Philanthropy and CSR

In recent years, there have been many forums and discussions on the question: What is the social responsibility of business? Answering this question is not as simple as even most businessmen seem to believe.

The primary problem is that many times, there are many different things that are called Corporate Social Responsibility or  popularly known as CSR. The major cause is that Corporate Philanthropy is often mistaken as being the same as Corporate Social Responsibility.

Philanthropy is popularly defined as “the effort to increase the well being of mankind by charitable aid or donations.” Another definition is that it is an action or institution to promote human welfare.

Business leaders like Bill Gates, founder of Microsoft, have given up their business careers to devote their lives to philanthropy. The Rockefeller, Ford and Rothschild families may not be the dominant business families they once were but their names continue to be recognizable worldwide for the philanthropic acts of the foundations they created.

In the Philippines, Gawad Kalinga, is a shining example of a philanthropic organization. Many private educational institutions have reached their level of excellence through major donations from corporate and private donors.

De la Salle University has been very fortunate for being the recipient of many generous donations. For example, it requires a donation amounting to several hundred million pesos for the naming rights to a college. But DLSU has two colleges named after two extremely generous donors – the Ramon del Rosario College of Business and the Gokongwei College of Engineering. The Henry Sy, Sr. building is reputedly the most expensive and beautiful school building in the Philippines. It houses the largest and most technologically advanced university library in the country. The entire project is said to have cost more than a billion pesos. The Yuchengco building contains DLSU’s main theatre and the Enrique Razon Sports Center is a multi story sports arena.

Certainly many other institutions and legitimate NGOs owe their existence and vibrancy to many corporate donors. I am an advocate of more corporate philanthropy and urge more companies to share their resources with institutions that promote human welfare.

I want to point , however, that philanthropy is not the same as corporate social responsibility. In my book Setting Frameworks: Family Business and Strategic Management, I proposed a definition of CSR which is inspired by Catholic Social Teaching, specifically the papal encyclical Centesimus Annus (Hundredth Year) issued in 1991 by Pope John Paul II. CSR must be defined as “the obligations and responsibilities of business and society, that in the pursuit of the profit motive, the basis for its corporate acts and strategies should include its commitment to protecting the environment, upholding the rights of its workers and contributing to the improvement of the quality of life of its community and society at large.”  Among the most important obligation to its workers is to pay them a “living wage” that will ensure for them and their family a “life of human dignity.”

There are other definitions of CSR that parallel this definition. The World Business Council for Sustainable Development offers this definition: “Continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”

The International Organization of Employers definition: “Voluntary positive initiatives by business that look to go beyond legal compliance in a diverse range of social, economic, and environmental areas.”

One example of CSR often cited is Anglo American, one of the world’s largest mining conglomerates.  According to Carroll, its CEO, the aim of the corporation is to make profits for its shareholders; but, another key purpose is to make real and lasting contributions to the communities in which it operates. The company’s actions may serve as an example to our own mining companies.

Carroll said that, in terms of CSR, it is focusing on several initiatives. One initiative was providing HIV/AIDS testing not just for its workers but also for their families and contractors and their families. HIV was a major disease in South Africa during that period.

The mining company also implemented plans to reduce the use of fresh water in its mining operations. The company also worked with suppliers and partners to ensure that they apply the same sustainability and responsibility standards that it does. Safety was also a priority. To reduce fatalities and injuries and embed safety best safety practices in the culture of the company, it has collaborated with those with a stake in the issue including governments and unions. This has led to a fundamental shift in the company’s safety performance. It even went so far as to shut down a mine that had a bad safety record so that all the personnel could be retrained. This sent a clear signal to employees that things had changed substantially in the company.

Businessmen must accept that they have responsibilities to society that must go beyond philanthropy. It is a fact that businesses are now institutions as powerful or more powerful than governments. It was the reckless neglect of CSR on the part of the financial world that caused the economic and financial meltdown in 2008 that led to economic recessions all over the world.

It is business that determines the price of drugs and, therefore, must assume responsibility for the lack of proper health care for the poor. It is business that hires child labor and causes resulting from indiscriminate logging and mining. It is business that causes pollution in the environment: decides whether land should be used for housing or a golf course; decides what news the public will read or view; what courses universities should emphasize; and, even what movies or plays we will see. The list could go on and on.

Business decision makers must accept personal responsibility for the outcome of any actions undertaken by their corporations. Business owners must be held responsible for smuggling and tax evasion by their companies. Media owners must accept moral responsibility for the type of coverage of their media outlets.

The only alternative to Corporate Social Responsibility is government intervention and regulation which means socialism which business oppose. But how do we answer Pope Francis who wrote:” ...some people continue to defend trickle down theories which assume economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in this world. This opinion, which has never been confirmed by facts, expresses a crude and naive trust in the goodness of those wielding economic power...Meanwhile the excluded are still waiting...We can no longer trust in the unseen forces and the invisible hand of the market...but the economy can no longer turn to remedies that are a new poison, such as attempting to increase profits by reducing the work force and thereby adding to the ranks of the excluded.”

The only answer is for business owners and managers to go beyond corporate philanthropy and sincerely and boldly adopt practices that manifest their Corporate Responsibilities to Society.

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