It is less than a square foot big, but for many in African villages, it is a life changer. Last year, I contributed to a project to build a network of entrepreneurial women in African villages selling small solar panels. The small panels provide electricity to charge the cell phones many use to pay for goods. Instead of riding a bus into town to charge their phone, they can charge it at home.

It is a powerful example of how government failure to provide basic infrastructure like electricity, leads to market-based solutions and the power of innovation that offers the best tool to improve environmental sustainability. However, some want to replace that innovative spirit with politically-directed control in the name of “corporate social responsibility” or CSR.

Todd Myers

Some see CSR as independent of government but as a paper from the International Centre for Corporate Social Responsibility notes, “CSR needs to be understood as part and parcel of a wider system of national societal governance incorporating government institutions, business organisations and non-governmental organisations.”

Problems With “Corporate Social Responsibility” 

Yet the overall thrust of CSR is likely to harm the poor and the environment. CSR-inspired government regulation suffers from some key problems.

Witness the push for a “socially responsible” green building standard called LEED. Our work at the Washington Policy Center shows how regulation was crafted to favor a certain set of builders and architects even though the standards often end up harming the environment.

Or consider the American Institute of Architects, which is encouraging cities like Seattle to push for carbon-neutral buildings by 2030. They do this not because it is an effective way to reduce carbon. In fact, it can be very expensive to achieve this goal, wasting money that could produce higher carbon reduction with other strategies. Instead, they choose this goal because it allows architects to receive higher fees.

On-Site Renewables Mandate Proved Tricky 

In London, environmental activists demanded business produce renewable energy on site in the name of CSR, stemming from legislation known as the “Merton Rule”, thinking it would create demand for solar panels. In reality, solar could not meet the CSR goals. The only option was to burn biomass on site. The amount of fuel required would have been massive, requiring a huge increase in truck traffic in an already clogged city.

Rather than open their own, socially responsible business, CSR activists push a crisis narrative to force others to do what the activists want. This kind of crisis mentality says “we don’t have time to think, we must act!”

Role of Individual 

It pays to take a step back, reflect, and then take action effectively. In fact, the greatest threats to air and water quality come from individuals, not corporations. Risks to water quality come primarily from small sources like excess fertilizer on lawns, failing septic tanks or oil leaking from old cars. Focusing on corporations won’t address those problems.

By focusing on “corporate” social responsibility, activists ignore the real issues. CSR might have been a solution 40 years ago, but it is an idea whose mindset is stuck in the 70s.

Further, and ironically, CSR ends up favoring big corporations. Corporations have the lawyers, accountants and lobbyists to control regulation in the guise of “responsibility” to harm smaller, and often more innovative, competitors.

Beware Today’s Baptists and Bootleggers 

It is the tale of the Baptists and bootleggers. Baptists pushed alcohol prohibition but bootleggers got rich as it put their competitors out of business. Just as prohibition created more corruption but didn’t solve the problems associated with alcohol, CSR can encourage corruption that benefits those with political connections without actually helping the environment.

For those who care about environmental solutions, the best real hope for environmental sustainability comes from the free market and innovators like the women in Africa.

The free market is the best system ever devised to do more with less. 

The Free Market’s Agility
In the U.S., air quality began improving in the 1950s, decades before the Clean Air Act, because soot meant lost energy and waste.  We are twice as energy efficient today because nobody wants to spend money on electricity when they could spend it on fresh produce or digital music from Amazon’s MP3 store. This is the reason the claims of resource depletion have proven so consistently false – the free market is extremely agile at innovating to avoid scarcity.

The number people living in extreme poverty has been cut in half since the 80s, even as population grew – all thanks to expansion of the free market. As Muhammad Yunus, the Bangladeshi inventor of microfinance and Nobel Prize winner put it, “When I see a problem, I don’t wait for government. I start a business.”

Paying the Premium 

The beauty of the diversity encouraged by the free market is that it offers numerous options to use disposable income to help make the world a better place. As I write this, I am sitting in a lovely bed and breakfast that is part of the British Green Tourism network. Some buy shade-grown coffee. Others pay a bit more for other green products.

The marketing value of these labels – voluntary labels – is considerable. They are more fair as well, allowing the rich to pay more while allowing working families to pay lower prices for traditional goods.

Where government standards need to be set, they should be set on everyone in a simple and transparent way. That will yield the best environmental results without creating complex regulation that corporations can use to squeeze smaller competitors out.

For rural villages in Africa, it is the market, not CSR policies that brought them solar power. For Orcas in Puget Sound, millions of small efforts to fix failing septic tanks and oil leaks will make the difference, not the self-congratulatory press releases of corporations with CSR campaigners standing beside them.

The free market has repeatedly made yesterday’s predictions of environmental catastrophe, today’s environmental success. Until CSR activists understand that, they will continue to make the same mistakes they have been making for decades.

Todd Myers is the Environmental Director at the Washington Policy Center, a market-oriented think tank in Seattle. His book, “Eco-Fads: How The Rise of Trendy Environmentalism is Harming the Environment,” has received national praise. Myers is a Wall Street Journal Expert Panelist for Energy and the Environment. Several Washington state newspapers, the BBC, USA Today, Fox News and the Wall Street Journal have featured his work.

Myers also runs a public relations firm whose clients have included the Seattle Mariners, Treehouse (a nonprofit organization improving the lives of foster children) and the Prescription Drug Assistance Foundation. A former computer programmer, Myers has a Bachelors Degree in Politics from Whitman College and a Masters Degree in Russian/International Studies from the Jackson School of International Studies at the University of Washington.

* Editor’s Note: This is a guest authored piece and does not necessarily reflect the views of the Washington Business Alliance. 

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