NAME OF STUDENT: Marielle Buscato

ASSIGNMENT 2: The Case Against Corporate Social Responsibility

COURSE: Good Governance and Corporate Social Responsibility

TERM/ACADEMIC YEAR: 1st Term, AY 2022-2023

FACULTY: Esmeraldo D. Dimaculangan, Jr., Ph.D.

DATE SUBMITTED: October 10, 2022

..............................................................................

Introduction

It is amusing how many business people believe shareholders only care about money. An
appeal to corporate social responsibility will almost always be ineffective because executives are
unlikely to act voluntarily in the public interest and against shareholder interests, according to
Karnani's main argument in the article. This is because "companies that simply do everything
they can to boost profits will end up increasing social welfare." The question is, are we
responsible for taking others into account when we take action in word or deed?

Content of the Article

As presented, CSR is not really in question as a financial calculation because, like any
other business component, it should enhance the delivery of higher economic returns over time,
and evidence supports this. In my opinion, the trade-offs between the short and long-term
performance of the company are the main flaws in this argument. The widespread consensus is
that shareholders, who are by definition focused on the long-term, desire to maximize short-term
profit at whatever cost. Yes, there is a component of giving up short-term profit for larger
long-term benefit, which is still in the best interests of shareholders.
The second flaw would be that implementing economic or social policies will prevent
governments from taking action on their own. The core of this argument opposes corporations
against governments and civil society, saying that each has a responsibility and ought to remain
on their sides and never meet. However, what we are currently witnessing as the concept of CSR
develops, is the meeting of these roles, the coming together of complex interactions through
which business affects law and law influences business.
Reflection

Although Karnani made some valid arguments, such as that certain executives' primary
responsibility to shareholders, businesses' goal for short-term profit rather than long-term gain,
and ineffective managers or CEOs, I disagree with Dr. Karnani's perspective on corporate social
responsibility. Despite these criticisms, CSR is not a fundamentally wrong idea; instead, it just
has some shortcomings that can be controlled and fixed, like any new, developing practice.
In one of the articles of Reeves (2013), he claims that businesses and managers interested
in incorporating CSR into their core values are still seeking profits—but profits built on moral
grounds. I also agree with Reeves' point that the definition of CSR in Karnani's article does not
paint an accurate picture. It is not necessary for managers and executives to "sacrifice" profits in
order to run a socially responsible business. In actuality, the other three CSR principles are built
on the foundation of economic responsibility or being profitable. A company may have to forgo
short-term profits to achieve greater long-term profits, but this does not mean that principles
must be compromised to achieve profitability.
In the CSR business model, philanthropic responsibility is also very much voluntary and
discretional. Karnani's claim that "executives are unlikely to act willingly in the public good and
against shareholder interests" is both untrue and out-of-date, according to Fabian Pattberg. He
said, "History and our present dire situation, economically and ethically, has shown that this is
not the case. Otherwise, there would not be an outcry and need for more responsible business
practice."

Conclusion/Recommendation

Therefore, I believe that most businesses have naturally grasped their obligation to
account for their influence and, if feasible, help improve conditions. This transition did not occur
because CEOs suddenly desired to protect the environment; rather, the movement toward
sustainability resulted from a widespread awareness of scarcity and the innate need to preserve
our resources.