- Corporate Social Responsibility •
- asset pricing •
- moral pluralism •
- Democracy •
- corporate voting
Corporate social responsibility (CSR) has gone mainstream. Over a quarter of total assets under management are now invested in socially responsible companies. Likewise, the global demand for sustainable products continues to rise.
This Article suggests that the real cost of CSR is not economic but democratic. When a morality demand is introduced in competitive markets, there is no profitable deviation at the equilibrium for corporations as producers of moral goods, as not engaging in CSR would make them less competitive. This equilibrium prediction dispels concerns about economic efficiency—but implies a warning against the risk of “corporate conformism” and a loss of pluralism. This risk is a by-product of the divisive nature of moral goods, as a reflection of individuals’ often conflicting moral preferences. Attempting to capture a larger demand, corporations conform to the morality of the capitalist majority, even though it might represent just a minority of individuals. This threatens moral pluralism, potentially explaining why CSR engagement presently tends to have an almost exclusively progressive connotation.
There are no easy answers to cure CSR’s overlooked democratic dysfunction, but we conclude by attempting to identify the several tough questions that need to be asked to that end.