by Christian Damholt, Denmark, ELP 2014 Written on July 21, 2014.   Last week, adjunct professor Mike Cheng1 offered a for-profit CSR perspective on sustainable development in an afternoon lecture at UC Berkeley. According to Cheng many business leaders have misperceived the full potential of CSR by understating it as “first you do well then you do good”. In other words first you get high profits then you consider CSR. However, this understanding fails to incorporate CSR into the core of the business model. Thus, Cheng rephrased the slogan to “doing good while doing well”. This point is a valuable point in the CSR debate, which has become increasingly important since the 1970s due to the increasing power of multinational corporations in the global economy2. However, the for-profit CSR perspective soon reaches its limits. I will here mention two criticisms. First, the perspective fails to challenge the structure of multinational corporations. Most multinational corporations are shareholder companies, whose main objective is short-term profit maximization for the shareholders. When market competition or external shocks squeeze profits there is little room for CSR. Second, the perspective fails to acknowledge the agency of citizens and consumers who in the first place put pressure on the corporations to take responsibility. The perspective hence only offers political agency to the company managers. In the following, I will attempt to transcend the two criticisms by applying them to the financial sector. From how to finance change to how to change finance A lot of banks went bankrupt during the financial crisis due to their excessive speculation in short-term profits. The price of “Wall Street banking” has been high for the society. All the biggest banks involved in the financial crisis were shareholder banks including Wells Fargo, Bank of America, HSBC, JPMorgan Chase and Goldman Sachs. It won’t help getting frustrated and angered over the hypocrisy of the bank’s CSR policies or the shareholders and the executives’ lack of consideration for the societal consequences of their speculation. It is the “nature” of the shareholder-model banks that compels them to strive for higher returns and share price increases. If we are to overcome the crisis and secure climate funding we must discuss, develop and move towards alternative banking not solely based on profit. The main alternative bank models are mutuals, credit unions and cooperatives3. All of these build on the cooperative business philosophy of having the customers, members and workers own and run the bank – and will as a result of this, generally have regard for society as a whole. This model is not in opposition to profitability and robustness, but the cooperative bank is driven forward by democracy and collaboration rather than private profit. One of the central contrasts between cooperatives and the shareholder bank is the time frame. If social solutions to climate change are to be pushed forward the current developments have to be turned away from rapid accumulation of profit towards a long-term strategy capable of creating real value for the majority of people. In a cooperative bank there are no shareholders demanding ever-increasing returns and therefore not the same incentive to engage in riskful speculations. In funding social and green innovation cooperative banks too have the upper hand. Cooperative banks are more capable of building bridges between the private sector and civil society, allowing new sustainable and socially responsible solutions to grow. The collective outlook of cooperative banks and their ability to respond directly to local opportunities can in the long run finance the creativity in private entrepreneurship and the social force of civil society. In this regard such a financial sector would be able to assist our society in a sustainable direction producing jobs, innovation and a more ecologically friendly economy. The cooperatives can if the members accept chose others goals than the narrow rent seeking. In Vancouver, Canada, the cooperative bank Vancity has half a million members supporting its sustainable profile. In 2008 the bank became CO2-neutral4 and later it became the biggest organization promoting ”Living Wage Employers”5. Some would object that cooperative banks wouldn’t be able to compete with the big shareholder-owned banks. However the long-term investment policy does serve as competitive advantage. The Dutch bank-cooperative Rabobank is an example of a big international cooperative that has show competitiveness and stability during the crisis. The cooperative has increased its marked shares and now holds more than 34 % of private loans in the Netherlands and operates in 48 countries. This is backed by research on banking systems from the Centre for European Studies6 and the ILO. If enough people move their money to a cooperative bank, we take small, but useful, steps towards a more democratic and sustainable financial sector. By doing this we will signal to the politicians, the banks and the media that we demand another financial system with favourable conditions for socially and environmentally sustainable banks, and demand better regulation and control with the existing shareholder banks. This would start a debate well beyond CSR. The first step is that you move your money! 1http://www.ggu.edu/graduate/faculty/bio/mike-cheng 2http://regulation.upf.edu/ecpr-05-papers/lsegerlund.pdf 3http://en.wikipedia.org/wiki/Cooperative_banking 4http://ecotrust.ca/vancity-meets-its-goal-be-carbon-neutral-a-first-a-north-american-based-financial-institution 5http://www.livingwageforfamilies.ca/employers/what-is-a-living-wage-employer/ 6http://www.ceps.eu/book/investigating-diversity-banking-sector-europe-key-developments-performance-and-role-cooperative