WHAT IS GOOD?

A quick browse of web sites for the Fortune 500 reveals that good goes by many names, including corporate social responsibility, corporate citizenship, corporate philanthropy, corporate giving, corporate community involvement, community relations, community affairs, community development, corporate responsibility, global citizenship, and corporate societal marketing.

For purposes of focused discussion and applications for best practices, the authors prefer the use of the term corporate social responsibility and offer the following definition:

Corporate social responsibility is a commitment to improve community well-being through discretionary business practices and contributions of corporate resources.

A key element of this definition is the word discretionary. We are not referring here to business activities that are mandated by law or that are moral or ethical in nature and perhaps therefore expected. Rather, we are referring to a voluntary commitment a business makes in choosing and implementing these practices and making these contributions. Such a commitment must be demonstrated in order for a company to be described as socially responsible and will be fulfilled through the adoption of new business practices and/or contributions, either monetary or nonmonetary. The term community well-being in this definition includes human conditions as well as environmental issues.

Others have offered several distinct definitions of corporate social responsibility (CSR). One from the World Business Council for Sustainable Development reflects the council’s focus on economic development in describing CSR as “business’ commitment to contribute to sustainable economic development, working with employees, their families, the local community, and society at large to improve their quality of life.”² The organization Business for Social Responsibility defines CSR as “operating a business in a manner that meets or exceeds the ethical, legal, commercial, and public expectations that society has of business.” This definition is somewhat broader as it encompasses business decision making related to “ethical values, legal requirements, as well as respect for people, communities, and the environment.”³

We also use the term corporate social initiatives to describe major efforts under the corporate social responsibility umbrella and offer the following definition:

Corporate social initiatives are major activities undertaken by a corporation to support social causes and to fulfill commitments to corporate social responsibility.

Causes most often supported through these initiatives are those that contribute to community health (i.e., AIDS prevention, early detection for breast cancer, timely immunizations), safety (designated driver programs, crime prevention, use of car safety restraints), education (literacy, computers for schools, special needs education), and employment (job training, hiring practices, plant locations); the environment (recycling, elimination of the use of harmful chemicals, reduced packaging); community and economic development (low-interest housing loans); and other basic human needs and desires (hunger, homelessness, animal rights, voting privileges, antidiscrimination efforts).

Support from corporations may take many forms, including cash contributions, grants, paid advertising, publicity, promotional sponsorships, technical expertise, in-kind contributions (i.e., donations of products such as computer equipment or services such as printing), employee volunteers, and access to distribution channels. Cash contributions may come directly through a corporation or indirectly through a foundation it has established to focus on corporate giving on behalf of the corporation.

Corporations may be sponsoring these initiatives on their own (such as the New York Times Company Foundation support for journalism and journalists) or in partnership with others (as with ConAgra Foods and America’s Second Harvest). They may be conceived of and managed by one department within the corporation, or by a team representing multiple business units.

As noted earlier, we have identified six major types of corporate social initiatives, which are the focus of this book, with a chapter dedicated to a detailed review of each initiative. An overview of these initiatives is presented in Chapter 2.

WHAT ARE THE TRENDS?

In the last decade, directional signals point to increased corporate giving, increased corporate reporting on social responsibility initiatives, the establishment of a corporate social norm to do good, and an apparent transition from giving as an obligation to giving as a strategy.

Increased Giving

According to Giving USA, charitable giving by for-profit corporations has risen from an estimated $9.6 billion in 1999 to $12.19 billion in 2002.⁴

Cone/Roper’s Executive Study in 2000, exploring cause initiatives from the corporate perspective, found that 69 percent of companies planned to increase future commitments to social issues.⁵ (For more than 10 years, the well-known Cone/Roper tracking studies have been instrumental in providing ongoing research on attitudes toward corporate involvement in cause initiatives. Their research includes surveys of consumers, employees, and executives. Their benchmark study of consumer attitudes, conducted in 1993, as well as results from subsequent studies, is described later in this chapter.⁶)

Increased Reporting

According to KPMG, a U.S. professional services firm, a 2002 survey of the Global Fortune Top 250 companies indicated a continued increase in the number of American companies reporting on corporate responsibility. In 2002, 45 percent of these companies issued environmental, social, or sustainability reports, compared with 35 percent in their 1999 survey.⁷

Major avenues for this reporting include corporate annual reports with special sections on community giving and, increasingly, the publication of a separate annual community giving report. Starbucks, for example, in 2003 published its second annual Report on Corporate Social Responsibility and, in an opening letter from the Chairman and CEO, emphasized that this report is a way “to provide transparency on our business practices, measurements of our performance, and benchmarks for future reports.” It further explains that Starbucks took additional measures in the second year of reporting “to assure our stakeholders that the information in this report is accurate by engaging an independent third party to verify its contents.”⁸

A review of Fortune 500 web sites also indicates that a majority now have special reports on giving, with sections typically labeled “Corporate Social Responsibility,” “Corporate Citizenship,” “Community Development,” “Community Giving,” or “Community Involvement.” Many of these sections provide lengthy detail on topics like annual giving amounts, philanthropic priorities, major initiatives, employee volunteerism, and sustainable business practices.

Establishment of a Corporate Social Norm to Do Good

Within these annual reports and on these web sites, there are also consistent and similar messages from CEOs, signaling that commitments to corporate social responsibility have entered the mainstream of corporate dialogue as a must-do, as indicated in the following examples:

• American Express: “Good Works = Good Business.... Not only is it appropriate for the company to give back to the communities in which it operates, it is also smart business. Healthy communities are important to the well-being of society and the overall economy. They also provide an environment that helps companies such as American Express grow, innovate, and attract outstanding talent.” (Harvey Golub, Chairman and CEO, and Kenneth Chenault, President and Chief Operating Officer, 2000)⁹

• Dell: “Dell is a global company that delivers products and services to more than 190 countries. We have more than 40,000 employees who live and work on six continents. That’s why it’s important that we provide technology to all communities that we call home.” (Michael Dell, Chairman and CEO, July 2003)¹⁰

• Fannie Mae: “Fannie Mae and the Greenlining Institute share a common mission. We are both devoted to improving the quality of life in underserved communities. We both are working to bring more opportunities to people and places inside the old red lines. And we both believe in the power of housing.” (Franklin D. Raines, Chairman and CEO, April 2003)¹¹

• Ford Motor Company: “There is a difference between a good company and a great company. A good company offers excellent products and services. A great company also offers excellent products and services but also strives to make the world a better place.” (William Clay Ford, Jr., Chairman of the Board and CEO )¹²

• Kellogg: “There are many measures of a company’s success. The most obvious, of course, are profitability and share value. A company may also be measured by its ability to change with the times, or develop innovative products. These elements are all vital to Kellogg Company. But there is another important measure that we hold ourselves accountable for—our social responsibility.” (Carlos M. Gutierrez, Chairman and CEO, 2003)¹³

• Hewlett-Packard: “I honestly believe that the winning companies of this century will be those who prove with their actions that they can be profitable and increase social value—companies that both do well and do good.... Increasingly, shareowners, customers, partners, and employees are going to vote with their feet—rewarding those companies that fuel social change through business. This is simply the new reality of business—one that we should and must embrace.” (Carly Fiorina, Chairman and Chief Executive Officer, November 2003)¹⁴

• McDonald’s: “Social responsibility is not a program that begins and ends. Acting responsibly has always been a part of who we are and will continue to be the way McDonald’s does business. It’s an ongoing commitment.” (McDonald’s CEO, Jim Cantalupo, CEO, 2003 )¹⁵

• Nike: “The performance of Nike and every other global company in the twenty-first century will be measured as much by our impact on quality of life as it is by revenue growth and profit margins. We hope to have a head start.” (Phil Knight, Chairman and CEO, 2001)¹⁶

A Shift from Obligation to Strategy

In a seminal article in the Harvard Business Review in 1994, Craig Smith identified “The New Corporate Philanthropy,” describing it as a shift to making long-term commitments to specific social issues and initiatives; providing more than cash contributions; sourcing funds from business units as well as philanthropic budgets; forming strategic alliances; and doing all of this in a way that also advances business goals.

One milestone Smith identified that contributed to this evolution was a Supreme Court decision in the 1950s that removed legal restrictions and unwritten codes which up to that time had restricted, or at least limited, corporate contributions and involvement in social issues. Subsequently, by the 1960s most U.S. companies began to feel pressures to demonstrate their social responsibility and established in-house foundations and giving programs.¹⁷

One of the next milestones Smith cited was the Exxon Valdez oil spill in 1989, which brought into serious question the philanthropy of the 1970s and 1980s, where corporations tended to support social issues least associated with their line of business, give to a variety of causes, and turn over management of their giving to separate foundations. When Exxon then needed access to environmentalists for expertise and support, management was “without ties to environmental leaders nurtured by the foundation.”¹⁸ A final milestone that Smith identified was the emergence and visibility of models in the 1990s such as one used at AT&T that proposed a new view of the role of a corporate foundation and its relationship to the for-profit arm. Its perspective was that not only should philanthropic initiatives of the foundation support business objectives but that business units, in return, should provide support for philanthropic activities in the form of resources such as marketing expertise, technical assistance, and employee volunteers.¹⁹

David Hess, Nikolai Rogovsky, and Thomas W. Dunfee suggest that another force driving this shift is the new “moral marketplace factor,” creating an increased importance of perceived corporate morality in choices made by consumers, investors, and employees. They point to several examples of marketplace morality, including “investors choosing socially screened investment funds, consumers boycotting Shell Oil because of its decision to sink the Brent Spar oil rig, and employees’ desires to work for socially responsible firms.”²⁰

The following section contrasts the more traditional approach to corporate philanthropy with the new strategic approach in terms of bestpractice issues of selecting, developing, implementing, and evaluating corporate social initiatives.

The Traditional Approach: Fulfilling an Obligation

Prior to the 1990s, decisions regarding the selection of social issues to support tended to be made based on themes reflecting emerging pressures for “doing good to look good.” Corporations would commonly establish, follow, and report on a fixed annual budget for giving, sometimes tied to revenues or pretax earnings. Funds were allocated to as many organizations as possible, reflecting a perception that this would satisfy the most constituent groups and create the most visibility for philanthropic efforts. Commitments were more short-term, allowing the organization to spread the wealth over a variety of organizations and issues through the years. Interestingly (given where we are today), there was more of a tendency to avoid issues that might be associated with core business products, which might be perceived as self-serving, and to steer clear of major and often controversial social issues such as AIDS, judging that these were best handled by those with expertise in governmental or nonprofit organizations. Decisions regarding issues to support and organizations to sponsor were also more heavily influenced by preferences (and wishes) of senior management and directors of boards than by needs to support strategic business goals and objectives.

When developing and implementing specific initiatives, the rule of thumb might have been described as to “do good as easily as possible,” resulting in a tendency to simply write a check. Most donors were satisfied with being one of many corporate sponsors, as visibility for efforts was not a goal or concern. And because it would require extra effort, few attempts were made to integrate and coordinate giving programs with other corporate strategies and business units such as marketing, human resources, and operations.

In terms of evaluation, it appears little was done (or asked for) to establish quantifiable outcomes for the business or the social cause; the approach was simply to trust that good happened.

The New Approach: Supporting Corporate Objectives as Well

As noted earlier, Craig Smith described how in the early 1990s, many turned to a new model of corporate giving, a strategic approach that ultimately impacted what issues corporations supported, how they designed and implemented their programs, and how they were evaluated.

Decision making now reflects an increased desire for “doing well and doing good.” We see more corporations picking a few strategic areas of focus that fit with corporate values; selecting initiatives that support business goals; choosing issues related to core products and core markets; supporting issues that provide opportunities to meet marketing objectives, such as increased market share, market penetration, or building a desired brand identity; evaluating issues based on their potential for positive support in times of corporate crisis or national policy making; involving more than one department in the selection process, so as to lay a foundation of support for implementation of programs; and taking on issues the community, customers, and employees care most about.

Developing and implementing programs in this new model looks more like “doing all we can to do the most good, not just some good.” It is more common for managers to make long-term commitments and to offer in-kind contributions such as corporate expertise, technological support, access to services, and donation of retired equipment. We see more efforts to share distribution channels with cause partners; to volunteer employee time; to integrate the issue into marketing, corporate communications, human resources, community relations, and operations; to form strategic alliances with one or more external partners (private, public, nonprofit); and to have funding come from additional business units such as marketing and human resources.

Evaluation now has increased importance, perceived as critical to answering the question “What good did we do?” Trusting is not good enough. This input is valued as a part of a strategic framework that then uses this feedback for course correction and credible public reporting. As a result, we see increased pressures for setting campaign goals, measuring outcomes for the corporation, and measuring impact for the cause.

Amid these increased pressures for evaluation of outcomes, program partners are challenged with determining methodologies and securing resources to make this happen.

WHY DO GOOD?

Most health care professionals promise that if we engage in regular physical activity we’ll look better, feel better, do better, and live longer. There are many who say that participation in corporate social initiatives has similar potential benefits. It appears that such participation looks good to potential consumers, investors, financial analysts, business colleagues, in annual reports, in the news, and maybe even in Congress and the courtroom. It is reported that it feels good to employees, current customers, stockholders, and board members. There is growing evidence that it does good for the brand and the bottom line as well as for the community. And there are some who claim that corporations with a strong reputation for corporate social responsibility actually last longer.

Let’s examine the existing evidence that participation in corporate social initiatives can impact key performance factors, which could then support these claims.

Business for Social Responsibility is a leading nonprofit global organization providing businesses with information, tools, training, and advisory services related to integrating corporate social responsibility in their business operations and strategies. Their research and experience concludes that companies have experienced a range of bottom-line benefits, including reference to several of the following:²¹

• Increased sales and market share.

• Strengthened brand positioning.

• Enhanced corporate image and clout.

• Increased ability to attract, motivate, and retain employees.

• Decreased operating costs.

• Increased appeal to investors and financial analysts.

Increased Sales and Market Share

Surveys conducted by Cone/Roper, mentioned earlier in this chapter, have provided strong evidence that companies can benefit significantly from connecting themselves to a cause, as illustrated in the following (now often quoted) findings from their benchmark survey of consumers in 1993/1994:

• “Eighty-four percent said they have a more positive image of companies that do something to make the world better.”

• “Seventy-eight percent of adults said they would be more likely to buy a product associated with a cause they cared about.”

• “Sixty-six percent said they would switch brands to support a cause they cared about.”

• “Sixty-two percent said they would switch retail stores to support a cause.”

• “Sixty-four percent believe that cause-related marketing should be a standard part of a company’s activities.”²²

Further, it was found that cause marketing activities had the strongest impact on people in higher education and income categories—those who attended college and earn more than $30,000 a year.

Evidently, these attitudes were strengthened after 9/11, as evidenced by the 2001 Cone/Roper Corporate Citizenship Study, which indicated an increased importance for corporate involvement in social issues. In March 2001, an estimated 65 percent of Americans surveyed believed companies should support causes. By November, that number had increased to 79 percent. “The atmosphere since September 11 has accelerated and intensified a trend that our Cone/Roper research has documented since 1993,” said Carol Cone, CEO of Cone. “We are seeing extraordinary jumps of 20 to 50 percent in public opinion. Corporate citizenship should now become a critical component of business planning as Americans are promising increased support for companies that share their values and take action.”²³

In 2002, there appeared to be no letup. The 2002 Cone Corporate Citizenship Study reported that 84 percent of Americans said they would be likely to switch brands to one associated with a good cause, if price and quality are similar.²⁴

Others have similar contentions and present strong evidence that involvement in social causes increases brand preference:

• Paul Bloom, Steve Hoeffler, Kevin Keller, and Carlos Basurto contend that “consumers these days monitor and pay attention to how brands are marketed, and if they like the way that marketing is done because they have some type of positive feelings about or affinity toward the social cause being supported in the marketing program, then consumers will weigh the brand’s marketing approach more heavily and positively compared to how they would weigh a brand’s marketing program if it were supporting a nonsocial cause (e.g., commercial sponsorship) in forming preferences.”²⁵

• In an article by Minette Drumwright in the Journal of Marketing, entitled “Socially Responsible Organizational Buying: Environmental Concern as a Noneconomic Buying Criterion,” the case is made that “as the earth becomes more populous and more resource depleted, noneconomic criteria are likely to play more prominent roles in organizational buying processes.” She quotes several studies: “In surveys, 75 percent of consumers have said their purchasing decisions are influenced by a company’s reputation with respect to the environment, and eight in ten have said they would pay more for products that are environmentally friendly (Klein 1990). One survey notes that 85 percent have said they believe that U.S. companies should be doing more to become environmentally responsible (Chase and Smith 1992 ).”²⁶

• As summarized by Business for Social Responsibility, a 1999 study conducted by Environics International Ltd., The Prince of Wales Business Leaders Forum, and The Conference Board surveyed 25,000 citizens in 23 countries regarding corporate social responsibility. Highlights of findings included the following:

• Ninety percent of respondents want companies to focus on more than profitability.

• Sixty percent said they form an impression of a company based on perceptions of social responsibility.

• Forty percent said they either responded negatively to or said negative things about companies they perceive as not being socially responsible.

• Seventeen percent reported they had actually avoided the products of companies if they perceived them as not being socially responsible.²⁷

Clearly, one of the best examples of a corporate social initiative that increased sales and market share was the American Express campaign for the restoration of the Statue of Liberty in the early 1980s. Featured in Chapter 4, American Express is an inspiring example of the potential for cause-related marketing. Instead of just writing a check to help with the cause, American Express tried a new approach, and the marketing world was watching. They pledged that every time cardholders used their cards, the company would make a contribution to a fund to restore the Statue of Liberty, as well as an additional contribution for every new card application. The campaign generated $1.7 million in funds for “the lady,” a 27 percent increase in card usage, and a 10 percent jump in new card member applications.²⁸

Strengthened Brand Positioning

In their book Brand Spirit, Hamish Pringle and Marjorie Thompson make a strong case for the contribution that linking a company or brand to a relevant charity or cause can make to the “spirit of the brand.” They contend that consumers are going beyond “the practical issues of functional product performance or rational product benefits and further than the emotional and psychological aspects of brand personality and image. Consumers are moving towards the top of Maslow’s Hierarchy of Needs and seeking ‘self-realization.’ ”²⁹ What they are asking for and are drawn to now are demonstrations of good. “In an anthropomorphic sense, if consumers know how a brand functions and how it ‘thinks’ and ‘feels.’ then the new question that has to be answered is ‘What does it believe in?’ ”³⁰

Bloom, Hoeffler, Keller, and Basurto see “marketing initiatives containing a larger amount of social content having a more positive effect on brand judgments and feelings than initiatives that are similar in size and scope but contain less social content. By ‘social content’ we mean activities in the marketing initiative that are meant to make tangible improvements to social welfare. Thus a program that would make a donation to an environmental organization every time a purchase was made would be higher in social content than a program that gave a consumer a free toy every time a purchase was made.”³¹

Consider, for example, the spirit that participation in corporate social initiatives has given to the Ben & Jerry’s brand. Most of us, when we see or hear the words “Ben & Jerry’s,” think of a philanthropic company that promotes and supports positive social change. We may know about their PartnerShops program that waives standard franchise fees for nonprofit organizations in order to offer supportive employment; or we may know about their commitment to promoting world peace, including a list of 50 ways to promote peace in the world posted on their corporate web site, www.benjerry.com; or we may know about their “Coffee For A Change” program, which pays a premium for coffee beans from farmers committed to sustainable farming practices. In the end, when we see the lineup of ice creams in the freezer section of our favorite grocer, many of us have a unique image and positive feeling for the Ben & Jerry’s label.

Improved Corporate Image and Clout

Several existing and respected reports cover standards and assessment of performance in the area of corporate social responsibility, including the following:

• The Council on Economic Priorities is a public service research firm that evaluates company performance on a range of social dimensions and publishes Shopping for a Better World to influence consumers’ purchase decisions.³²

• Fortune publishes an annual list of “America’s Most Admired Companies,” based on a survey of 10,000 executives and securities analysts conducted by HayGroup, a global consultancy firm. Respondents are asked to rate companies, using a scale from 0 to 10, on eight attributes: innovation, financial soundness, employee talent, use of corporate assets, long-term investment value, quality of management, quality of products/services, and social responsibility. These eight attributes were determined more than 20 years ago through research that uncovered strong opinions that social responsibility—defined simply as “responsibility to the community and/or the environment”—should be one of the eight attributes. In 2004, those on the top 10 list for the social responsibility subcategory in the United States were United Parcel Service, Alcoa, Washington Mutual, BP, McDonald’s, Procter & Gamble, Fortune Brands, Altria, Vulcan Materials, and American Express.³³

• Business Ethics publishes a list of “100 Best Corporate Citizens,” recognizing companies’ corporate social responsibility toward stakeholders, including the environment and the community. In 2002, the top five Best Corporate Citizens were IBM, Hewlett-Packard, Fannie Mae, St. Paul Companies, and Procter & Gamble.³⁴

• Other external reports and standards covering corporate social responsibility include the Global Reporting Initiative, the Global Sullivan Principles, Social Accountability 8000, the Caux Round Table, the Interfaith Center on Corporate Responsibility, Sunshine Standards for Corporate Reporting to Stakeholders, and the Keidanren Charter for Good Corporate Behavior.³⁵

In addition to positive press from reports such as these, according to Business for Social Responsibility, “companies that demonstrate they are engaging in practices that satisfy and go beyond regulatory compliance requirements are being given less scrutiny and more free rein by both national and local government entities.”³⁶

A strong reputation in the community can be a real asset in times of crisis. Hess, Rogovsky, and Dunfee describe a dramatic example of this, in which a good reputation protected McDonald’s during the 1992 South Central Los Angeles riots. “The company’s efforts in developing community relations through its Ronald McDonald Houses and its involvement in developing employee opportunities gave the company such a strong reputation, McDonald’s executives stated, that rioters refused to harm their outlets. While vandalism caused tremendous damage to businesses in the area, all 60 of McDonald’s franchises were spared harm.”³⁷

And finally, this positive corporate image may also influence policy makers as well. Craig Smith, in the article mentioned earlier, “The New Corporate Philanthropy,” cites an example for AT&T in the early 1990s. The AT&T Foundation, the principal instrument for AT&T philanthropy, supports various education and art programs for children. As a result, “in the postelection (Clinton/Gore) economic summit in Little Rock, Arkansas . . . [AT&T CEO Robert] Allen was able to comment on the link between economic performance and the well-being of children. Then, as if to thank Allen for addressing a crucial issue on the policy agenda, President Clinton called on Allen to speak about the information superhighway. In front of the nation, the CEO of AT&T was able to make a point crucial to the company’s government relations strategy: the superhighway should be a private rather than a public initiative.”³⁸

Increased Ability to Attract, Motivate, and Retain Employees

Cone/Roper studies also indicate that a company’s participation in social initiatives can have a positive impact on prospective and current employees, as well as citizens and executives. According to their March 2001 survey, employees working in companies reported to have cause-related programs were 38 percent more likely to say they are proud of their company’s values than were employees in companies not reported to have these programs. Even before 9/11, 48 percent of respondents indicated that a company’s commitment to causes is important when deciding where to work. After 9/11, that percentage rose to 76.³⁹ And in their 2002 Citizenship Study with a national cross section of 1,040 adults, 80 percent of respondents said they would be likely to refuse to work at a company if they were to find out about negative corporate citizenship practices.⁴⁰

Similarly, one noteworthy study conducted by Net Impact found that more than half of the 2,100 MBA students surveyed indicated they would accept a lower salary in order to work for a socially responsible company. Two additional studies conducted by the World Resources Institute and the Initiative for Social Innovation Through Business, also focused on MBAs, reported that these graduates look for the right corporate culture, as well as the right salary, job description, and opportunities for promotion.⁴¹

At Timberland, for example, full-time U.S. employees are given 40 hours of paid time off to perform community service; part-time employees get 16 hours per year. This program, called Path of Service, began in 1992, and by the year 2000, nearly 95 percent of Timberland’s U.S. employees were participating in the program. The program has been recognized by many, including Fortune, which for the past three years has rated Timberland as one of its “100 Best Companies to Work For.” This service program was cited as a factor in its selection.⁴²

Decreased Operating Costs

Several business functions can cite decreased operating costs and increased revenue from grants and incentives as a result of the implementation of corporate social initiatives. One arena easy to point to includes companies who adopt environmental initiatives to reduce waste, reuse materials, recycle, and conserve water and electricity.

At Cisco Systems, for example, an energy conservation initiative called “Cleaner Air and Millions in Savings” is expected to save the company about $4.5 million per year in operating costs. In addition, these energy savings will eventually qualify the company for an estimated $5.7 million in rebates from the local energy supplier, Pacific Gas & Electric.⁴³

Another area for potential reduced costs is in advertising expenditures, especially as a result of increased free publicity. The Body Shop, for example, is noted for its campaign against using animals for cosmetic testing. According to an article by the World Business Council for Sustainable Development, “The Body Shop was launched on the basis of fair prices for fairly produced cosmetics. Anita Roddick, its founder, generated so much favorable publicity that the company did not need to advertise: a win-win on the cost-benefit front, leaving aside the do-gooding.”⁴⁴

Increased Appeal to Investors and Financial Analysts

Some argue that involvement in corporate social initiatives can even increase stock value. They point to the ability to attract new investors and reduce exposure to risk in the event of corporate or management crises:

• In an article appearing in the Financial Times in July 2003, Jane Fuller wrote: “It pains me to say this, but I am becoming less cynical about Corporate Social Responsibility. This is not because of the weight of words expended on this subject by companies, lobbyists, and politicians. It is because companies that are less exposed to social, environmental, and ethical risks are more highly valued by the market . . . In other words, investors are already pricing in social, environmental, and ethical factors. This is not sentimental behavior. It represents a cool appraisal of various costs.”⁴⁵

• Praveen Sinha, Chekitan Dev, and Tania Salas suggest that demand for investments in firms deemed socially responsible can be enhanced “as some mutual funds and large pension funds are mandated to make investments in only those companies deemed socially responsible (for instance, CREF’s Social Choice Fund).”⁴⁶

• Business for Social Responsibility agrees that companies that address ethical, social, and environmental responsibilities have “rapidly growing access to capital that might not otherwise have been available.” They cite a Social Investment Forum report that estimates that assets under management in portfolios using screens linked to ethics, the environment, and corporate social responsibility have grown from “$639 billion in 1995 to $1.185 trillion in 1997, to $2.16 trillion in 1999.”⁴⁷

• An often-quoted study by the University of Southwestern Louisiana, “The Effect of Published Reports on Unethical Conduct on Stock Prices,” demonstrated that publicity about unethical corporate behavior lowers stock prices for a minimum of six months.⁴⁸

• According to an article posted by SocialFunds.com in April 2002, an academic study conducted at DePaul University concluded that the 100 companies making Business Ethics’ list of 100 Best Corporate Citizens had a better financial performance than the remaining companies on the S&P 500. Business Ethics editor and publisher Marjorie Kelly was quoted as saying, “These top companies perform substantially better than their S&P 500 peers, in strictly financial terms.”⁴⁹

WHAT ARE THE MAJOR CURRENT CHALLENGES TO DOING GOOD?

Managers and program planners are challenged at each of the fundamental decision points identified throughout this book—decisions related to choosing a social issue, selecting an initiative to support this issue, developing and implementing program plans, and evaluating outcomes.