Corporate Community Involvement

What makes a good corporation?  Ethicists say it is one that makes a better community, they want corporations to be "good citizens".  Their language is Corporate Citizenship or Social Responsibility, their tools for ensuring the desired outcome are audits of the ethical behaviour of corporations, particularly their supposed environmental and social obligations.

They argue that corporations need to move beyond their traditional role of producing goods and services responsibly.  They observe that corporations are delivering services that in the past were provided by government.  They interpret this to mean that governments are withdrawing from providing for the needs of citizens.  These arguments and interpretations are without foundation.  For example, businesses involved in the Job Network must carry out government wishes.  Matters that arise from the specific performance of the contract will be taken up with the contractor, but ultimately any fault with employment services should be laid at the feet of government.

As for government withdrawing from the business of government, it simply is not true.  In the setting of a mature economy, the numerous privatisations of the last decade constituted a restoration of government to its core business, as an agent of redistribution and keeper of the rules.  It no longer had business being in business.  Similarly, business has no role in the "community".  It is not a citizen in the sense that an individual is.  Its role is far more important, and far more constrained than either citizen or government.

The Prime Minister's Community Business Partnership is a response to these canards of government withdrawal and community responsibility.  The recent report of the Centre for Corporate Public Affairs on Corporate Community Involvement very delicately, using all of the language of ethics, suggests the corporate response to the new world of partnerships is "strategic".  To be less delicate, corporate community involvement and social and environmental audits are devices corporations use to keep NGO's off their backs.  They are the price of doing business in a post-material world.

To the extent that community involvement can enhance a corporation's reputation it will undertake such tasks as are necessary.  The type of involvement will vary with the type of business.  Local producers relying on local labour supply or requiring permits to operate will have a premium on local involvement.  Rio Tinto's partnership with the World Wide Fund for Nature, Western Mining Corporation's with the Royal Geographical Society and Alcoa's with Landcare are examples.  Those that rely on a young mass market will concentrate on causes, like Kellogg's with Kid's Help Line and The Body Shop with the Australian Youth Foundation.  Others are more traditional, like the Macquarie Bank's donations to a charitable foundation.  None of these is bad, they may even be productive, but the product of corporations is not "goodness".

The ethical audit game is a ritual designed to allow the corporation to get on with its real obligations.  These are not directly to the community or to the environment or to human rights.  They are to shareholders and the laws that govern corporate behaviour.  Such laws have already incorporated all of the values the community wishes.  Doubtless there are more laws on the way, but given the extraordinary propensity for democratic governments to write a law for every occasion it is hardly worthwhile trying to prejudge, as do ethical audits, the next piece of legislation.

Corporations are commercially responsible and liable for the goods and services they produce for their customers.  They are industrially responsible for and contractually obligated to their employees.  They are financially responsible for and legally obligated to their shareholders.  This is a lot and enough.

Ethical audits may well undermine the accountability to the people and issues that count the most:  shareholders, employees and customers.  They give standing to those groups who have none, but who seek to capture a piece of the corporation for their favoured issue.  They will push corporations down paths that they should not take and would not be required to take by a formal regulatory process.

An alternative ethical audit would ask, does the corporation comply with the law?  Does it fulfill product claims?  Is there sufficient information available about its operations to make informed consumption and investment decisions?  Good information is the lifeblood of the marketplace, why constrain that information by some predetermined, and "tick the box" audit of someone's imposed values?  How does a corporation handle the bad times, like customer complaints, product recall, employee compensation, product liability and so on?

Honesty is the best policy, any more is just politics.

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