Shelling out in London: More on CSR, Tax and Shell

In the aftermath of the English riots – themselves an explosion of tensions arising from the local consequences of globalization and imposition of the neoliberal order – a number of transnational companies have made corporate donations to a London High Street Fund established to assist small businesses affected by the disturbances.

More than £4 000 000 has already been donated with the greatest single contribution apparently coming from Shell, which has kicked in £500 000 to the fund.

Prompt assistance to small businesses harmed by the riots is of course to be welcomed, but what is in it for the donor companies? For those who believe in the corporate social responsibility fairy, there is clearly magic in the air. According to the British Prime Minister David Cameron ‘[t]he High Street Fund is a great example of British business putting something back’; while London Mayor Boris Johnson described the donation from shell as ‘huge’ and ‘a fantastic gesture and one that will go a very long way in helping businesses to get back on their feet’. The Chairman of the High Street Fund, Sir William Castell said:

Shell have dug deep to support hard-pressed small companies and we are so grateful for their support. Claims from the fund are now coming in and with Shell’s generosity we’ll be able to help many more local businesses.

For those who do not believe in fairy stories, the reality is rather more prosaic. Corporations are amoral entities mandated to maximise returns for shareholders which don’t ‘put something back’ except as part of business strategy. Corporations can’t be ‘generous’, because ‘generosity’ is a human attribute that requires moral calculation which cannot sensibly be attributed to a legal abstraction.

Of course, exactly how ‘deep’ Shell had to ‘dig’ to make the ‘huge’ donation is also pretty questionable given that at the end of July the company recorded that profits had soared 77% to nearly £5bn in the previous three months.

So behind the fairy tale, what is Shell’s business motivation for making the payment to the High Street Fund? As Milton Friedman once wrote, describing discretionary payments as ‘corporate social responsibility’ is ‘one way for a corporation to generate goodwill as a by-product of expenditures that are entirely justified in its own self-interest’. It may be complete coincidence that Shell has been going through a public relations debacle in the UK lately, including the company’s fudged reaction to the Gannet Alpha oil spill in the North Sea. Shell is also facing an enormous fight over its deeply irresponsible plans to explore for oil in the Arctic.

There is a surface contrast between Shell’s willingness to handover a contribution to the High Street Fund with the company’s recent attitude to paying tax in the UK. Back in April Shell was outraged at the UK Government’s proposal to impose a windfall tax on North Sea oil profits (despite at that stage having just achieved a 30% jump in profits). But as this blog argued last week, there is no intellectual inconsistency in a corporation giving money to charity while simultaneously trying to minimise the amount of tax being paid, because both may be in the company’s commercial interests. Putting to one side the question of gaining access to tax relief, mandatory contributions to the public purse do not provide the same PR opportunities as making donations which are characterised as ‘corporate social responsibility’.

So what about the politicians? Boris Johnson’s office has been quite candid on the subject, boasting that the Mayor is ‘looking at getting sponsorship for everything’. According to Daniel Ritterband, the Mayor's director for marketing:

We could bring in more money by giving ownership of, say, the sustainability programme to a company. So every time Boris talks about sustainability he says, for instance, that it is in partnership with BP and Shell.

At the same time the Mayor is reportedly actively lobbying the UK Government to cut the corporate tax rate on the basis of the competitive pressures of globalization. It is no wonder that companies may be willing to engage in ‘corporate social responsibility’ in the City of London.

Follow David Ritter on Twitter here.