The Corporate Social

Responsibility Debate
(August 9th, 2011)

Corporate Social Responsibility (CSR), also known as corporate conscience, is a

commitment to integrate social and environmental concerns into a companys business
model. CSR incorporates public and environmental interests into corporate decision-
making.
Proponents of CSR believe that a corporation should not only be responsible to
shareholders but also to the environment and company stakeholders. These stakeholders
may include employees, customers, communities, and related groups that support the
organization. Approaches to implementing CSR include community-based development,
creating better business practices to mitigate risk, and philanthropy.
Economist Milton Friedman presented the classic objection to CSR in 1970. Friedman
argued that the success of a free-market economy is based on the premise that the only
social responsibility of a business, provided it operates lawfully, is to use its resources and
engage in activities designed to increase its profits. Friedman equated CSR to spending
someone elses money for a general social interest. Doing so, he argued, would be
usurping a political role by imposing taxation (in the form of CSR policies) on shareholders.
Such a role is appropriate for a socialist government, not a corporation, according to
Friedman.
Central to the CSR debate is the question of whose interests a corporation ought to serve.
This question, known as the shareholder-stakeholder debate, pits anti-regulation
economists like Friedman against those who believe companies should be bound by
ethical and international norms (and not only laws) to protect the interests of all
stakeholders. CSR has gained increased importance in the last two decades due to a new
phenomenon called ethical consumerism -- the practice of educated consumers
purchasing only products they believe are made ethically. As a consequence, many
companies are now being pressured to adopt CSR strategies regardless of whether they
genuinely care about social responsibility or not.