When Principles Pay: Corporate Social Responsibility and the Bottom Line

When Principles Pay: Corporate Social Responsibility and the Bottom Line

by Geoffrey Heal
Pub. Date:
Columbia University Press
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When Principles Pay: Corporate Social Responsibility and the Bottom Line

Stories of predatory lending practices and the reckless destruction of the environment by greedy corporations dominate the news, suggesting that, in business, ethics and profit are incompatible pursuits. Yet some of the worst lenders are now bankrupt, and Toyota has enjoyed phenomenal success by positioning itself as the green car company par excellence. These trends suggest that antisocial corporate behavior has its costs, especially in terms of the stock market, which penalizes companies that have poor environmental track records and rewards more socially conscious brands.

The political context of our economy is rapidly changing, particularly in regard to incentives that operate outside the marketplace in a strict and narrow sense and involve interactions between corporations and nongovernmental organizations (NGOs), activist groups, regulatory bodies, consumers, and civil society. These interactions can significantly color a corporation's alternatives, making socially or environmentally harmful behavior much less attractive. British Petroleum, for example, has voluntarily reduced its greenhouse gas emissions over the past ten years, Starbucks, has changed the environmental impact of its coffee production, and Nike and other footwear and textile makers now monitor the labor conditions of their subcontractors.

When Principles Pay jumps headfirst into this engaging and vital issue, asking whether profit maximization and the generation of value for shareholders is compatible with policies that support social and environmental goals. Geoffrey Heal presents a comprehensive examination of how social and environmental performance affects a corporation's profitability and how the stock market reacts to a firm's social and environmental behavior. He looks at socially responsible investment (SRI), reviewing the evolution of the SRI industry and the quality of its returns. He also draws on studies conducted in a wide range of industries, from financials and pharmaceuticals to Wal-Mart and Monsanto, and focuses on the actions of corporations in poor countries. In conclusion, Heal analyzes how social and environmental performance fits into accounting and corporate strategy, presenting an executive perspective on the best way to develop and implement these aspects of a corporation's behavior.

Product Details

ISBN-13: 2900231144000
Publisher: Columbia University Press
Publication date: 03/26/2008
Series: Columbia Business School Publishing Series
Edition description: New Edition
Pages: 288
Product dimensions: 6.50(w) x 1.50(h) x 9.50(d)

Table of Contents

Preface     xi
Introduction     1
Adam Smith and Corporate Responsibility     4
External Costs     7
Fairness     13
Shareholders     15
Conclusions     18
Social, Environmental, and Financial Performance     19
What the Data Tell Us     28
Conclusions     41
Whirlpool and Corporate Social Responsibility     41
Socially Responsible Investment     47
The Performance of SRI Funds     53
The Impact of SRI Funds     58
Conclusions     65
Financial Institutions and Social and Environmental Performance     67
Background to the Equator Principles     68
Development of the Equator Principles     70
Drafting the Equator Principles     72
Second Meeting of the Banks-February 12, 2003, at Citigroup's Office in Canary Wharf, London     74
Financial Times Articles     74
Third Meeting of the Banks-April 29, 2003, at WestLB's Offices in Dusseldorf     75
Elements of the Equator Principles     76
Test-Marketing the Principles with Project Sponsors and NGOs     79
Marketing the Principles to Other Banks     80
TheManagement Decision-Go It Alone or Not?     80
Reaction to the Equator Principles     81
Equator Principles at Citigroup     82
Consequences and Implications of Equator Principles     83
Evolution of the Equator Principles     86
The Business Case for the Equator Principles     87
Evaluation of the Equator Principles     91
Pharmaceuticals and Corporate Responsibility     96
Doing Well and Doing Good     96
The Fall from Grace     98
Access to Medicines     100
Transparency     103
The Way Ahead     105
Conclusion     111
Wal-Mart and Starbucks     113
Wal-Mart     113
Starbucks     131
Interface and Monsanto     137
Interface     137
Monsanto     144
Outsourcing     152
The Ethics of Outsourcing     156
Case Studies     157
Facts About Outsourcing and Low-Wage Countries     160
Corporate Responsibility and Outsourcing     168
Outsourcing in China     170
Conclusions     174
Getting Rich by Selling to the Poor     176
Capital Markets and Prosperity     176
Consumer Goods and the Poor     191
Cell Phones and Development     197
Phones and Economic Growth     197
Mobile Phones in Poor Countries     201
Conclusions     206
Measuring Corporate Responsibility     208
Social and Environmental Policies and Corporate Strategy     225
Corporate Responsibility and Risk Management     228
Corporate Responsibility and Brand Value     229
Corporate Responsibility is Often Collective     232
How Do Social and Environmental Strategies Work?     233
Do Social and Environmental Policies Work?     234
Summary     235
Conclusions     236
Doing Well by Doing Good?     236
International Dimensions     240
Conclusions     245
Notes     247
Index     263

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