Corporate Social Responsibility

and Globalization
Prof. Lok Sang Ho
Centre for Public Policy Studies Lingnan
University
Peoples’ Council for Sustainable
Development
 Why CSR?

Multinational Companies today have

become extremely powerful, and are not
like any of the private enterprises that
existed, say, two decades ago;

To put it mildly, the future of humanity is

very much at their mercy.
CSR and Free Market Economics
Milton Friedman has argued that the social
responsibility of business is simply to
maximize the rate of return to the general
shareholders, consistent with the law.
This Legal Approach implies Regulation.
If Regulation were effective and
appropriate, Friedman’s approach is fine.
 Limitations to the Regulatory
Approach
Transnational Regulations are notoriously
ineffective because there is no one to enforce
them;
National Regulations are often not enforced
because of widespread corruption in many
developing nations;
Globally needed regulations are often not even
in place because of short-term behavior of
people in power or because of poverty.
Examples of Regulatory Failures
Bhopal disaster and Union Carbide—
compensations by Indian standards may be
affordable and “within the law”, but are we
content with having had the disaster?
Human cost of coal mine accidents in China;
Politicians and their constituents may not be
sensitive to pollution that drifts across national
borders and causes only small short term
problems at home
Advantages of the CSR Approach
Often more effective than the regulatory
approach;
CSR implies a constant dialogue between the
corporation and the community, and allows
considerable leeway for implementation that
may reflect the changes of the times;
The CSR approach allows struggling small and
medium enterprises greater room for survival
How much is Perfectly Legal worth?
David Cay Johnston, a Pulitzer Prize-
winning reporter for the New York Times,
reveals how the government provides the
"super rich"--from private individuals to
profitable corporations—-to hide their
wealth, to defer or evade tax payments,
and to pass the bill to law-abiding middle-
class Americans.
 CSR and the Bottom Line
If corporations operate within the law and
maximize profit by disregarding industrial
safety, because industrial safety is more
costly than paying compensations when
accidents do occur, is this acceptable?
If corporations cause serious
environmental damages but the law allows
that, is this acceptable?
 Supply and Demand
When numerous suppliers vie for the business
Big Corporations can keep costs very low and
profits very high;
When hundreds of thousands of workers vie for
the scarce jobs Big Corporations can pay very
low wages and raise their profits;
The low costs and wages may have nothing to
do with “low productivity”, and are often the
result of the working of supply and demand.
 Human Costs
When profits are the result of huge human
costs, they are unhonorable and the world
should be made aware of it;
“Productive and hardworking but poor”
should be history;
Avoidable industrial disasters should be
history
 Sustainable CSR: Corporations
generate sufficient profit to sustain
their operations over the long term
while:

paying their workers and providing a clean

working and safe working environment
paying their suppliers reasonable prices
paying due respect to the environment
 A Better World
With a living wage, hundreds of thousands
of manufacturing and service workers will
be able to unleash their newly found
spending power on goods and services,
and this will cause a BOOM in investment
and a new prosperity
More inequality and less waste
A sustainable, happier and more peaceful
world.