|

Wherefore art thou, corporate social responsibility?

by Stephen Hesse

As an American lawyer, I know a bit about working in a profession that has had serious image problems.

My law-school classmates perversely enjoyed telling lawyer jokes featuring sharks and reptiles and, for a long time, when I told people my profession they responded with grimaces that were equal parts sympathy and disdain. So these days I can imagine what it’s like to be a banker or a corporate CEO, before whom mothers pull their children aside and avert their eyes.

This is not to say that all bankers and CEOs are out to sack and pillage. But last year, when top executives at major U.S. banks, including Bank of America, Citibank and Goldman Sachs, gave themselves bonuses totaling billions of dollars just after the U.S. government used taxpayers’ money to prevent their institutions from melting down, the consummate capitalists got deservedly bad press.

And now, with global economies continuing to totter and the BP disaster heightening public awareness, the policies and actions of corporations are coming under closer scrutiny. There are even indications in the United States that positive perceptions of the term “capitalism” are in decline.

Commenting on three recent polls conducted in the U.S., Prof. Charles Derber of Boston College has found some interesting changes under way in American thinking.

“The polls in this era do not suggest a socialist country, but not a capitalist-loving one either. This is not a ‘center-right’ America, but a populace where almost 50 percent are deeply ambivalent or clearly opposed to capitalism,” Derber wrote in a May 18 commentary that can be found on CommonDreams.org.

“The story gets more interesting when you look at young people, the ‘millennial generation’ currently aged between 18 and 30. In a Pew poll, just 43 percent of Americans under 30 describe ‘capitalism’ as positive. Even more striking, the same percentage, 43 percent, describe ‘socialism’ as positive. In other words, the new generation is equally divided between capitalism and socialism,” he noted.

“The Pew, Gallup and Rasmussen polls come to the same conclusion. Young people cannot be characterized as a capitalist generation. They are half capitalist and half socialist. Since the socialist leaning keeps rising among the young, it suggests — depending on how you interpret ‘socialism’ — that we are moving toward an America that is either center-left or actually majoritarian socialist,” Derber concluded in his commentary titled “Capitalism: Big Surprises in Recent Polls.”

If my law-school peers are any indication, I’m guessing that most bankers and CEOs are not too terribly troubled by the flak their professions are taking. However, as the Pew and Gallup polls were conducted in April, and the Rasmussen poll a year earlier, it is not unlikely that cynicism will have grown further in the wake of the Deepwater Horizon tragedy that occurred in the Gulf of Mexico on April 20.

As Derber pointed out, “deep concern for the environment” and “belief that big business is corrupting democracy” are now “strong and relatively stable” perceptions in the U.S. And with the Gulf of Mexico facing decades of contamination, Americans could become even less likely to accept apologies and excuses from those who profit richly from dirty industries.

Of course, when the oil stops flowing — and there are indications a recent capping operation may be successful — sunbathers and fishers will gradually return.

But if past oil spills are any indication, the damage in the Gulf will take years to mend.

“On the rocky beaches of Alaska, scientists plunged shovels and picks into the ground and dug 6,775 holes, repeatedly striking oil, still pungent and dangerous a dozen years after the Exxon Valdez infamously spilled its cargo. More than an ocean away, on the Breton coast of France, scientists surveying the damage after another huge oil spill (from the Amoco Cadiz in March 1978) found that disturbances in the food chain persisted for more than a decade. And on the southern Gulf coast in Mexico, an American researcher peering into a mangrove swamp spotted lingering damage 30 years after that shore was struck by an enormous spill,” Justin Gillis and Leslie Kaufman noted in a July 17 New York Times article.

How quickly the Gulf rebounds will generate endless speculation and years of research, but one of the most interesting spinoffs of this latest, and ongoing, disaster has already been the heightened attention being given to corporate malfeasance, particularly in the fossil-fuel sector.

Earlier this month, I received an e-mail from MoveOn.org, a U.S.-based political-action advocacy group. That e-mail outlined the group’s “Top 10 Corporate Outrages.” Four of the 10 are fossil-fuels related: * 1. “Exxon Mobil made billions in profits, and yet paid not one dime in federal income taxes in 2009. * 2. “The 2005 energy bill had a little-known provision, commonly called the Halliburton Loophole, which exempted natural-gas drilling from the Clean Water Act. The result? Water so contaminated that you can light it on fire. * 3. “Massey Energy was cited more than 2,400 times for safety violations in its mines, but chose not to fix potentially lethal problems because low penalties meant it was cheaper to simply keep paying the fines. This spring, 29 miners were killed in an underground explosion at a Massey mine in West Virginia. * 4. “BP — a company with a record of 760 drilling-safety and environmental violations — was granted safety waivers in order to operate the deep-water drilling rig that has ultimately created the worst environmental disaster in U.S. history.”

Reading through these, one wonders how so-called Big Oil and Big Coal have managed to convince their shareholders that corporate social responsibility is unnecessary. Or perhaps the shareholders simply don’t care.

Another thought comes to mind as well: Who harbors greater culpability, the oil and coal executives or the government regulators who let these corporations get away with murder?

Government regulators are paid to be public servants, protecting us from threats we cannot know. That abuses of the public trust are allowed, repeatedly, confirms that far greater transparency is essential — in business and government.

Last weekend another e-mail arrived, this one from Foreign Policy magazine, with an article titled “The World’s Ongoing Ecological Disasters.”

“BP appears to be finally getting the oil spill in the Gulf of Mexico under control. But many of the world’s greatest environmental catastrophes continue, with no end in sight,” Joshua E. Keating wrote.

At the top of Keating’s list were deadly fossil-fuel crises in Nigeria and China.

“The Deepwater Horizon incident may have been the worst oil spill in U.S. history, but it pales in comparison to the ongoing catastrophe that has afflicted Nigeria’s Niger River Delta over the last five decades. As many as 546 million gallons of oil are believed to have spilled since oil exploration began in this region: the equivalent of an Exxon Valdez spill every year,” Keating pointed out in his July 16 piece.

In China, meanwhile, the killer is coal.

“The country’s mining sector is extremely dangerous, killing as many as 13 miners every day. But nowhere is the danger of China’s out-of-control coal addiction more evident than in the 62 raging underground coal fires that have burned in Inner Mongolia since the early 1960s. Covering an area more than 3,000 miles (4.800 km) long, China’s northern coal fires are estimated to destroy as many as 20 million tons of coal per year, more than the entire annual production of Germany. According to some estimates, these fires could be the cause of up to 2 to 3 percent of the world’s carbon emissions from burning fossil fuels,” Keating explained.

Little wonder that recent surveys have found the public increasingly concerned about environment degradation and social justice. But are we internalizing these concerns, or would economic good times push them to the back burner once again?

Eventually even the most cloistered politicians, regulators, bankers and CEOs will realize that they inhabit the same compromised planet. The crux of the problem is that they can, and likely will, isolate themselves in denial far longer than the rest of us.

Stephen Hesse is a professor in the Chuo University Law Faculty and Director of the Chuo International Center. He can be reached at stevehesse@hotmail.com