It has become next to impossible to speak about business in North America today without talking about corporate social impact. It’s also sometimes called corporate social responsibility; shared value; corporate purpose; environmental, social, and corporate governance; or the triple bottom line. Despite some differences between terms, the basic premise of them all is the same: companies must serve more than their shareholders. They are accountable to a range of stakeholders, including their employees, their suppliers and distributors, their consumers, and the communities in which they live. They must, in other words, have a positive impact on society at large — on the world beyond the balance sheet.
“Increasing numbers of social entrepreneurs all over the world are using business to help tackle social problems,” the Thomson Reuters Foundation observed in a 2019 study on the leading countries for social impact work. Canada was ranked at the very top that year, and the evidence is everywhere on our televisions, billboards, and social feeds — from Bell’s “Let’s Talk” campaign (“Creating positive change and supporting Canada’s mental health”) and Telus’s “Let’s Make the Future Friendly” promise (“Using our technology for good”) to Lululemon’s “Impact Agenda” (“Be human. Be well. Be planet”).
Of course, this isn’t only, or even primarily, a Canadian phenomenon. The topic now regularly drives the agenda at the World Economic Forum at Davos, and countless global giants have bought into the idea. Integrated impact is now seen as a gateway to a new generation of consumers, who say they will support companies that share their concerns for social issues. It also helps attract potential employees, especially those whose skills are in high demand and who may avoid working for companies that don’t display enough passion for solving the world’s problems. The practice, therefore, is seen as win-win-win: good for the issue being tackled, good for the consumer and employee, good for the business.
Companies have long supported good causes, but the more specific turn toward social impact ramped up after the 2008 financial crisis, when it was seen as a corrective to a dangerously distorted market system. Then the idea became supercharged during the Trump presidency, when it allowed businesses and brands to align themselves with those who opposed the administration’s reactionary policies and populist rhetoric.
As social impact activities have grown, so too have the critics. Some argue that a CSR or ESG push is a cynical enterprise that allows businesses to display a veneer of goodness while covering up unsavoury practices. A company may deceptively suggest its products are environmentally friendly when they aren’t (so‑called greenwashing), or it might demonstrate a commitment to diversity and inclusion in its hiring practices at home while operating unsafe facilities in low-wage jurisdictions overseas. Plenty of household names have been called out for such hypocrisies.
Other skeptics note that corporate leaders who take public stands on social issues are implicitly exempting themselves from examining their own roles in creating the very problems they are hoping to solve. And while this line of thinking is more accurately a criticism of capitalism, the argument is nevertheless put forward as a critique of corporate social impact.
There are also key business-focused criticisms of social impact, notably that it makes the job of running a company extraordinarily difficult and therefore lessens the likelihood it will do well. Not all go as far as Milton Friedman, who claimed that “the social responsibility of business is to increase its profits,” but these critics believe that even a business unfettered from shared-value platitudes is a force for good. They have considerable justification, in that wealth creation, innovation, and employment are social benefits. What we do with that wealth, how we share that innovation, and how we regulate labour conditions are matters for citizens, through elected officials, to decide. Business has no business in such matters.
From 2016 to 2019, I worked at a hybrid consultancy and marketing agency that helped publicly traded and privately held companies and other organizations to integrate social impact into their strategic plans, their operations, and their marketing efforts. In my experience, the field was full of people who genuinely wanted to improve specific outcomes and to make our society a better place to live. I still count some of them as friends.
But I left the field disillusioned. Despite all the good intentions, I came to believe that corporate social impact will end up doing more harm than good. Instead of increasing trust in capitalism, it will deepen a cynical view of it. Instead of promoting the further adoption of progressive views, it will exacerbate dangerous cleavages in society.
As the phenomenon of corporate social impact makes gains in executive offices and boardrooms, the lengths to which businesses will go to demonstrate their fealty to social issues continues to grow.
Companies are increasingly eager to show that social impact is embedded deeply in their strategies, plans, and cultures — that it’s part of their DNA, to use the current lexicon. Among Canada’s largest corporations, for example, RBC holds that “creating a positive social impact is integral to how we do business.” Loblaw states that “as Canada’s food and pharmacy leader, we create positive environmental and social change.” Sun Life is committed to “making life brighter for our employees, Clients, and communities.”
And since activists now commonly use social media to humiliate companies that express insufficient zeal toward progressive ends or, worse, that exhibit hypocrisy, companies increasingly tout their impact efforts as corporate obligations. After all, an obligation isn’t a conditional belief but a binding commitment. At a time when authenticity is seen as a paramount virtue, an obligation to such-and-such a cause is a way of showcasing that ideal.
Given these expressions of corporate obligation from some, consumers, employees, and activists are, in turn, more likely to demand them from others. So when the 2020 Stop Hate for Profit campaign promoted an international boycott of ad buys on Facebook (for one month!), to hold the company accountable for the hate speech and racism that exist on its platforms, Canada’s Big Five banks added their names to the list of 1,200-plus signatories. No dummies, they did not want to be on the wrong side of an issue that was dominating Twitter feeds. A spokesperson for RBC told the CBC the financial services company “understands that systemic racism has disadvantaged Black people, Indigenous people and people of colour, and the bank intends to combat that.”
Great! you may be thinking. We need more voices standing up for equality and justice, not fewer. It’s a good thing when Bay Street lends its weight to these and other pressing social matters, isn’t it? Well, not if it ends up increasing cynicism about business.
In March, Coca-Cola was targeted for a boycott after the 129-year-old company declined to sign on to an open-letter campaign that pledged corporate opposition to a Georgia law creating new voting restrictions. Passed by the state’s Republican-controlled legislature and based on the lie that the November 2020 election was stolen from Donald Trump, the Election Integrity Act of 2021, which many predict will make it more difficult for Black voters and many Democrats to cast ballots in urban and suburban areas, is yet one more front in America’s internal cold war.
Coca-Cola said it had “spoken up in support of the foundational right to vote,” but it wouldn’t go further, at least not publicly. That was insufficient for some. “Our position is they’ve not lived up to their own words,” said Reginald Jackson, a bishop in the African Methodist Episcopal Church, which led the boycott. “By your silence you’re actually being complicit.” In other words, Coca-Cola had an obligation to act against the legislation.
Companies have long been on the receiving end of boycotts and consumer-led opposition campaigns. But Coca-Cola’s public embrace of corporate social impact raised the stakes. Even though the company’s impact efforts are focused in the area of environmental sustainability (“Our planet matters”) and not racial justice, the broader CSR logic dictates that self-declared socially minded businesses must stand up for what’s right — just as the Canadian banks did in combatting racism on Facebook. You want to wrap yourself in the cloak of goodness, Coca-Cola? Here’s your chance. But that’s where things get complicated.
The implication in this case is that, as a Georgia-based company, Coca-Cola has a special duty to act against a clear injustice in the state. And let’s say, for argument’s sake, that Coca-Cola agreed. Let’s say that it signed the letter and publicly made clear its strong opposition to voting restrictions. But Georgia is just one state of several that are considering or have already passed similar measures. If voting restrictions are an injustice in Georgia, they are surely an injustice in Florida and Texas. Is Coca-Cola obliged to take a stand in those places, too? Does it need to lay down a marker and oppose restricted voting anywhere in the United States? As an iconic American brand, perhaps it does. But is a company that’s active in some 200 countries similarly obliged to combat voting restrictions anywhere and everywhere it sells its products, like Venezuela or Vietnam? Is Coca-Cola morally bound to take a stand against China? If it isn’t, why not? If it doesn’t act in China but does in Georgia, isn’t the company being parochial and hypocritical?
Beyond that, who exactly is obligated? Despite corporate personhood laws, Coca-Cola isn’t an individual like you or me. It’s a publicly traded company with thousands of shareholders and tens of thousands of employees. So to whom, exactly, does the obligation to oppose voting restrictions belong? To its chief executive, James Quincey? He’s not the company; he’s an agent of its owners. To the board of directors? Are Coca-Cola employees and shareholders likewise obligated to act against such laws? Clearly, they aren’t. But then, in whose name would Coca‑Cola be acting?
Let’s say the company gets past these concerns and does take a stand against restrictive voting laws everywhere. After all, it’s a just cause, and the company decides there’s no room for debate on the issue. Does this courageous stance then give Coca-Cola a pass on its contribution to the obesity epidemic? Or to environmental concerns? The company is the world’s largest producer of plastic waste. Isn’t it similarly obliged to do something about that? While voting restrictions are detrimental to the proper functioning of democracy, sugary drinks are detrimental to our health, and plastic waste is terrible for the environment. Coca-Cola has an obligation on all of these issues, you might say. If so, is there a hierarchy of importance attached to them, and who decides that ranking?
And do obligations on voting rights (along with human health and the environment) extend to taking actions that may hurt the bottom line? It’s one thing for Coca-Cola to lose market share to a plucky competitor that brands itself as the cola maker with a conscience — the beverage company that always stands up for what’s right. It’s quite another to lose market share for reasons that have nothing to do with the company’s core business. Perhaps this helps explain why McDonald’s has also not taken a public stance on voting rights. “We chose not to weigh in on it,” the company’s CEO, Chris Kempczinski, told the New York Times in July. “We’ve talked about jobs and opportunity. We’ve talked about helping communities in crisis. We’ve talked about planet. And we’ve talked about supporting local farmers and ranchers. Those are the areas that we’ve said are specific to our business where we feel like we’ve got a role to play. If it’s outside of that, then there has to be a really good reason that us saying something can also be part of the solution.”
This is a thorny problem with corporate social impact. Companies, especially well-established and publicly traded ones, have multiple commitments to a range of stakeholders. That makes it exceedingly difficult for them to take cut-and-dried stances on social issues, even if they may be right on the merits of the case. If an organization doesn’t think through the contradictions of its positions, standing up for a cause isn’t so much a principled stand as it is theatre: a performance where the corporation follows a script and everyone — the activists, the boardroom, the consumers — agrees to suspend disbelief in order to feel virtuous.
If a company does think through the contradictions, it often ends up with an incremental approach to social change, which can be at odds with the tenor of the times. Let’s come back to those five Canadian banks, which face this dilemma all the time. Despite growing pressure to divest from the fossil fuel economy, how can businesses that are systemically important to the Canadian economy — to corporate lending, job creation, financial markets, retirement savings, and so on — declare they’ve decided that the environment trumps everything else? That they’ll simply get out of a major line of business? Despite listing sustainability as a key social impact goal, they can’t.
Having it both ways increases the likelihood that the entire exercise is perceived as cynical: that obligations to the greater good are empty promises, nothing more than a progressive veneer that masks business as usual. In this manner, corporate social impact raises expectations that businesses will inevitably struggle to meet. And that does not foster trust in capitalism: it breeds contempt.
Beyond cynicism, the Coca-Cola example points to another problem, one that doesn’t get the attention it deserves, even though it’s far more pernicious.
Too often, the logic of corporate social impact is presented as a simple binary: if a business or at least one of its brands (which, let’s be honest, are not always connected in the consumer’s mind) supports my view on an issue and is prepared to do something about it, then I will reward it with my purchases. If another company doesn’t, I’ll steer clear. Call it voting with your wallet. Companies find social impact seductive for the flip side of the same coin: it’s a way of building loyalty among a cohort of consumers who are moving into their prime spending years and whose command of social media pays dividends for those businesses and brands they like — or think they like.
This mutual attraction is based, at least in part, on a growing belief that governments can no longer solve complex social problems. Consider Patagonia. The clothing company has often been a leader in corporate social impact efforts (“Don’t buy this jacket,” it urged consumers in a Black Friday ad in 2013), and two years ago it changed its mission statement to “We’re in business to save our home planet.” As Patagonia’s CEO, Rose Marcario, told Time magazine in 2019, “Business has to pick up the mantle when government fails you.”
In 2018, Larry Fink wrote an open letter to CEOs that has since become something of a social impact lodestar (the Maple Leaf Foods boss Michael McCain, for one, frequently cites it). As CEO and chair of BlackRock, the world’s largest asset manager, Fink put it this way:
We also see many governments failing to prepare for the future, on issues ranging from retirement and infrastructure to automation and worker retraining. As a result, society increasingly is turning to the private sector and asking that companies respond to broader societal challenges. Indeed, the public expectations of your company have never been greater. Society is demanding that companies, both public and private, serve a social purpose.
Leaving aside that governments of all stripes have always struggled to solve complex social problems (they’re hard to solve precisely because they’re complex), how in the world does Fink, or any of his acolytes, know what society is demanding? He doesn’t, and they don’t. What they are reacting to is the importance that many younger people attach to certain issues, along with their views on them, which tend to be far more progressive than those of older cohorts. Fink could have said that “many younger people” are making these demands, but that doesn’t have the same ring of universal truth to it. Nor does it carry the weight of obligation. Saying “society” implies that everyone, or at least the overwhelming majority, agrees with Fink’s proposition.
A number of companies did, in fact, sign on to the letter campaign that Coca-Cola declined to join. Those signatories agreed that “for American democracy to work for any of us, we must ensure the right to vote for all of us” and pledged “to defend the right to vote and to oppose any discriminatory legislation” that may limit access to voting. And a month after the Georgia letter, another campaign targeted a similar Texas law.
If “society” were indeed demanding that companies serve a social purpose — in this case, the admirable position of preserving voting rights — we could assume that there would be little opposition to these campaigns. But that’s not the case. Predictably, there was a backlash against many of the companies that signed the letters, mostly from pro-Trump politicians. One called out “woke corporate hypocrites,” while others threatened unspecified penalties for businesses that didn’t stay in their lane. To say that people who opposed the campaigns are the usual suspects misses the point: if there were no advantage in criticizing the companies that stood up for voting rights, these politicians wouldn’t have done so. But the fact that they did clearly means “society” isn’t of one mind on this issue. The letter-writing campaign, a fine example of corporate social impact initiatives, is merely politics by another name.
The desire not to debate voting rights — or other fundamental matters that may be protected by the U.S. Bill of Rights or the Canadian Charter of Rights and Freedoms — is understandable but misguided. As much as we may wish it weren’t the case, some people still want to argue over issues many of us thought were settled. Whether we like it or not, liberal societies debate those things they choose to debate. And as odious as we may find the beliefs and opinions of those with whom we profoundly disagree, we still have to live with them. However, adherents of corporate social impact, like supporters of past progressive movements, would prefer a world where they did not have to debate their fellow citizens at all. Their hope is that the sheer weight and scale of the corporate world lining up behind a position will tip the scales in its favour. Their hope is that the huge power of brands can settle things once and for all.
This would be a mistake. The proper place to manage political differences is through electoral politics, as citizens, and not through the marketplace, as consumers. Yes, democratic politics is frustratingly slow. Yes, democratic politics is having trouble getting big things done. Yes, it’s increasingly dominated by people who punt on big issues. Yes, yes, yes. But we don’t have a better way of hashing out our differences. Too often, progressives betray an anti-democratic impulse that seeks to impose solutions on others rather than persuade them of their positions on the merits.
Might a competitive marketplace sort all this out — with certain businesses catering to progressive views, while others are supporting traditional ones? Well, that would be the worst outcome of all. If everything, including the news you watch, the science you agree with, and the cola you drink, becomes a partisan choice, everything risks becoming a raw fight for power. And as the Israeli philosopher Moshe Halbertal has pointed out, “That is the end of politics.”
Democracies need reference points that aren’t political. Without them, without specifically apolitical spaces, our society will devolve into a zero-sum struggle of winners and losers, until politics itself becomes a weapon used by those in power against those who aren’t. Not convinced? Then you haven’t been paying attention to what’s been going on in the United States for the past several years.
Corporate social impact is the gauzy promise of progressive social outcomes without the messy compromises and accountability of liberal democracies. In our highly politicized era, it adds more politics where it doesn’t belong. Let’s instead channel the desire for change into the political system, where it does.