Responsible? Did you say responsible?
By parodying Jacques Prévert’s famous line from the film *Drôle de drame* (1937), we want to draw attention to the sudden popularity of this adjective, which has sprung up everywhere to describe the desirable direction our society should take, yet remains rather poorly defined.
Najoua TAHRI, University of Montpellier and Jacques Igalens, University of Toulouse 1 Capitole
A responsible government?
First, at the highest levels of government. It was common for the government to include a Secretary of State for the Social and Solidarity Economy (SSE), but since July 2020, the Castex government has included a Secretary of State for the Social, Solidarity, and Responsible Economy, Ms. Olivia Grégoire.
However, while the social and solidarity economy (SSE) is clearly defined—encompassing associations, mutual societies, cooperatives, and foundations—the “responsible” economy is not.
What is well known is CSR, or “corporate social responsibility,” which requires or sometimes encourages companies to limit their environmental impact and avoid causing social or societal harm. But CSR applies to all companies and even all organizations, regardless of their status. This is very different from the SSE. We will therefore have to wait to see what “responsible economy” entails and what its new State Secretariat will entail.
Responsible capitalism
While “responsible economics” has not been defined, “responsible capitalism” has just been defined in a report by the Institut Montaigne titled “Responsible Capitalism: An Opportunity for Europe”
As Yves Perrier (CEO of Amundi) and Jean-Dominique Sénard (Chairman of the Board of Directors at Renault) point out, this is not simply a matter of discussing CSR, but of rethinking capitalism as a whole. We currently live under the dominance of financial capitalism, which is inherently short-term in nature and focused primarily on shareholder interests; for the authors, the challenge is to envision a different kind of capitalism that would prioritize long-term economic prosperity and take society as a whole into account. They see the beginnings of responsible capitalism emerging through the concept of “raison d’être.”
Jean-Dominique Sénard was one of the two authors of the “Sénard/Notat” report submitted to the government in March 2018, which aimed to “restore substance to the company and encourage it to reflect on its purpose.” The recommendations of this report were partially incorporated into the Pacte Law, which led to significant legislative changes, particularly regarding the very definition of a company. However, the concept of “purpose” was already the cornerstone of the “Sénard/Notat” report, and since the Pacte Law, more than half of the CAC 40 companies have adopted it.
Responsible capitalism would thus be capitalism grounded in a “purpose,” but for the authors, it is not enough for companies to transform themselves by adopting a “purpose”; investors must also support them—or even lead the way—and the bulk of the 17 recommendations contained in the report pertain to corporate financing. The first recommendation sets the tone: it calls for the allocation of European financial resources for long-term investment.
These recommendations come as no surprise, since the terms under which businesses are financed are indeed a central issue in capitalism: without capital, there is no capitalism…
On the other hand, what is more surprising is to limit capitalism to corporate financing, since capitalism is also linked to a mode of representing and exercising power that the report does not address.
The concept of “stakeholders” is mentioned in the report, but their place and role in the governance of responsible businesses are not addressed. Yet this issue is currently a subject of debate between those who advocate for the inclusion of stakeholders on Boards of Directors (BoD) and those who believe that, alongside the BoD and the Supervisory Board, a Stakeholder Council (or Committee) should be created, whose functions and powers must be clearly defined, as articulated by Jacques Igalens, and Sébastien Point in their book *Toward a New Corporate Governance: The Company Facing Its Stakeholders*. Each of the two solutions has advantages and disadvantages. Including stakeholders on the board of directors risks diminishing the effectiveness of a key institution of capitalism, as the board is a governing body whose mission is to define strategy. If it represents divergent interests, it risks failing to reach consensus and sinking into fruitless debate.
Setting up a stakeholder committee is often a waste of time, as such committees quickly become mere rubber-stamp bodies. Responsible capitalism therefore still needs to be further defined, particularly with regard to its governance.
Individual responsibility
Following in the footsteps of the economy and capitalism, the term “responsible” has also gained prominence in current research to describe the behavior of employees, customers, job seekers, and citizens in general.
The underlying concept of this research is “micro-CSR.” In a recent analysis, David Jones, Chelsea Wilness, and Ante Glavas even refer to “an explosion of research on micro-CSR.” The findings provide a better understanding of the reasons behind behaviors such as volunteering, responsible consumption, and eco-friendly practices. They highlight the altruistic dimension and the alignment between an individual’s values and those of organizations.
Thus, by applying Peter Blau’s theory of social exchange, as outlined in his study *Exchange and Power in Social Life*, it has been shown that employees of companies that act responsibly feel a sense of obligation and, in turn, become engaged in environmental or social causes.
The term “responsible” has thus become a new horizon for the economy and capitalism, but this horizon is not yet very clear. On the other hand, if responsible economics and capitalism were to rely in the future on responsible behavior on the part of individuals, research could offer us some food for thought.
Najoua TAHRI, Associate Professor of Management Sciences, IAE Montpellier and MRM, University of Montpellier and Jacques Igalens, Professor of Management Sciences, IAE Toulouse and CRM-CNRS, University of Toulouse 1 Capitole
This article is republished from The Conversation under a Creative Commons license. Readthe original article.