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Wednesday, February 6, 2013

Strategic CSR - Mandatory vs. Voluntary

The article in the url below raises an important issue in the CSR debate, although it does not do it directly and does it in a context not related to CSR. Applied to a discussion about CSR, however, the article is instructive—Can and/or should firms be compelled to behavior more responsibly? Specifically, the article focuses on the absence of law compelling people to help others in distress. Even when the risk and cost to the person in a position to help is low, the social consequences of not helping are high:

“‘The expert swimmer, with a boat and a rope at hand, who sees another drowning before his eyes, is not required to do anything at all about it, but may sit on the dock, smoke his cigarette, and watch the man drown.’”

What is worse is that:

“If you voluntarily try to rescue someone, you may be liable if you then stop and the victim is harmed.”

The article explains the evolution of this situation in language commonly used to describe the laissez faire approach to capitalism often promulgated in the U.S.:

“The ‘no duty’ rule can be traced to the spirit of rugged capitalist individualism, the Darwinist idea that the common good is advanced through the struggles of selfish individuals.”

As such, the current law is defended in terms of its defining goals:

“One defense of the no-duty rule is that common law exists to prevent people from harming one another, not to compel people to help one another.”

A big part of the core argument behind Strategic CSR is a debate about whether more socially responsible behavior is best encouraged via mandated or voluntary actions. The resolution we settled on is that firms are more likely to implement CSR genuinely and substantively if they are convinced it is in their self-interest to do to (hence the focus on medium- to long-term stakeholder value). Central to this argument is the belief that firms are more likely to avoid or try and circumvent legislation if they are compelled to act. This debate is not fully resolved in my mind, however, as there are many grey areas in between the extremes (e.g., the rise of behavioral economics, see: Strategic CSR – Nudge) and the article below taps into these internal debates:

“A duty to help would not require bystanders to endanger themselves or provide help beyond their abilities; it could simply require warning someone of imminent danger or calling 911. … it would require us to accept our fundamental moral duty to help those in grave peril.”

The concept of moral duty is difficult to quantify because morals and values are subjective. As such, who gets to decide which morals/values apply and in what situations? More importantly, if I disagree with those morals/values, why should I be forced to comply with them? In spite of these very valid questions, however, asking them does not feel very satisfactory. I am currently drafting the third edition to the book and have made a more conscious effort to move beyond a self-interest argument alone, reemphasizing the importance of a CSR Filter as integral to the strategic process (a central argument in the second edition), but strengthening the need to embed that whole process within a framework of guiding values that set the parameters of decisions and guide all employees through the construction of the firm’s strategy, as well as the day-to-day implementation via operations. The work of John Mackey (Whole Foods Market) on conscious capitalism ( is highly complementary to the argument we present in Strategic CSR and was instructive.

Take care

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Can the Law Make Us Be Decent?
By Jay Sterling Silver
November 7, 2012
The New York Times
Late Edition – Final