January 21, 2006

Business and Social Responsibility

Yesterday’s One World Week discussion was "Business and Social Responsibility: Do Good Values Equal Good Business?". The list of speakers is here. There was pretty much zero tension between any of the speakers and nothing to really disagree with. They stressed the gains society has seen as a result of the profit motive and that ultimately power is determined by how well they serve the customer. They were also eager to emphasise the role of law and voluntary/mandatory codes of conduct to prevent harm; like individuals not all firms seem to have a conscience. Just a couple of points:

– It wasn’t mentioned, but most people are or will be shareholders of some sort though voluntary savings and pension schemes. With luck, the increased value of such investments will help us fund spending later in life. Some shareholders are already incredibly wealthy, but many others just want some money to fund their retirement, pay for medical expenses and help their children through university. No sense in demonising them all. Beyond the provision of ipods, phones, cars and drugs, this is another helpful way in which we gain from having soundly run firms. Of course, we all have different ideas of what it means for a firm to be 'soundly run', so there's a role for ethical investment trusts, aligned with the varied preferences of individuals.

– Maybe there are conflicts in the stated desires of CSR proponents. A firm that goes beyond its legal obligations and donates all profit to various stakeholders won’t generate jobs, puts existing jobs at risk and won't develop/improve existing products and services. Charity isn't costless and extremes in either position are harmful. This uncertainty suggests that laws creating more positive obligations aren’t necessarily in society’s long term benefit.

– A recent example of a voluntary choice to become more socially responsible is the decision by US firm Whole Foods to embrace renewable energy. See here.

Natural food grocer Whole Foods Market Inc. said it will rely on wind energy for all of its electricity needs, making it the largest corporate user of renewable energy in the United States..The decision follows the publicly traded company's mission of environmental stewardship without losing sight of the bottom line, Whole Foods regional president Michael Besancon said Tuesday.

The firm is known for its commitment to stakeholders and has yet to suffer as a result. See this report on its stock performance. See here

The ability of Whole Foods to essentially establish a high-end niche market in the humdrum grocery business — where innovative ideas tend to be rare — has earned comparisons with coffee titan Starbucks. So have heady growth plans of Whole Foods — it aims for $12 billion in sales in 2010, up more than 150 percent from last year.

If efforts to be take care of stakeholders are well publicised, negative financial effects may be lessened somewhat.


- 2 comments by 1 or more people Not publicly viewable

  1. Little time was allowed for people from the floor to challenge the cosy consensus . Not surprising as One World Week is corporate sponsored – one of the speakers was from Accenture, a major backer of One World Week. A good image is good business.

    No-one from the platform mentioned market failure. Qualms that any corporation which sacrificed profits in an attempt to reduce the negative impact of such failures would lose out to those which didn't were brushed aside.

    It was just like a careers' fair

    21 Jan 2006, 16:32

  2. I don't think they would have denied that the drive for profit can cause damage in the absense of appropriate institutions. Firms are ultimately run by individuals, and individuals can act selfishly regardless of the economic/political system they're placed within.

    I don't thnk the affair was a strategic ploy on the part of a few firms and OWW organisers, but yes, more time should have spent on the questions about water privatisation in Bolivia and whether 'socially responsible' firms can maintain competitivness in the long term. Balance should have come from the inital selection of panel members rather than the audience questions.

    23 Jan 2006, 18:36


Add a comment

You are not allowed to comment on this entry as it has restricted commenting permissions.

January 2006

Mo Tu We Th Fr Sa Su
Dec |  Today  | Feb
                  1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31               

Search this blog

Tags

Galleries

Most recent comments

  • i like muff on toast by guildy on this entry
  • hairs :P by Peter hairs on this entry
  • Incest hairs by michael lumsden on this entry
  • incest thursday every day with mary!! by michael lumsden on this entry
  • I like maureen by Neil duncan on this entry

Blog archive

Loading…
Not signed in
Sign in

Powered by BlogBuilder
© MMXIX