Most Executives Believe in the Business Case for CSR. So Why Don’t They Invest More in It?

Companies achieve remarkable things. They create products for customers, financial returns for investors, and jobs for employees. At the same time, they develop medications that cure deadly diseases, technologies that bring internet access to every corner of the earth, and, by making more and more amenities and technologies easily affordable, they steadily increase our general quality of life.

But companies also do terrible things. They set up workplaces such that employees are dying for a paycheck, they cause environmental catastrophes such as oil spills or deforestation, and they sell our data to whoever bids the most for it, possibly to manipulate us not only to buy products but also to vote for specific candidates in political elections.

Given companies’ track record in achieving great things, the question is not whether companies can be a force for good. The question is, why don’t all executives lead their companies to be a force for good? In other words, why do some executives refrain from leading their companies in socially responsible ways, and what would motivate them to invest in corporate social responsibility (CSR)?

The typical way to answer these questions is to invoke the business case for CSR. In other words, to spur corporate investments in environmentally friendly products or safe working conditions, CSR advocates believe, it is crucial to provide business executives with evidence that such investments benefit their company’s bottom line. In turn, the general premise is that, if executives don’t invest in CSR projects, what’s holding them back is that they don’t believe in the business case of such projects.

This logic relies on three problematic and thus far untested assumptions. The first assumption is that most business leaders do not believe in such a business case. The second is that they would start believing in the business case if confronted with factual evidence that the business case indeed exists. And the third assumption is that they would invest in socially and environmentally responsible initiatives once they had come to believe in this business case.

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