There are lots of things government can do to encourage corporate social responsibility without resort to regulation, says David Grayson
The underlying drivers for corporate social responsibility are market forces: vigilant consumers, institutional investors concerned with reducing risk, and talented employees. I am, therefore, cautious about how far policymakers can encourage a company to become more socially responsible, as opposed to their negative power to discourage it.
As an important stakeholder for business and an important voice in society, it is good that government is encouraging CSR – politicians possess what the Americans call the ‘bully pulpit’, which can be used to great effect in this area. Personally, though, I would prefer government to name and fame rather than name and shame. Responsible businesses should be highlighted in ministerial speeches and given priority when society honours business.
Governments should also ease regulatory burdens on businesses that can demonstrate their environmental and social responsibility – as is now beginning to happen in the United States.
Where governments might particularly help is in developing the capacity of small business organizations to help their members understand the business case and how to become more socially responsible.
Government can also make a difference by being more open to engagement with business. It can develop a public-private-community partnership ethos that blends the best of the public service ethos, the entrepreneurial, problem-solving culture of business, and the best of community empowerment. But it is not enough just to develop such an ethos – it then has to be aggressively promoted and rewarded within the civil service.
Furthermore, there is an opportunity for creative new intersectoral compacts at the level of international development – for example, more CSR and more active, generous public support from the North and the West for development in, say, Africa.
On the other hand, there must be greater freedom for community-based organizations and non-governmental organizations, and better governance – including a willingness to improve public governance by learning from the private and voluntary sectors. Travelling in Africa and India this year, I have heard committed business leaders complain of rebuffs from politicians whom they offered to help improve public governance.
These are harder things for politicians to do – but if they are serious about getting the best out of corporate social responsibility, then this kind of agenda will have more enduring positive outcomes than a simple resort to regulation that requires companies to measure and report on CSR at a time when reporting is still in its infancy.