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Corporate Social Responsibility (CSR) is a concept whereby corporations (orother for-profit organizations) consider the interests of the societies withinwhich they are based and operate. Moving beyond philanthropy and com-pliance, CSR addresses how companies manage the impact of their econom-ic, social, and environmental policies, as well as their relationships with cus-tomers, employees, suppliers, shareholders, and communities.CSR has become a multi-billion dollar public relations specialty in the busi-ness world, yet there are those who argue that the positive impact of CSR onbusinesses is overblown and say companies exist to sell products, makemoney and please shareholders — not to save the world.
Corporate Social Responsibility
Businesses grow moresocially conscious
Additional Resources andVoices extension
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By Edward IwataUSATODAYActivists have argued for decadesthat companies, as good corporatecitizens, are morally obligated toadopt socially responsible businesspractices. On their end, companiessay they exist to sell products, makemoney and please shareholders —not to save the world.But those clashing views may befinding common ground, say busi-ness experts on the movementknown as "corporate social responsi-bility," or CSR.There's growing evidence that com-panies are embracing CSR practices -- whether it's reducing factory andtransportation pollution, using natu-ral materials for packaging or treatingworkers fairly — because theybelieve such strategies can be prof-itable and socially responsible."All of a sudden, corporate responsi-bility is an idea whose time hasarrived," says Julie Fox Gorte, chief social investment strategist at theCalvert Group, which managessocially responsible mutual funds."We're seeing more companies whothink it's not just a philosophy, butgood for business, too."
Study shows value
Christine Arena, a San Francisco busi-ness consultant and author of TheHigh-Purpose Company, says more
More think strategycan also be profitable
USA TODAY Snapshots
®
Mixing ads and social issues
Is it acceptable for companies to involve a cause orissue in their marketing?
Source: Cone Corporate Citizenship study of 1,033respondents. Margin of error ±3 percentage points.By Darryl Haralson and Alejandro Gonzalez, USA TODAY
Yes
72%
No
23%
Notsure
5%
AS SEEN IN USA TODAY’S MONEY SECTION FEBRUARY 14, 2007, 3B
Reprinted with permission. All rights reserved.Page 2
corporations are using CSR not for feel-good philanthro-py or to polish their public image, but as long-term cor-porate strategy.Arena and 10 MBA students at McGill University studied75 U.S. corporations, including Wal-Mart, McDonald's,Volvo, JetBlue, outdoor retailer Patagonia, clothingdesigner Eileen Fisher and agricultural products compa-ny John Deere.They found that many are visionary, risk-taking compa-nies that Arena calls "the early adopters, the alphas of the modern business world." The companies are stakingtheir business growth and future on environmental andsocial goals. For instance:
u
General Electric.
CEO Jeffrey Immelt announced GE's"Ecoimagination" initiative two yearsago, and the con-glomerate hopes to double its revenue from environ-mentally clean technology to $20 billion by 2010. Amongthe products and services: fuel-efficient jet and trainengines, wind turbine power, energy-saving fluorescentlight bulbs and water purification projects.
u
Toyota.
Critics scoffed when it launched the Priushybrid car in the USA in 2000 and in Japan a decade ago.Today, the Prius is so popular that Toyota expects to sellmillions of hybrid cars and SUVs worldwide by 2010 inthe Prius, Highlander, Lexus and Camry models. Now,Ford Motor, Nissan, General Motors and others are goingthe hybrid route.
u
Wegmans Food Markets.
While many businesses suf-fer from poor staff morale, this $4 billion retailer boasts aworker-friendly culture and cost savings from lowturnover of employees. Workers enjoy generous salariesand benefits, vacation time and training. Each year,130,000 job hunters apply to Wegmans — ranked No.1 inFortune's "Best Large Companies to Work For" list in2005."It's not a fleeting fad," Arena says. "These companies areinvesting money in a way that creates social, environ-mental and financial value. They can't afford to stopinvesting in this higher purpose."But many companies still ignore CSR issues, she says. Inher study, 14 of 75 failed the litmus test. They preachedsocial values, but made fewer investments in CSR prac-tices than "high-purpose" companies did.Companies such as ExxonMobil, she says, face lawsuitsand a public backlash when they fall short on environ-mental and social issues. A federal judge recently ruledthat ExxonMobil must pay $2.5 billion in damages fromthe Exxon Valdez oil tanker spill in 1989.Economists and executives have debated for decadeswhether CSR practices help the bottom line. The lateeconomist Milton Friedman panned social values in theboardroom, saying the No.1 goal of businesses is toboost shareholder value. Leading scholars such as DavidVogel, author of The Market for Virtue, believe the posi-tive impact of CSR on businesses is overblown.But CSR gained momentum in the 1980s, when the anti-apartheid movement forced firms to withdraw invest-ments from South Africa, and in the 1990s, when gar-ment and retail companies were blasted for their suppli-ers' sweatshop labor conditions. More companies real-ized they could not ignore the link between their busi-nesses and social issues.In the most sweeping research on the topic, theUniversity of Redlands' Marc Orlitzky and the Universityof Iowa's Sara Rynes and Frank Schmidt looked at 52studies — covering 34,000 companies worldwide — oncorporate social responsibility over a 30-year period.
'A virtuous cycle'
Their 2004 study found that well-run, profitable busi-nesses also boasted strong social and environmentalrecords, and vise versa. Overwhelmingly, firms that
Jack Gruber, USATODAY
Consultant:
Christine Arena, author of The HighPurpose company, works in her San Francisco home.
Page 3
AS SEEN IN USA TODAY’S MONEY SECTION FEBRUARY 14, 2007, 3B
Reprinted with permission. All rights reserved.
rewarded employees with good work climates and high-er pay and benefits ultimately saw stronger sales andstock prices, plus less employee turnover."It's a virtuous cycle," Rynes says. "As a companybecomes more socially responsible, its reputation andfinancial performance go up, which causes them tobecome even more socially responsible."Clearly, CSR isn't going away."Some still think CSR is a distraction," Orlitzky says. "Butmore business strategists now believe that socialresponsibility has economic value."Hundreds of corporations churn out annual "CSRreports" that tout their social consciences and businesspractices. Investors poured $179 billion in 2005 — upfromonly $12 billion a decade earlier — into sociallyresponsible mutual funds, reports the Social InvestmentForum. Businesses and environmental groups are evenjoining forces.Last month, the U.S. Climate Action Partnership — a newalliance that includes GE, DuPont, Alcoa, Caterpillar,Duke Energy, Environmental Defense and the NaturalResources Defense Council — urged lawmakers and theWhite House to reduce greenhouse gas emissions andhasten technology research.
DuPont's transition
Many CSR experts point to DuPont, the $27 billionchemical manufacturer in Wilmington, Del., as a compa-ny evolving successfully from the old smokestack indus-try era into the environmentally aware 21st century.DuPont used to rely heavily on fossil fuels to make paint,plastics and polymers. But in the 1990s, DuPont —renowned for its R&D that created products such as thesynthetic fiber nylon — decided to pour billions of dol-lars into safe, environmentally friendly products.For instance, DuPont and British food refiner Tate & Lylemake Bio-PDO — a corn-based chemical used in cosmet-ics, detergents and material in carpeting and clothing —at a $100 million plant in Loudon, Tenn.Since 1990, DuPont has cut greenhouse gas emissions by72% and air carcinogen emissions by 92% at its facilitiesworldwide, says Dawn Rittenhouse, DuPont's director of sustainable development.But DuPont, like other companies that claim to be social-ly responsible, still faces some issues.DuPont faces lawsuits alleging that perfluorooctanoicacid (PFOA), a chemical compound used in the making of Teflon, poses public health risks and contaminates drink-ing water — charges denied by DuPont.Two years ago, DuPont agreed to a $16 million settle-ment with the Environmental Protection Agency after itwas accused of failing to report data on PFOA, a likelycarcinogen. DuPont later volunteered to halt by 2015 allPFOA emissions from its plants.Beyond the legal fights, DuPont keeps plowing newground. The company vows to make $2 billion a year inrevenue by 2015 from 1,000 products that save energyand reduce pollutants."What's good for business," Rittenhouse says, "must alsobe good for the environment and for people worldwide."
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USA TODAY Collegiate Case Study: Corporate Social Responsibility
Corporate Social Responsibility (CSR) is a concept whereby corporations (or other for-profit organizations) consider the interests of the societies within which they are based and operate. Moving beyond philanthropy and compliance,
CSR addresses how companies manage… (More)
CSR addresses how companies manage… (More)
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