Should CSR Lead the Fight against Global Inequality?
Ismael Bena - MBA, SIG Leader
As often before, inequality formed a major part of the discussions at the Davos Summit, once more pointing to the ever-growing divide between the world richest 1% and the rest.
As argued by various business scholars, “Income inequality has become the most notable challenge of our times” (Crane, et. al, 2014: pg.1). They argue that business should be pivotal in fighting this. One may argue how business should actively address this divide, as opposed to placing the problem at governments to redistribute incomes through their taxing mechanisms (Alvaredo, Atkinson, Piketty & Saez, 2013) (See also the recent 12manage discussion: Global Tax on Wealth (Piketty)).
Corporate Social Responsibility generally advocates the inclusion of stakeholder’s expectations and social consequences of doing business. Therefore this problem should be fought through these channels, including corporate social programs. Businesses can be regarded as one source of this inequality as they generally sustain this (income) inequality through corruption or exploitation of the “bottom of the pyramid” (the latter through sweatshop acceptance). Others argue inequality is not caused by business, since economic growth generated through business has elevated millions from poverty and improved their life standards in the process (Freeman, 2011). Freeman goes on arguing that the cause of inequality is the lack of opportunities, which eliminates people’s hopes.
On the other hand it can be argued that innovation is often driven by businesses. Because of that businesses deliberately create unstable markets, as they thrive under such conditions, so can it be argued that inequality is inherent to business. But should severe [income] inequality be accepted, even as this causes extreme poverty by exploiting the bottom of the pyramid?
Who do you believe is best equipped to change this paradigm? Businesses, governments, supranational organizations, or another party? Why?
Crane, A., Bryan, W., Bapuji, H., & Derry, H., (2014) Income Inequality in Business and Society Research, Proceedings of the International Association for Business and Society. Business Ethics & Ethical Leadership
Freeman, R.E. (2011) Speech at the OECD Policy Forum on Tackling Inequality, Paris, May 2.
Alvaredo, F., Atkinson, A.B., Piketty, T., & Saez, E. (2013) The top 1 percent in international and historical perspective. Journal of Economic Perspectives, 27(3): 3-20..