Why Companies Can No Longer Afford to Ignore Their Social Responsibilities

Tuesday, May 29, 2012

In 1970, the economist and Nobel laureate Milton Friedman published an article in The New York Times Magazine titled, “The Social Responsibility of Business Is to Increase Its Profits.” In the article, he referred to corporate social responsibility (CSR) programs as “hypocritical window-dressing,” and said that businesspeople inclined toward such programs “reveal a suicidal impulse.” Even four decades ago, at a time of growing public concern for the environment, his views represented the general skepticism and contempt with which many in Corporate America viewed CSR.

Times have changed. There remain company chieftains who take a Friedman-esque view, of course, but many more have made CSR a priority. Ten years ago, for instance, only about a dozen Fortune 500 companies issued a CSR or sustainability report. Now the majority does. More than 8,000 businesses around the world have signed the UN Global Compact pledging to show good global citizenship in the areas of human rights, labor standards and environmental protection. The next generation of business leaders is even more likely to prioritize CSR. According to data released this month by Net Impact, the nonprofit that aims to help businesses promote sustainability, 65% of MBAs surveyed say they want to make a social or environmental difference through their jobs.

Today, amid a lingering recession that has dented corporate profits and intensified pressure from shareholders, companies are devising new CSR models. Rather than staffing a modest CSR department — and slapping it on the org chart as a small offshoot of the public relations (PR) or philanthropy division — many companies are instead trying to embed CSR into their operations. Some blue-chip companies, such as Visa, are creating new markets in the developing world by closely aligning social causes with their overarching corporate strategies. Others, such as Walmart, have made ambitious commitments to sustainability as a way to save money and tighten their supply chain.

Source: TIME (link opens in a new window)

Tags
corporate social responsibility, profits