“Tackling climate change presents a big challenge and an even greater opportunity for Canada, one that will impact all of our lives, and those of generations to come. Our nation’s plan to drastically reduce greenhouse gas emissions down to ‘net-zero’ by 2050 requires the largest change to our economy in our lifetime, and one that RBC is fully committed to supporting.” – Royal Bank of Canada, “Reimagining a sustainable future,” Toronto Star, October 23, 2021.
By Rey Moreno
The raison d’être of all business, large or small, is to have a profit in their bottom lines. In Milton Friedman’s words, “the social responsibility of business is to increase its profits.” So to ask them to share or expend their revenues for the benefits of society is clearly an anathema to their self-interest. But they have found a clever way to spin a positive outlook for their clients and society, in general, by organizing fundraising campaigns for social causes. One example of this is the annual United Way Campaign.
The investment firm I once worked with took the United Way Campaign seriously. They assigned a number of employees in diverse positions to be the focal group of ensuring success for contributions to trickle in. They had auctions, financial support for those colleagues participating in climbing the stairs of the CN tower, or just regular contributions to get a tax credit. Then at the end of the campaign, the whole company would gather for free lunch and a congratulatory program dedicated for the members of the campaign committee.
It has been a boon for businesses to be in the forefront for charities and social causes. In fact it has given them a positive connectivity to their clients and employees that they are willing to pay a full-page ad to give notice to the fabulous work they do. Aside from the first paragraph of the epigraph I quoted from RBC’s full-page ad, here’s another sample from Bell Canada in Toronto Star’s December 19, 2021 Sunday issue:
“Bell today just got better. The network we’re most proud of. As part of our Bell for Better commitment, we’re invested in creating a better today and tomorrow, and it’s Bell team members from coast to coast who are making it possible. Bell would like to thank our employees who contributed to our record-setting Team Bell Giving campaign this year. We’d also like to applaud our team members who volunteer to give back to their communities. From supporting the Ottawa Food Bank Holiday Drive to the CP24 CHUM Christmas Wish program to the Distress Centres of Greater Toronto and dozens more, our team members give their time to help make the holidays better for those in need. It’s all a reminder that our greatest network is our people. Learn how Team Bell initiatives are helping create a better world, better communities and better workplaces at bell.ca/bellforbetter.”
In a study conducted by Thomson Reuters Foundation in 2019 named Canada as the number one country conducive for businesses to make social impacts. So they ran billboards and slogans such as Bell’s “Let’s Talk” campaign to tackle mental health, Telus’s “Let’s Make the Future Friendly” to make technology a force for good and Lululemon’s “Impact Agenda” with the slogan: “Be human. Be well. Be planet.”
Even the corporate language has changed. Now we hear of: corporate social responsibility, shared value, environmental, social and corporate governance, triple bottom line, corporate purpose. All these terms reflect the changing business attitude of not only serving the interests of the shareholders but to a whole range of stakeholders, including their employees, their suppliers, their distributors, their consumers, and the communities in which they reside.
The genie is out and those companies who made a binding commitment to impact social change are feeling virtuous right now. Faced with reality, can they sustain it?
In 2020, a “Stop Hate for Profit” campaign urged an international boycott of ad buys on Facebook for running hate speech and racism on its platforms. Afraid of being on the wrong side of the issue, Canada’s Big Five banks allowed their names to be included in the 1,200-plus signatories. But that’s the easy part. When Coca-Cola was asked this year to sign an open-letter campaign opposing Georgia’s new voting restrictions, the company refused and wouldn’t go as far as just making a statement “in support of the foundational right to vote.” Like other social entrepreneurs, Coca-Cola has embraced corporate responsibility on social issues. By refusing to sign, Coca-Cola shows, according to its critics, its real face of hypocrisy.
McDonald also refused to weigh in on voting rights. Its CEO, Chris Kempczinski, explained: “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.”
Dan Dunsky, in his article “Impact Statement: Whose social responsibility is it anyway?” featured in the October 2021 issue of Literary Review of Canada, argued that such contradiction in public stance for both Coca-Cola and McDonald represents “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.”
So whatever good intentions and motivations these socially-conscious companies claim to have, they will always be subjected to public cynicism. It doesn’t help that in this time of the pandemic, corporate profits have rebounded from the 2020 recession and were 22 percent higher in the quarter of July-September 2021 from the same period two years ago, according to the U.S. Bureau of Economic Analysis. Thus it brings out the question of how far did the companies’ jacking up their prices contribute to causing inflation worldwide?
Another prickling point is CEOs’ bonuses. Alicia Massie and David Macdonald issued a 21-page report in August 2021 entitled “Boundless Bonuses: Skyrocketing Canadian executive pay during the 2020 pandemic” for the Canadian Centre for Policy Alternative. The Fast Facts of the report stated the following:
- Executive pay is up on average 17% in 2020 compared to 2019.
- 49 of Canada’s biggest companies modified their own compensation rules to boost executive bonuses during the pandemic in these ways:
- 13 companies awarded large direct bonuses via cash, shares, or options;
- 8 companies excluded poor financial results or otherwise adjusted away the impact of the pandemic;
- 24 companies altered the weighting, percentage, scores, or categories within performance evaluations;
- 4 companies shifted to different financial or time-based evaluations.
- Among the executives who took “salary cuts” due to COVID-19, 52% saw their total pay increase anyway because bonuses overcame any salary decrease.
In the Opinion Page of Toronto Star’s January 7, 2022, the editorial column called it the “Paradise for the Few”. It further stated that the “Macdonald’s report contains many of the sort of details that make average citizens howl.” Macdonald was also quoted to have said: “One of the issues we’ve seen with income inequality is that when the economy does poorly, it’s often just the low-wage workers that suffer. It’s not the CEOs that suffer, and that was really highlighted by the pandemic and the data for 2020.” Not only that. The report also revealed that thirty of the one hundred CEOs received government support through programs like the Canada Emergency Wage Subsidy (CEWS) although they didn’t need it but they still applied as long as the federal money was available.
He recommended that “the federal government should review rules on how much executive compensation companies can deduct (the United States already caps it at $1 million per employee), capital gains and stock options, as well as instituting a wealth tax for the richest Canadians.” He further said that “higher taxation levels can reduce inequality and help to refill government coffers following the impact of the pandemic.”
Report like that can make us a perennial skeptic even if the social impact activities of companies increased. But here’s Dan Dunsky, who was deeply involved in this field from 2016 to 2019, again: “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.”
7 September 2022
