Tag Archives: corporate governance

Whats social about CSR?

4 Mar

This is about the Corporate Social Responsibility (CSR) that Management takes up and the its issues with Corporate Governance. The funds expended on CSR are coming from the returns to the shareholders, and its in direct conflict with their interests of maximizing returns

Unless a CSR’s ulterior motives are to maximize returns to its share holders in the long-term (there is historical evidence that markets like long-term planning) they shouldn’t even set on that path, it’s a path to the sunken millions(read $’s).┬áBut there in lies the dilemma? Do CSR for CSR’s sake or do it for real returns, where does one make the distinction, and more precisely who makes the decision?

3M wordmark

Image via Wikipedia

There are examples of CSR’s which according to me works wonderfully, examples that come to mind are

  • Patagonia Apparel’s – recycle the threads program,
  • 3M’s recycle of used bottles in their products.
  • Calpers investing in badly run companies and bring them inline (there is bad social things in finance that need cleaning up too!)

In these cases the CSR could be woven right into the product itself and the results were inline with what they were doing, there was an item at hand which has its CSR

In other cases like the Coke case and the BP case we discussed tonight, the CSR’s were way orthogonal to what they did in their day-to-day, so why even embark on such an attempt, dump so much cash into it and get a bad rep as a result?

My question is this, did the Management see this fiasco coming in the near future? what made them take that dive into things like this?

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