Event

This paper frames a money laundering scandal as an opportunity to theorize on the dark side of “Corporate Social Responsibility” (CSR) quantification in “Environmental and Social Governance” (ESG) reporting. We identify three hypotheses as to whether ESG is developing for the better or for the worse CSR’s originally qualitative ideals. (i) what we call a ‘neutral CSR hypothesis’ is close to classic organizational hypocrisy theory, framing hypocritical CSR as an essentially harmless pursuit. (ii) based on the mainstream research-based understanding of CSR, we identify a ‘positive hypocritical CSR hypothesis’ in the ways that many institutions use CSR as an instrument to signal to their stakeholders that they are following and holding up social order, and therefore deserve relaxed regulatory and market pressures. (iii) what we call a ‘negative hypocritical CSR hypothesis’ is that quantified CSR potentially is but a cover under which to hide and to take attention from money laundering or other illegitimate operations that result controversies. Using a novel cross-border payments dataset, we examine the dynamics behaviour of money laundering, CSR and ESG controversies of a sample of Nordic banks during the 2005‒2019 period. Our analysis supports our negative hypothesis more than it does the above neutral or positive hypotheses. Our findings raise critical questions against quantified and instrumental approaches in and around CSR, and bear policy implications for the improvement of corporate governance, particularly when it comes to CSR and ESG. ”