Corporate Social Responsibility: Good for Business, Good for the Community
Steven Pearlstein’s article Social Responsibility Doesn’t Much Sway the Balance Sheet (Wednesday, October 5) concludes that there is no business case for corporate citizenship, or what is commonly referred to as corporate social responsibility (CSR), while encouraging increased government regulation. Mr. Pearlstein’s comments are based largely upon the conclusions reached in the recent book “The Market for Virtue” by David Vogel. We believe these conclusions are both misguided and outdated.
CSR pays off, according to two of the most definitive studies on the subject. Consider: Innovest Strategic Value Advisors looked at 60 research studies over six years, finding that 85 percent showed a positive correlation between CSR and financial performance. While Mr. Vogel cites what many consider to be the most significant paper on CSR – Marc Orlitzky’s study of studies, which found a positive correlation between CSR and financial performance – he does not factor these findings into his discussion.
As proof of the lack of effect CSR has on a company’s performance, Mr. Pearlstein mentions that many companies, such as Enron, Fannie Mae and Merck, were once considered good corporate citizens. Let us be clear: CSR is not about publishing glossy reports which tout a company’s understanding of the need to be a good corporate citizen, or issuing press releases or developing commercials highlighting a few small initiatives, or corporate philanthropy. True CSR is about the alignment of business strategy and operations with the needs and desires of all stakeholders, including shareholders, employees, consumers, investors, and local communities.
The movement toward socially responsible business practices (in commitment and deed not just in rhetoric) helps to ensure that capitalism serves as a rising tide that raises all boats rather than as a driver for selfishness and personal gain. And for that, the Business Roundtable – and other groups and companies – should be lauded for their efforts rather than dismissed.
Full Text of this article can be found here: http://www.dcsbn.org/news/news_detail.cfm?id=10
CSR pays off, according to two of the most definitive studies on the subject. Consider: Innovest Strategic Value Advisors looked at 60 research studies over six years, finding that 85 percent showed a positive correlation between CSR and financial performance. While Mr. Vogel cites what many consider to be the most significant paper on CSR – Marc Orlitzky’s study of studies, which found a positive correlation between CSR and financial performance – he does not factor these findings into his discussion.
As proof of the lack of effect CSR has on a company’s performance, Mr. Pearlstein mentions that many companies, such as Enron, Fannie Mae and Merck, were once considered good corporate citizens. Let us be clear: CSR is not about publishing glossy reports which tout a company’s understanding of the need to be a good corporate citizen, or issuing press releases or developing commercials highlighting a few small initiatives, or corporate philanthropy. True CSR is about the alignment of business strategy and operations with the needs and desires of all stakeholders, including shareholders, employees, consumers, investors, and local communities.
The movement toward socially responsible business practices (in commitment and deed not just in rhetoric) helps to ensure that capitalism serves as a rising tide that raises all boats rather than as a driver for selfishness and personal gain. And for that, the Business Roundtable – and other groups and companies – should be lauded for their efforts rather than dismissed.
Full Text of this article can be found here: http://www.dcsbn.org/news/news_detail.cfm?id=10
The full text of this article was submitted to the Washington Post by the Executive Director and the Board of Directors for the Washington DC Sustainable Business Network
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