobbes and Rousseau which does resonate with questions about the role of business (and other organisations) in contemporary society. At a minimum, I hope to provoke a reaction from which we all might learn something. And, as my patience with the ‘CSR industry’ is wearing thin, I give us all a good collective kick to do better and too ask the tougher questions about the activities of all of our organisations.

I will not just be blogging to promote this my first book. Rather I wish to develop my own voice and thinking on a range of issues, perhaps resulting in future books perhaps to be written by others. I hope some of you will share this journey through your own comments and writings. The role and legitimacy of non-state organisations in today’s world (be they businesses, NGOs, communities, religious organisations, regional authorities and so on) is one of the most fundamental of our life time and so tough questions need to be asked.