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Posts Tagged ‘corporate social responsibility’

Walmart and Responsibility to Society

February 3rd, 2011 2 comments

Walmart recently announced an initiative to make the food it sells healthier.  As the nation’s largest grocer, this will likely have an impact on food sold elsehwere as well since manufactures of goods aren’t going to make a “Walmart version” and a “non-Walmart version” of their products.  I guess a few might, but as in so many other situations “as Walmart goes so goes the market.”

Some questions I’m pondering:

  1. Does a retailer like Walmart have a duty to society to undertake initiatives such as this?
  2. If you answer “yes” to the first question, does it matter if the retailer is a market leader?  In other words, does Aldi or the corner grocer have he same level of responsbility?
  3. What are the other motivations for Walmart in undertaking this push for healthier food?

Most of the people I’ve talked with insist that a company’s sole responsibility is to its shareholders.  In that line of thinking, Walmart would only make this move if they were projecting that doing so would result in increased profits (and if their customers were demanding it — which it seems they aren’t).

Article links about the announcment:

In contrast with the prevailing though (in class and elsewhere) there is a group of folks that insist that Walmart DOES have a duty as the nations largest grocer to positively impact the health of the public.  Before recently, no single grocer had enough market-share to even contemplate such a thing but now that is not the case.  In spite of the fact that Walmart’s customers are perfectly willing to purchase unhealthy food (because they do it every day) Walmart is making a bold move by reformulating its offerings to be healthier.

Skeptics point out that Walmart may very well be doing this to save money it spends on employee healthcare since a good number of those folks likely buy their groceries at Walmart, but I wonder if this is really a cost/benefit type decision of if it represents something more — a social consciousness of a company’s place in society.  Interesting, to say the least…

Article links analyzing the announcement and the role of businesses in society when it comes to corporate responsibility:

Bill George: Corporate Responsibilty Extends Beyond Profits

January 24th, 2011 Comments off

Bill George, former chair and CEO of Medtronic and current Harvard Professor, is one of the nation’s most outspoken leaders when it comes to the role corporations play in society.  I discovered his recent opinion piece in the Star Tribune when I read a rebuttal by Howard Root to it in today’s newspaper. 

Bill George:

A short-term focus on shareholder gains has substantially increased the velocity of stock market trading. In the past 25 years, holding periods for stocks have fallen from eight years to six months. CEOs focusing on meeting the demands of short-term investors have led to the destruction of many once-great companies, including General Motors, Sears and Enron. This culminated in the 2008 global financial meltdown, when over-leveraged financial institutions collapsed as they tried to maximize short-term value.

Howard Root:

 But George conveniently inserts the words “short-term” into Friedman’s philosophy. Contrary to George’s assertion, to maximize profits does not mean to focus only on today and ignore long-term growth. To maximize profits also does not mean to make poorly designed products (as GM did) or to fail to adapt to the popularity of the big-box retail concept (as Sears did). Friedman did not advocate short-term thinking, but rather that a corporation’s only constituency, both on a short-term and a long-term basis, is the shareholder, and that management’s favorite societal causes are irrelevant to its business goals.

I think both authors make excellent points througout their pieces and I think in an odd way (for writing and having seemingly opposite viewpoints) they can both be considered “right” when it comes to this argument.  Root conveniently uses extreme examples just as George conveniently leaves out pieces of what MIlton Friedman believed. 

Read both and draw your own conclusions.  Regardless of how any of us feel, I think this idea of corporate social responsibility is one that will grow in the coming years.  I’m not sure whether it is important if it grows because business are pursuing profits (i.e. giving customers what they want) or if it grows because they feel a responsibility to society.  Drawing from Kant and Machiavelli, the ends may justify the means. 

Bill George:

Howard Root

The Case AGAINST Corporate Social Responsibility

August 24th, 2010 Comments off

Here is an interesting take that I’ve not seen so bluntly stated before: CSR can be a bad thing for companies to focus on.  I’m a firm believer in the idea that there aren’t any “bad ideas” and that being exposed to more viewpoints is nearly always a good thing, so I offer you this Wall Street Journal piece as food for thought.  It appeared in a special section on Monday (the Journal often runs special sections on Mondays in place of Personal Journal, which runs the rest of the week).

The basis for this argument isn’t as crazy as it first sounds…in fact, the author seems to be echoing some of the thoughts I’ve posted before that companies that pursue profits end up being socially responsible.  Or vice versa.  In the end it might be the pursuit of financial goals that is the means to the end.

In the end, social responsibility is a financial calculation for executives, just like any other aspect of their business. The only sure way to influence corporate decision making is to impose an unacceptable cost—regulatory mandates, taxes, punitive fines, public embarrassment—on socially unacceptable behavior.

Pleas for corporate social responsibility will be truly embraced only by those executives who are smart enough to see that doing the right thing is a byproduct of their pursuit of profit. And that renders such pleas pointless.

WSJ Executive Adviser (A Special Report): The Case Against Corporate Social Responsibility: The idea that companies have a duty to address social ills is not just flawed, argues Aneel Karnani; It also makes it more likely that we’ll ignore the real solutions to these problems. Aneel Karnani. Wall Street Journal. (Eastern edition). New York, N.Y.: Aug 23, 2010. pg. R.1

The Emergence of the Triple Bottom Line

March 13th, 2010 Comments off

We will be looking at a framework in a couple weeks that explores the idea that accounting systems need to change to measure environmental impacts/costs.  I happened to come across an article that predicts that the movement in this direction will expand and will take on an increasingly external-focus as opposed to Corporate Social Responsibility efforts that have been more internally focused.

The days of purely measuring business performance by financial result may well be numbered. In its place, I believe that discerning investors will look for something broader to measure an entity’s real contribution and performance.

That something could be in the shape of the “triple bottom line”; an amalgam of financial results and an assessment of the social and environmental impacts of a business. Or, put another way: People, Planet and Profits.

As we discuss in class, one of the biggest hurdles companies need to overcome is that their existing accounting systems are built to report numbers according to financial rules and pulling data out of the accounts to track environmental costs can we quite difficult.

Regardless of whether or not you agree with the direction this takes us in, you do then have to ask the question of just how many businesses are in a position to report on such non-financial performance aspects. Bearing in mind that recent research2 has highlighted businesses’ and their finance functions’ shortcomings when it came to dealing with the financial result alone (and not forgetting that they’ve just endured two years of being battered by recession-busting cost reduction initiatives), it’s hard to imagine how many could easily transition into this new mindset.


Read more at: The Emergence of the Triple Bottom Line.

Corporate Social Responsibility in a Downturn

August 3rd, 2009 Comments off

A short Harvard Business School piece about Corporate Social Responsibility in rough economic times contends that it is more important than ever for companies to push CSR programs when times are tough.  This echoes the sentiments in some pieces I’ve posted recently such as the one that discussed the importance of spending on quality initiatives even when the economy is hurting.

Corporate Social Responsibility in a Downturn.  Q&A with V. Kasturi Rangan. August 3, 2009. By Martha Lagace.  HBS Working Knowledge.

CNBC Episode on Corporate Social Responsibility

April 7th, 2009 Comments off

I mentioned in class last week that the MMEC module is rather dated and that I recommend, if you have time, that you check out a CNBC program for a more current discussion on Corporate Social Responsibility.

Here is how you can view the episode:

  1. Visit http://innovation.cnbc.com/en/podcasts
  2. Choose the video or audio podcast.
  3. Choose Itunes or the RSS link (depending on if you have Itunes I suppose).
  4. The one that has to do with CSR is called “CNBC’s The Business of Innovation – Season 2, Episode 4″

This direct link to the video may work:

http://podcast.cnbc.com.edgesuite.net/BOI-062308.mp4

You will need Quicktime to view the video version of the Podcast.  Quicktime is free and is available at http://www.apple.com/quicktime/download/ if you don’t already have it installed.