The Triple Bottom Line Blog

What a difference two years makes. Back in 2005, Britain's respected, slightly-right-of-center newsmagazine The Economist published an entire special section (subscription required) devoted to "debunking" the concept of corporate social responsibility. Taking the Milton Friedmanesque stance that "The selfish pursuit of profit serves a social purpose," the magazine argued that companies have no business spending shareholders' money on needless frills like worker-friendly or eco-sensitive policies. The editors didn't quite declare "Greed is good," but they came close.

Now, after two years in which CSR has grown steadily more mainstream--and Friedman's assaults on it have become more marginalized--we find The Economist rushing to defend CSR. The context is an article about Supercapitalism, the new book by Robert Reich, secretary of labor in the Clinton administration.

In an interesting twist, Supercapitalism (which we haven't yet read) criticizes CSR from a left-wing perspective. Reich makes a twofold argument. First, he says (as summarized by The Economist), that many companies use CSR simply to grab credit for the incidental social benefits produced by policies whose real objective is maximizing profits.

Second--and more important--Reich worries that liberals who praise companies that act responsibly are being lulled into ignoring a more important issue: namely, the need for tougher government regulations that could prevent corporate misbehavior altogether.

And here, of course, is the reason for The Economist's turnaround. If there's anything a conservative defender of corporate prerogatives fears and hates worse than left-wing agitators demanding reform, it's government officials demanding reform--and enforcing those demands through the power of law. So now, in the face of Reich's call for re-regulation, the magazine leaps to the defense of the same CSR it viewed as a threat not so long ago:

[D]one well, CSR can motivate employees and strengthen brands, while also providing benefits to society. Understanding and responding to the social context in which firms operate is increasingly a source of new products and services, observes Jane Nelson of the Prince of Wales International Business Leaders Forum. Telling firms they need not act responsibly might cause them to under-invest in these opportunities, and to focus excessively on short-term profits.

Well, yes. Corporate social responsibility can indeed produce good results for both shareholders and the broader society. And it does so by encouraging long-term rather than short-term thinking and the search for lasting rather than patchwork solutions to society's biggest economic, social, and environmental challenges.

You might call such a philosophy "sustainability." It's a worldview some of us have been advocating for quite some time. And it's nice to welcome such a prominent convert to the case as The Economist. Isn't it interesting to see how a renewed threat from the left--and, perhaps, the resurgent political fortunes of Democrats in the United States--can open some people's eyes to the value of a reasonable middle ground?

Labels: Robert Reich, Role of Government, Supercapitalism, The Economist