2. Coherent Organizational Responsibility

What is meant by having meaning for thought? Imagine someone explaining that they will soon go on holiday. It is easy to get the concept of what a holiday is, and while each person may have a different idea of how to carry out such an activity, there is common understanding of what defines the concept without further information being transmitted. We may ask for additional facts if we care to (will you travel abroad or not?), or the conversation may be terminated there and then, without any confusion being generated. And when several weeks have passed, and a third party asks for the whereabouts of the person we spoke to, we can simply respond by saying that they are on holiday, transmitting the whole concept that we have received to the third party, who can also assimilate it without need for further information.

I say that as someone insufficiently informed of the science, based on general observation. There is no intention to reject the argument that this is exactly the type of society that we should be aiming to build.

Throughout this book, the term organization is preferred. This is simply to emphasize that while we are principally dealing with profit-making economic entities, that is not to say that other types of organizations (be they political, non-governmental, religious, educational, and so on) can ignore their responsibilities for generating negative environmental and social impacts.

Emissions and waste discharge are not commonly referred to as inputs, but as they are part of the costs of producing a product or service, they should be. Genuine responsible behavior should not permit that they are externalized at little cost to the organization, but at great cost to society.

A company that admittedly is there just to maximize profits, which doesn’t have any sense of social responsibility whatsoever, does not fulfill condition #1. It cannot be conceived of as a responsible entity, in the sense CSR theory and stakeholder theory have been portraying over recent decades.

This is hardly a revolutionary act. As far back as 1516, Thomas More wrote a work based on the idea of parallel realities, comparing the Europe of his day with his imagined land of Utopia (More 1966).

For example, a paper mill uses a variety of inputs drawn from different stakeholders, which include finance, raw materials (pulp drawn from trees), labor, energy, and managerial techniques such as quality process and logistics. In line with condition #4, the organization can be very transparent assessing that 90% of the value generated (the paper products) is due to their superior production techniques, quality control processes, strong brand image, and access to cheap and easily available finance, and only a small part to the quality of the pulp. As such, they dedicate a small part of their profits to either forestry renewal projects, or adapting their supply chain to work with suppliers who have implemented sustainable forestry management programs, yet the quantity is insufficient to offset the negative impact they generate by using more wood pulp that they replace. At the same time, they dedicate a large part of the value generated to the financial investors and management team. Such an approach still fails the coherent responsibility test, by not respecting condition #2 of property interdependence (one cannot claim mutual need and take more than one gives back), as it weakens the future interdependence of the relationship. It also fails condition #3 of mutual reflection (a responsible organization cannot generate irresponsible value, in this case negative value for the environment).

The risk is that the use of the term property—something which belongs to something else—can reinforce this misinterpretation.

Nevertheless, any emphasis on genuinely tackling the social and environmental impacts generated in the pursuit of economic returns is welcome.

Wood (1991), building on Wartick and Cochran (1985), devised a three-stage model of Corporate Social Performance (CSP) that emphasized the response level and the resulting outcomes, with the aim of overcoming the blockage of the identification stage. Despite the importance of the journal—Academy of Management Review—where the article was published, and it subsequently being widely cited (close to 7000 citations according to Google Scholar at time of writing), the terminology has not caught on.

Ironically, this argument, so much loved by large corporations and their CSR directors, is an admittance that they are indeed responsible for the enormous amounts or misery and environmental destruction generated during their profit-generating activities. What is less discussed is how readily they accept the limited effect their CSR policies have in easing such problems.

At the same time, such arguments are rarely made regarding other pressing social issues. Consider problems such as domestic violence, drug trafficking, or football hooliganism—an argument that those who cause the problem should be left alone to resolve it, without any intervention by any legitimate authority—would be laughed away by any sane person as ridiculously naive and highly ineffective.

Examples abound, but the case the banking sector in the years before the economic crisis come to mind. Many were praised for their good human resource policies, promoting an adequate world-live balance and good salaries, while at the same time being highly irresponsible in promoting risky financial products so they could make extraordinary rents. These (often fraudulent) practices played an important role in creating the economic recession, which those same bank’s employees did not escape from, ultimately creating a lose–lose situation.

For example, the debate about where philanthropy is a part of CSR is resolved under a coherent responsibility approach. For a company to engage in philanthropy is to be welcomed, but in no sense can that company be considered to be acting responsibility if, at the same time, it is generating negative impacts as it does business. Philanthropy can be considered as related to the community stakeholder, but a coherent approach insists on both on interdependence between stakeholders, and that each one reflects the responsible approach of the organizational. If the community and the environment are interdependent, how can one be rewarded while the other is punished, and the organization claims to be coherent? How can the organization claim to be responsible, and push to see that responsibility reflected in the community it sponsors, while irresponsibility is reflected in the environment it destroys? A coherent approach does not reject philanthropy; instead, it actively supports it. What it does not allow is for companies to hide behind philanthropy instead of taking responsibility for other actions.

Wood (1991) spoke about observable outcomes when discussing CSP, but more in reference to the orientation of the firm regarding social impacts, the programs it develops, and subsequent polices on social issues and stakeholder interaction.

It’s important not to over-estimate this. In 2016, 6903 organizations registered a report with the GRI. This has to be compared against more than 60,000 MNCs in the world, with over 500,000 affiliates (Kordos and Vojtovic 2016).

It is not possible to understand the relations of production and exchange of a modern economy without taking into account the part the environment plays (Rodriguez et al. 2018).

Payments to government bodies who ‘own’ the natural resource for extraction and exploitation rights are not the same thing. Realistically, these payments are more akin to paying a supplier just for the rights to transport the material away from their factory, plus a small percentage of sales, without having to pay for the actual production of the material.

This is known as volition bias and is used by companies to justify their limited response (Mazutis and Eckardt 2017). The argument is that the company’s room for maneuver is limited, since the rules are made by others, and the organization can do no more that obey them. However, since many of these rules permit certain levels of harm, for example carbon emissions, the irresponsible generation of negative impacts continues apace.

This was not the actual vision statement, rather a rallying cry to drive forward the vision and mission.

Without, however, offering any hard goals on how that money would be invested.

Now the Bureau of Ocean Energy Management.

BP pleaded guilty in 2007 to negligent pipe discharge for the Alaska spill. Prosecutors argued that this was due to neglect in maintaining the pipes, and that BP was aware of this neglect. In the case of the Texas City oil refinery fire in 2005, where 15 employees were killed and more than 180 injured, the principal findings (The Mogford Report) emphasized cost cutting, a lack of corporate oversight on safety and accident issues. Amazingly, BP was fined almost US$80 million in 2009 for failing to implement the safety procedures identified as being key aspects of the accident. The company stated it would fight the fine, but in August 2010 (just four months after the Deepwater Horizon disaster), agreed to pay most of it (BBC 2010).