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The recent financial crisis has been analyzed from almost every possible point of view: causes, consequences, culprits, beneficiaries, harmed. The impact of and on companies' responsibility practices has also been analyzed. But I think there has been a lack of analysis of what actors in CSR management can learn from the behavior of actors in the financial crisis. Before we forget that we had a financial crisis, I think it is timely to reflect on the lessons it has left us for CSR management. There is some consensus that much of the crisis was caused by some institutions taking risks beyond their ability to tolerate them. And the INCENTIVES of the financial system, particularly the banks, are to take more risks to earn more. It's like betting with other people's money. If it goes well, most of the profits are yours, if it goes wrong, the losses are someone else's. There is a great asymmetry. The classic “privatization of profits and socialization of losses”. When the bank, the bigger the better, takes risks that exceed its capacity and it turns out well, the profits are its own, and a good part of them belong to the managers (as we saw in the previous article about bonuses at Goldman Sachs). If it goes wrong, some losses fall to the shareholders, who have little power in decision-making. And if it goes very badly, we can spread the losses to society because the bank is too important to fail. It would drag down many companies and individuals. The case of some individual operators within some institutions was even worse.
They were given, or taken, authority to make Phone Number List transactions whose risk was not compensated by the capital assigned to cover the transaction. But if they did well, the profits could be enormous given the leverage of the operation, and therefore their bonuses. Institutional or personal incentives were not aligned with society or those of the institution. In the financial system we have discovered that not only the traditional level of capitalization (own resources to support losses using external resources), the mainstay of banking regulation, was important. We have discovered that there were liquidity, funding, credit, market risks and some that we have not yet discovered. Now it turns out that it is not enough to impose minimum capital requirements. We must also impose liquidity requirements, review the risk rating system, the internal risk analysis process, the allocation of capital to risk in the different units, bonuses, etc. What does this have to do with responsible company practices? If we analyze it we will see that it is the same. Aren't the INCENTIVES of non-financial companies also to take more risks to earn more? Doesn't the non-financial company take more risks than it thinks? In the same way as in the financial system, managers of non-financial companies are taking social and environmental risks that may go beyond the company's ability to assume them, in order to improve profits in the short term, which are those who usually determine their remuneration.
If in the case of financial risks we did not know how to measure them, let alone social and environmental risks. If in financial risks we are learning to walk, in the case of social and environmental risks we are in diapers. Companies may be taking these risks, by omission or commission, which compromise not only the capital that is accounted for (equity) but also what is not accounted for: the license to operate in society, reputation. What is clear is that in the case of non-financial companies it is very unlikely that they will access public bailout, due to the lower systemic risk they entail. However, what happened to General Motors? Did they let her go bankrupt? It is true that the problems were more about incompetence than environmental or social risks (although some will tell me that the labor problems became social ones). But isn't social irresponsibility the same as incompetence? To prevent the financial crisis from recurring, measures to regulate all those risks are being proposed and implemented, including restrictions on salaries and bonuses. It is easier to do it in the financial system since regulators are more concentrated or coordinated (or they should be!!). In the case of the activities covered by the mandatory part of CSR in non-financial and financial companies, there is a wide variety of regulators (environment, labor, trade, etc.), with a wide variety of capacities, with wide gaps in regulation. Could there be a systemic crisis arising from irresponsible practices in the non-financial sector? It is very unlikely.
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發表於 12:13:44