The Smoke and Mirrors Game of Global CSR Reporting: Issues and Fixes

Corporate social responsibility, or CSR, is a deeply embedded concept in Western society. It embodies the idea that corporations have an ethical responsibility to society beyond financial return and beyond their immediate shareholders. CSR organizations, contractors and reporters have proliferated in recent decades as activist pressure around labor rights, equity and environmental destruction including climate change has ramped up.

This book examines international regimes working to monitor CSR, such as The Global Compact and the EITI. We find the organizations rife with conflicts of interest, lacking the means of verifying information reported by corporations, and unable to enforce transgressions of the largest corporations in any meaningful way. We then turn to the burgeoning reporting industry that informs socially responsible investment, using a test case of severe human rights violations leading to death. In these cases, we find that while the incidents are reported, they are obscured in the reporting system and have very tangential and fleeting effects on CSR ratings. This underscores the overall lack of accountability for corporations that violate their ethical commitments, and the lack of credit for those who step up to them.

We close the book with a series of suggestions about how to reform the CSR regime so that ethical investors and consumers can begin to have confidence that the corporations they select to support will begin to live up to their promises. Until there is transparency and objectivity, CSR will remain a smoke-and-mirrors game of marketing over ethical responsibility.