“Corporate social responsibility” is a bust.
The San Francisco Chronicle reports on its interview with Branson:
…In his new book, Screw Business as Usual, Branson argues that businesses should endeavor to do good, not simply generate revenue and profit. He contends that companies with responsible agendas are capable of outperforming businesses whose focus is solely on top and bottom line numbers. To Branson, doing good means more than charity, it means committing the company’s talent to changing the world. Virgin Group’s non-profit foundation, Virgin Unite, is committed to solving problems ranging from slashing carbon emissions through its Carbon War Room, to peaceful conflict resolution through its Elders initiative…
As to “businesses should do good, not simply generate revenue and profit,” Steve Milloy wrote (Aug. 30, 2010) in the Wall Street Journal:
The role of business in society is to sell goods and services that the public wants, by which activity business creates wealth, employment and the taxes that support government. Profit-making is a difficult enough endeavor for most businesses without being expected to also take on the additional roles of government, charities and social activist groups.
As to “companies with responsible agendas are capable of outperforming businesses whose focus is solely on top and bottom line numbers”, Steve Milloy recently pointed out (Dec. 19, 2011) in the Wall Street Journal:
When economist Art Laffer performed (in 2005) the first empirical study of “sustainable capitalism,” also known as “corporate social responsibility,” he found “no significant positive correlation between CSR and business profitability as determined by standard measures.”
Your data–2005–about CSR and no positive effects on corporate profits is way out of date! Numerous studies demonstrate that ‘high’ CSR companies outperform financially and in their stock prices those with ‘low’ CSR.
See many of these studies at http://investingforthesoul.com/Main%20Pages/ethical-investing-CSR-research-studies.htm
Best wishes, Ron Robins
PS I’ve been following socially responsible investing for about forty years and the link above is to a page on my website. My website focuses on global news, research and services related to the subject.
Milton Friedman once described CSR-activities of the firm as an agency cost, as the agent (management) is engaging in activities, which cost time and effort (which translates into a monetary cost), and do not benefit the principal (the shareholders).
However, I think it’s better to think of CSR as a kind of glorified marketing. A way to target the “ethical consumer”. This despite the fact that CSR-gurus will forever deny it.
What those who support CSR do not realize is that, by focusing on profits, the firm generates wealth for its shareholders and pays the wages for its employees. This can then be spent on anything at all, including so-called ethical or social activities. When the profit motive is bypassed in favor of other motives, less wealth creation must be the result and the whole system becomes less efficient, leaving less funds for the programs CSR-supporters purport to support.
It is the responsibility of corporations to make profits for their shareholders within the constraints of the law. It is the responsibility of individuals to do good things.
The beginning of the end for American was when liberal leftist baby boomers started taking over our premier universities…