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 Prizewinning 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 middleclass Americans.

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?

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.

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

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.