The mighty CSR hits the buffers

Corporate Social Responsibility – CSR – is said to have been started by John Spedan Lewis for his retail chain: “Solely to make the world happier and a bit more decent”

Unilever has the goal of ‘making sustainable living commonplace’ – they believe that ‘by doing good they will do well’

Dave Lewis, CEO of Tesco, says: “Leaders have to balance achieving short-term value for investors against ensuring a sustainable long-term future – profit should never be the fundamental motivation for leadership (a mistake his predecessor had made) – a wider purpose is crucial for recruitment and motivating staff – bosses need models where companies can do well by doing good

And many major investors such as big pension funds now have much the same aims – they’re concerned to make ethical investments and will ignore companies who don’t pass CSR muster

Thus, over the last decade, CSR has gathered steam in the corporate world – so much so that the likes of PWC and KPMG, the big accountants, now expect ethical statements in annual accounts and even conduct social audits which measure corporate reputations to highlight if and where they may be going wrong

But Carillion, the biggest contractor of projects that the UK government outsourced, went bankrupt – and they had signed up to the CSR idea

According to Dominic Lawson in the Sunday Times: “It ticked every box of the CSR agenda, and then some” – go to its website and you will find:

  • Greatest prominence is accorded to its virtuousness, not its profits
  • Page after page of “sustainability strategy”, “making tomorrow a better place”, “better communities, better environment, better business”
  • “Determined to be a force in the battle against slavery”

Lawson claims ‘such stuff impresses civil servants beyond measure’

However, he also says:

  • “Already suffering from deals going sour (many due to bad luck on projects to be fair) Carillion failed to charge enough on many contracts in a desperate bid to generate more cash flow”
  • At the same time, they were “signing off on sumptuous pay packets and bonuses for its most senior executives even when, according to the FT, they scored zero on key performance targets”

Lawson then also cites RBS – Royal Bank of Scotland – as another example of a major firm once in the vanguard of the CSR movement

Only three months before they collapsed, Ethical Performance (a news service for the global CSR audience) had reported: “100% of RBS’s contracted electricity was sourced from renewables”

So, despite the world’s biggest bank loan book being out of control, investors in RBS could warm to knowing “its HQ was heated entirely by wind power”


  • CSR has become another buying factor, along with quality and service levels, that matters to customers nowadays, on top of price
  • However, firms that seem to put CSR before good financial management put themselves in great danger

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