Saturday, September 30, 2006

Adam Smith Had Nothing to Say on CSR

A nice little piece on Adam Smith's Lost Legacy talking about corporate social responsibility and Smith.

In the article Gavin Kennedy refutes any suggestion that the writings of Smith provide ammunition against CSR.

Corporate Social responsibility (CSR) is a modern proposition. Much of it arising from the problems associated with pollution, or with extractive methods that do not account for the environmental damage a firm’s operations cause to a locality.

Two responses already exist, or can be put under the ambit of laws, namely that polluters pay and that extraction processes must include the cost of restoring the land or sea to the situation before the process commenced. If ‘clean up’ costs make an operation unprofitable, then it should not commence, until technology resolves the clean up requirement.

But CSR that goes beyond these type of requirements, to requiring a firm to engage in social expenditures that do not arise from its operations, when not voluntarily offered, and are really an additional ‘tax’ on its revenues, in addition to the taxes on employee incomes, on local taxes for local amenities provided by local taxpayers, and on its profit taxes and other charges, are problematical. They are also the subject of current debate.

No comments: