I stumbled upon a very interesting commentary from Betsy Atkins, which was published by Forbes.com in November 2006.
The concept of corporate social responsibility deserves to be challenged. It seems that political correctness has obfuscated the important business points. It is absolutely correct to expect that corporations should be “responsible” by creating quality products and marketing them in an ethical manner, in compliance with laws and regulations and with financials represented in an honest, transparent way to shareholders. However, the notion that the corporation should apply its assets for social purposes, rather than for the profit of its owners, the shareholders, is irresponsible.
The corporation’s goal is to act on behalf of its owners. The company’s owners–its shareholders–can certainly donate their own assets to charities that promote causes they believe in. They can buy hybrid cars to cut back on fossil fuel consumption or support organizations that train the hard-core unemployed. But it would be irresponsible for the management and directors of a company, whose stock these investors purchased, to deploy corporate assets for social causes.
It would be very easy to carry out a litmus test of the market for corporate social responsibility. For example, Apple Computer could sell one iPod for $99 and another for $125. The company could announce that the extra $26 from the more expensive iPod would be spent to promote specific social causes, such as education, environmentalism, etc. Such a test would account clearly and honestly for how shareholders’ money was being used and would allow the market to drive the outcome. If consumers wanted to pay the extra $26, voting with their wallets for a cause they believe in, they could.
Interestingly, such a litmus test already exists, albeit not in the private sector. Beginning in tax year 2002, the state of Massachusetts gave taxpayers the option of checking a box on their 1040s to pay a higher rate, with the extra funds going to social services. Out of the $16 billion that Massachusetts residents paid in taxes that year, only $100 million came from people who volunteered to pay extra. That’s less than 1% of the market–sobering when one considers that Massachusetts is a state with a high degree of social consciousness. (See: America’s Most Generous States.) In point of fact, when it comes to actually voting with their wallets, consumers prefer not to be directed to do so. They like to contribute individually, to charities they believe in and wish to support as individuals, not as part of a huge pool. They certainly do not expect the for-profit corporations in which they invest to deploy corporate assets for social causes.
Thus, it would be a questionable use of corporate assets for a company to invest its shareholders’ money in a “green” headquarters that cost an extra $100 million. The goal of reducing pollution by building an environmentally friendly headquarters may be a worthy one–but the corporation hasn’t asked shareholders whether they want their assets spent that way. In fact, it would be not only irresponsible but deceptive.
Management is charged with making informed decisions to invest corporate assets for uses that will efficiently achieve corporate goals. These include growth, profitability, product innovation, and anything else that drives the shareholders’ return on investment as measured by the stock price. What quantifiable outcome could a green headquarters produce? How could the corporation justify, in a quantifiable way, the use of shareholder assets?
There are practical reasons why corporations should cloak themselves in the politically correct rhetoric of social responsibility. But marketing should not be confused with significant deployments of corporate assets. For example, British Petroleum’s (nyse: BP – news – people ) marketing campaign, which is all about looking for alternative energy sources, makes the consuming public feel good about purchasing BP products. But if BP had redeployed billions of dollars into environmental investments that yielded no profits, and its stock plummeted, one would certainly expect the investing public to transfer its money to a competitor.
What the investing and consuming public really means by “social responsibility” is:
- Be transparent in your financial reporting.
- Produce a quality product, and don’t misrepresent it.
- If you know something about the product that endangers the consumer, be forthright and let the public know.
- Do not use predatory practices in offshore manufacturing, such as child labor.
- Do not pollute your environment or other environments, and adhere to laws and regulations.
- Be respectful, fair and open in your employment practices.
In other words, corporate social responsibility actually refers largely to what the company does not do. I think this is a clarification that should be understood by all constituencies.
This commentary was published by Forbes.com, November 28, 2006. Find more information about Betsy here and also visit the commentary on Forbes.com
At an event of the World Affairs Council in San Francisco last week, I had the chance to meet Wilford Welch and learn about his new book “The Tactics of Hope”.
In a nutshell, The Tactics of Hope is a call to action for individuals who are concerned about global issues such as poverty, human rights, social justice, and environmental sustainability but are not clear what steps they might best take to move from concern to effective action. The Tactics of Hope provides support and inspires by telling 27 stories of social entrepreneurs and their creative, powerful initiatives.
At the event, I also spoke to Priya Haji, one of the featured entrepreneurs in the book. Priya is co-founder and CEO of World of Good, a company that distributes handcrafted products made by artisans in developing countries. Besides the companies fair trade practices, 10% of World of Good’s profits go to its nonprofit foundation, which seeks to improve the standard of living of the artisans. World of Good supports 5,680 artisans who in turn have nearly 23,000 dependents. 75% of them are women. With the eBay partnership I was writing about in a post yesterday, World of Good will be able to leverage eBay’s technology and increase its scale and impact tremendously.
At the event, Tactics of Hope contributing editor David Hopkins presented the beta version of the application he was developing. In line with the book, the goal of this tool is to connect website visitors to organizations and other individuals around the world, who want to discover their own tactics of hope and take action to address the most pressing challenges of our time.
Of course you can buy the book online. To get it signed, however, you’ll need to meet Wilford and his team at one of the book stores listed here.
At the Dow Jones Environmental Ventures conference in San Mateo, CA, Robert Chatwani, eBay’s General Manager for WorldofGood.com participated a panel, discussing “Which Technologies Will Get the Green Light?” The panelists recognized that consumer purchases of green products and services are increasing and therefore, I wanted learn more about eBay’s partnership with World Of Good.
World of Good is a mission driven business that engages people in changing the world through commerce that alleviates poverty and benefits the environment. So far, World of Good sells fair traded handicraft through its a network of 1,300 US based stores. The collaboration with eBay will provide World them with an advanced community platform and a marketplace with global reach. By leveraging eBay’s technology, World Of Good will be able to scale it’s business to an extend unheard of in the fair trade community.
I find it fascinating, that sometimes there are partnerships that just make a lot of sense. And without doubt, the collaboration between eBay and World of Good, two companies that seem to share a common vision of creating positive change through commerce, has tremendous potential. To safeguard fair trade practices, the future World Of Good online store will not follow eBay’s traditional auction model.
As you know, Worldsight’s mission is to bring together all stakeholders of mission driven businesses or programs. So no matter whether you are a big corporation, a small startup, a service provider, or an NGO, please let us know how we can help you scale your business or help you create a meaningful partnership.
To learn more about “Robert Chatwani, eBay’s Greenest Rising Star” make sure to read Treehugger’s interview with him from earlier this year.
Sorting hotel search results by Price, Hotel Name, or Distance from a Landmark are familiar tools to almost any traveler, but RezHub.com, Orlando, FL based travel site is now providing a sort feature with a conscience: Sort by Green Score.
Customers using the RezHub hotel search are now able to view hotels in order of the way they care for the environment.
RezHub and their Green Travel Hub launched in September of last year with a dedication to providing green travel options to everyone and for every trip. Since their launch, the site has continued to provide innovative tools to help travelers learn that going green does not have to mean going to extremes. The Green Score ratings system for hotels was designed to show customers exactly what steps individual hotels are taking to protect the planet. Hotels earn points and Green Score “Branches” by completing tasks ranging from incorporating recycling programs, to using Energy Star Appliances, to landscaping with native plant gardens. RezHub became the first travel site to include a Green Score in every hotel search, and the launch of their “sort by Green Score” feature is the perfect enhancement. The Sort by Green Score feature works just as a “sort by price” would work. When sorted, hotels appear in order of their Green Score starting with the highest at the top and ranging down to the lowest.
RezHub has already Green Scored almost 1000 hotels in the US, 2000 worldwide, and their list grows daily. Customers are encouraged to keep in mind that although some hotels may only have received one Green Score Branch, that they are making positive changes for the planet.
“It’s important to support the green efforts that each hotel is making because it shows the management that they are doing the right thing. Supporting these programs now will help them grow in the future”
says Marketing Director for the website Melissa Evans. RezHub will continue on its mission to bring Green Travel to the mainstream. The Sort by Green Score is one of many more features to come that will take Green Travel searching to the next level.
In addition to providing Green Travel options, information, and bookings, the website donates 20% of its profits from every trip booked to an environmental non-profit group each quarter. Which non-profit group actually “gets the green” is decided by a vote from their customers. Both the RezHub Green Score and Sort by Green features are Patent Pending.
About RezHub.com
RezHub.com™ is the next generation of online travel, providing innovative research and reservation tools to the traveling public. It is our goal to ensure that you feel good about travel, especially when it comes to making the best choice for your trip.
Boston based City Year unveiled an expansion of its long-time partnership with Comcast, announcing that Comcast has pledged cross-channel advertising and financial support for City Year totaling $27 million over the next three years. Comcast has had two previous agreements with City Year over the past five years with a total value of $30 million. This expanded agreement will encourage young people to commit to volunteer service by increasing awareness of City Year’s mission and investing in leadership training for City Year corps members and staff.
“Comcast is a tremendous corporate citizen. Its investment in City Year is making it possible for young people to provide vitally needed services to children in schools and communities nationwide. Further, Comcast’s multi-million dollar national public service campaign will call on America’s young people to ‘give a year’ and ‘change the world’ as City Year corps members,”
said Michael Brown, City Year CEO and Co-Founder. Executive Vice President of Comcast Corporation David L. Cohen, who also serves as a member of City Year’s National Board comments:
“By enabling our youth to be more responsible citizens today, and more effective leaders for the future, City Year is making a positive difference in communities across the country – and we are proud to partner with them to promote volunteerism, diversity and youth leadership development.”
Besides the direct financial commitment of $3M, the partnership includes leadership development. media sponsorship, and other joint activities, such as City Year corps members serving alongside Comcast employees and their family members at Comcast Cares Day, the company’s national day of service.
About City Year
City Year is a nonprofit organization that unites young people of all backgrounds for a demanding year of full-time service, giving them the skills and opportunities to change the world. As tutors, mentors, and role models, these dedicated idealists make a difference in the lives of children, and transform schools and neighborhoods in 17 U.S. locations and Johannesburg, South Africa. Founded in 1988, City Year is dedicated to helping children succeed, building stronger communities, breaking down social barriers and developing young leaders. City Year is a proud member of AmeriCorps.
About Comcast
Comcast Corporation (Nasdaq: CMCSA, CMCSK) is the nation’s leading provider of cable, entertainment and communications products and services. With 24.7 million cable customers, 14.1 million high-speed Internet customers and 5.2 million voice customers, Comcast is principally involved in the development, management and operation of broadband cable systems and in the delivery of programming content.
At next week’s 2008 CRO conference, San Francisco’s Mayor Gavin Newsom will speak about “Lessons from America’s Greenest City” whereas Peter A. Darbee, Chairman of the Board, Chief Executive Officer and President of the Pacific Gas and Electric Company (PG&E) will present “America’s Greenest Utility”.
PG&E was ranked #10 on the 100 Best Corporate Citizens 2008 list, closely followed by Richmond, VA based utility company, Dominion Resources, Inc. Overall winner and awarded as #1 Best Corporate Citizen 2008 was Intel Corporation.
Dave Stangis, who worked to create the CSR function at Intel in the late 90’s and is currently Intel’s Director of Corporate Responsibility, will also participate on a panel at the event.
I am planning to attend the confernce and hope to see you there.
To download the full 100 Best Corporate Citizen list, click here.
E+Co, the Bloomfield, NJ based non-profit investment company has been officially awarded as the Financial Times’ prestigious Sustainable Investor of the Year.
As one of five categories at the 2008 FT Sustainable Banking Awards, the Sustainable Investor of the Year award highlights groundbreaking achievement in the area of sustainable investment, recognizing programs with outstanding triple bottom-line impact.
“You hear talk about boutique investing, about SME investing, about technology investing; E+Co brings all three together. An inspiration,”
states the 2008 Judging Panel of the Financial Times’ Sustainable Banking Awards.
E+Co creates its direct impact by investing in individual energy enterprises and building a portfolio of companies that provide clean energy products and services. These impacts are then measured across a triple bottom line of financial, social and environmental impacts. To date, E+Co has brought energy to more than 4 million people, offsetting 3.3 million tons of carbon dioxide emissions and mobilizing $172 million of co-financing. With more than 100 active energy investments, E+Co’s portfolio encompasses solar, wind, hydro, biogas, LPG and energy efficient businesses.
It is the combination of services and capital that distinguishes E+Co’s work from others in the clean energy field. E+Co’s approach is to empower local small and medium enterprises that supply clean and affordable energy to households, businesses and communities in developing countries.
SAM Sustainable Asset Management of Switzerland was awarded as runner-up. More information about the FT Sustainable Banking Awards, including judging criteria and award categories, can be found here.
About E+Co
E+Co is a non-profit investment company that provides business support services and capital to energy businesses in Africa, Asia and Latin America. With almost 15 years of experience and offices in Bolivia, Brazil, China, Costa Rica, Ghana, the Netherlands, South Africa, Thailand and the United States, E+Co’s innovative business model provides lasting solutions to climate change and poverty.
CNBC’s Maria Bartiromo discusses YouTube as a business, quality control, and the Viacom lawsuit with Steve Chen, YouTube’s co-founder.
Maria asks the one or other interesting question about YouTube’s responsibility when it comes to content and infringement. She also asks:
“What’s going on with YouTube vs. the other traditional media companies that want to get paid for the video that they own on the website YouTube”.
This also explains very well, why the interview is kept so exclusive that I cannot embed it to our site and why it is not even posted on YouTube. But let me be very precise: Michelle Caruso-Cabrera’s introduction of her colleague and the interview is available on YouTube. To watch the video itself, however, you need to visit CNBC’s website and – sometimes – watch a commercial upfront. Watch the video interview here.
Harry R. Halloran Jr., a Philadelphia energy industry entrepreneur has given $10 million to the Opus College of Business at the University of St. Thomas to support its programs in corporate ethics and responsibility.
Besides his roles at American Refining Group Inc. and Energy Unlimited Inc., Halloran also is the founder of Halloran Philanthropies, an organization that supports efforts to enhance global business ethics, microfinance and community service.
“Over the past decade I have come to know and admire St. Thomas’ scholars and programs devoted to corporate ethics,” Halloran said. “The university and its Opus College of Business are leaders in this critically important field, and I am grateful to be able to support their efforts.”
Halloran’s donation to St. Thomas’ Opening Doors capital campaign will support work in corporate ethics and responsibility undertaken by two organizations in the Opus College of Business: the SAIP (Self-Assessment and Improvement Process) Institute and the Center for Ethical Business Cultures.
About Halloran Philanthropies
The purpose of the Halloran Philanthropies is to create a healthy world community that promotes economic development and human dignity guided by ethical principles. GLOBAL ETHICS Supporting programs that impact the ethical behavior of business and promote corporate social responsibility and interreligious programs MICROFINANCE Ensuring the empowerment of the poor to achieve sustainable and dignified livelihoods COMMUNITY SERVICE Promoting neighborhood revitalization and youth education through entrepreneurial development.
