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Why Companies Make False Corporate Social Responsibility Promises

No major corporation can get by now without saying they’re doing good things for society, but how many of them actually do? Not that many.

The idea that corporations should refrain from things like dumping toxic chemicals into the environment or forcing children to work in sweatshops has been gaining steam. Corporate social responsibility—CSR as the MBAs call it—is so hot right now. Or is it hot air?

Two University of Michigan sociologists, Kiyoteru Tsutsui and Alwyn Lim, decided to investigate. As more and more companies adopt CSR promises, Tsutsui and Lim wanted to find out "what sorts of factors were pushing these companies to embrace corporate social responsibility," as Lim says, and whether they were following through on their promises.

The two researchers looked at companies that had committed to one or both of the most popular international CSR standards, the Global Reporting Initiative and the United Nations Global Compact. Both of these are voluntary programs that ask companies to report on and, if necessary, improve, their economic, environmental, and social practices. The researchers ended up with data from companies in 99 countries—72 developing countries and 27 developed countries—spanning the years from 2000 to 2007.

Tsutsui and Lim found that corporations in the developing world were more likely to make substantive CSR efforts. In comparison, corporations in the developed world made shallower CSR promises and were less likely to submit reports of their progress.

As Tsutsui says, "Companies in the developed world may respond to civil society and investors’ pressure to take social responsibility more seriously by adopting CSR frameworks, but only to appease their critics and without any attention to actual changes in their practices." In other words, voluntary CSR commitments may just be a way for corporations in the developed world to forestall real regulation.

How do we make sure companies are taking CSR seriously? Making social and environmental reporting mandatory and public would help, says Tsutsui. And more importantly, the public needs to hold companies accountable when they fail to keep their promises.

Stay vigilant.