An Open Letter to the Journal: Why CSR Is Good For Shareholders and Society, by James Epstein-Reeves

I read with interest your opinion piece in yesterday’s Wall Street Journal entitled “The Case Against Corporate Social Responsibility.”  I applaud your effort to continue to challenge this emerging field in business. In the spirit of continued and friendly academic debate, however, there are a few very important pieces of information you didn’t include in your article.

Most notably, Milton Friedman’s nearly 40-year old New York Times Magazine article, “The Social Responsibility of Business is to Increase Profits,” raised many of the same issues in your piece, making many of your points seem familiar to me.  Namely:  an executive’s sole responsibility is the return of profits to shareholders, that he or she shouldn’t use shareholder money to promote a personal interest in philanthropy, and that executive-owners of private firms are free to make their own decisions since they are usually the sole or primary shareholders.

In addition, from the context of your article, you implied that CSR looks to use philanthropic dollars and shareholder money to solve society’s ills. This is an old, misguided view of CSR.  I define CSR as “a set of actions that a company takes to change business operations in order to improve, maintain, or mitigate that company’s impact on society or the environment.” This is far different from donating to a local Little League team.

Also, contrary to what you stated, CSR doesn’t aim to usurp the fiduciary responsibility of managers to wisely spend shareholder money. It is not a guised effort by neo-hippies to get CEOs to sing Kumbaya around the campfire. Rather, CSR is a discipline deeply rooted in capitalism under the rigorous eyes that are intently focused on increasing shareholder value. The professionals promoting CSR as a valuable business tool are very much interested in profit, but profit based upon principles.

Moreover, in your article you outlined a false dichotomy: a choice between CSR and profits. Any social responsibility activity that is profitable must not be CSR, but just good business, you argued. Indeed, there is a lot of overlap between solid CSR initiatives and a sound, market-oriented business philosophy. And yes, it is true that there are some CSR programs that may incur higher costs associated with making changes to business operations. However, CSR typically looks at ways in which the company can identify and take advantage of opportunities in the marketplace and decrease threats to a company’s profitability. CSR is fundamentally a mature, long-term-based approached to business. It is not, as you say, an effort by an executive to impose a “tax” on shareholders.

+Read full article: http://blogs.forbes.com/csr/2010/08/24/an-open-letter-to-the-journal-why-csr-is-good-for-shareholders-and-society/

+Read article The Case against CSR: http://online.wsj.com/article/SB10001424052748703338004575230112664504890.html?mod=dist_smartbrief

+Read article Milton Friedman The Social Responsibility of Business is to Increase its Profits: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html

+Check the Sustainability Consortium: http://www.sustainabilityconsortium.org/

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6 comentários

  1. […] An Open Letter to the Journal: Why CSR Is Good For Shareholders and Society, by James Epstein-Reeves… […]

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  3. […] An Open Letter to the Journal: Why CSR Is Good For Shareholders and Society, by James Epstein-Reeves… […]

  4. […] An Open Letter to the Journal: Why CSR Is Good For Shareholders and Society, by James Epstein-Reeves… […]

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