It?s an ill wind …

Thursday, June 11, 2009


As job losses mount, profits fall and companies fail, phrases such as “sustainable business” or “corporate responsibility” have taken on a whole new meaning. But while the terminology describing companies’ attempts to manage their social and environmental impacts may be flawed, many argue that the new scrutiny of global capitalism will only strengthen the case for ethical and responsible business practices.

Even so, some of this optimism may be misplaced. In the food industry, for example, “CSR” appears to be eclipsed by other concerns. In a survey released this week* of the top 10 priorities for food retail and manufacturing decision makers in 54 countries, CIES, a global food business network, found CSR had dropped from first place in January last year to third place a year later, and now languishes in fifth place.

And in the face of economic worries, the pressure consumers and shareholders have recently been exerting on business to behave responsibly could weaken as shoppers look for cheaper goods and as investors focus on short-term returns.

“You don’t lose the [ethical consumers] who are deeply committed but you do start to lose the waverers,” says Andrew Simms, policy director at New Economics Foundation, a think-tank. “And in tough times, the institutional investor’s voice demanding bottom-line returns starts to become more dominant.”

On the other hand, recession may also be strengthening the case for corporations to address their social and environmental impacts. The most obvious example is in resource efficiency. Companies cutting their carbon footprint are, as they look to trim their budgets, seeing this as a new source of savings through reductions in their energy bills.

“Efficiency almost always ties in with savings and direct business benefits,” says Tom Delay, chief executive of the Carbon Trust.

“Businesses now need to find a way to shore up profits that they are in control of – and efficiency is the best way of doing that.”

Source: Financial Times (link opens in a new window)