Cupid must have hit columnist Nick Nichols with a vinegar-dipped arrow this year. Mr. Nichols chose Valentine’s Day to publish his latest column, History’s Cesspool of Bad Ideas: Socialism and Corporate Responsibility.
After a lively diatribe against the government’s stimulus package – or “congressional crapola,” to quote Mr. Nichols – he says: “When Americans actually start investing in the markets again, I suspect they will not take kindly to the Corporate Social Responsibility crowd who pressured hundreds of publicly traded companies to spend hard-earned shareholder cash on socialist projects that had little to do with the bottom line. I pray that investors will relegate the Corporate Social Responsibility movement to history’s cesspool of bad ideas and once again reward CEOs who focus on making a profit rather than posing for publicity shots with left-wing political activists.”
At least Mr. Nichols didn’t argue that the downfall of so many businesses can be traced back to their CSR spending. Instead, he says we’re in a mess “that past social engineering programs created—to wit, forcing lending institutions to offer mortgages to those who could not afford them.” I’d say there’s just as much evidence that lenders, caught up in the need to keep producing results for shareholders, wrote bad loans to cash in on servicing and processing fees with little regard for how the loans could be repaid. I don’t recall many government bureaucrats putting the screws on loan managers to write million-dollar loans to people making $40,000 a year.
I’d also submit that the shareholder money directed toward CSR in this country is dwarfed by the shareholder money lost to mismanagement, dumb decisions and malfeasance. If we want to start protecting shareholders again, there are plenty of places to look other than companies’ CSR budgets.
I’m not sure which CSR projects Mr. Nichols had in mind when he described them as “socialist.” The CSR efforts I recall have to do with projects like protecting wetlands, building hospital wings, improving education, building parks and the like. I can’t remember any company putting its CSR money behind comrade recruitment or indoctrination.
I am, I believe, every bit as much a red-white-and-blue capitalist as Mr. Nichols. (Interesting how the words “red” and “blue” come together in that phrase.) Unlike him, however, I don’t equate CSR with socialism but with good business. It makes good sense for companies to do their part in strengthening communities just a little beyond providing jobs and quality goods and services. Good CSR programs enhance reputation, build trust, help attract and retain good employees, and provide a quality of life that helps keep communities viable for the long term.
No sensible person is asking companies to shirk their responsibilities to shareholders. No one is forcing companies to jeopardize their earnings statements or their balance sheets to solve all of society’s problems. Well-run companies, however, will pursue prudently managed CSR programs. They serve both society’s interests and their own at the same time.
