The new 'corporate social responsibility' (CSR) movement will increase business costs, reduce welfare and undermine the market economy, according to Professor David Henderson, former Head of Economics and Statistics at the OECD.
In his new IEA paper*, Henderson says many advocates of CSR do not understand the rationale of a market economy and the role of profits. They want companies to embrace 'corporate citizenship' and run their affairs in close collaboration with numerous 'stakeholders', promoting 'sustainable development' instead of concentrating on profitability and shareholder value. But 'sustainable development' is ill-defined and the actions required to promote it are unclear.
The adoption of CSR by business is likely to increase costs and impair performance, as managers try to take account of a wide ran