Do Car Recalls Indicate a Failure in CSR?

Do car recalls indicate a failure in CSR?  It depends who you talk to.  ESG ratings firms often look for number of recalls as an indicator of how responsible a company is.  Their assumption: less is more.  In other words, the fewer recalls, the better the company.

Without wanting to debate the point too publicly, many quality assurance chiefs within companies have long held the opposite stance, namely that a responsible company is one that is not afraid to pull back a faulty product and proactively alert consumers that there was a problem.  Their position: that mistakes get made throughout supply chains of all major brands, but that only the most responsible companies are willing to step up when issues come to their attention.

So if recalls are a source of pride, why do CSR reports rarely tout recalls as an indicator of corporate responsibility?  Is the public too stupid to understand?  Or do the people who write CSR reports simply not want to open a conversation that may not be too cut and dry in the court of public opinion?

Whatever the answer is now, the tide may be turning, as evidenced by an article today in the New York Times.  Ever since Toyota was fined $16.4 million by the U.S. National Highway Traffic Safety Administration for waiting too long to recall faulty pedals, auto manufacturers have adopted a better-safe-than-sorry attitude.  To cite an example, GM has recalled three million vehicles this year.  The article also claims that people seem to be more willing than they were previously to take time out of their busy schedules to bring their recalled car into the dealership.

But are car recalls really a matter of CSR, or do they represent compliance issues?  If nothing else, this episode acts as a staunch reminder that the line between corporate social responsibility and compliance can be blurry.   In fact, some might argue that CSR is nothing more than a collection of strategies to get out in front of regulators, demonstrating sufficient behavior when it comes to public interest issues that government officials focus their attention on companies less willing to step forward in situations where errors have been made.  And for those who view this interpretation as overly-narrow, there may be reason to ask another question: if recalls start making their way into CSR reports, will they do so at the expense of other corporate social responsibility initiatives?

Photo credit: VirtualErn