Corporations need a social conscience
American corporations plainly are smarting from the accusation that they’ve abandoned their sense of social responsibility in pursuit of higher profits.
You can tell that by the defensive indignation with which the business community has greeted President Obama’s rhetorical attacks on “millionaires and billionaires.” And by Bank of America’s defensiveness in spinning the cancellation of its $5 debit card fee as rather an act of consumer altruism. (“We have listened to our customers very closely,” a spokesman said.)
Then there are the CEO statements collected by Harvard Business Review for an online forum titled The CEO’s Role in Fixing the System, some of which carry the whiff of the heebie-jeebies experienced by ancien regime dandies facing down a torch-bearing mob of Jacobins.
For example, Raymond Gilmartin, the former chairman and CEO of Merck, acknowledged in the forum that corporate behavior in the economic slump had “deepened a widespread public distrust of corporations and capitalism.” He proposed that CEOs and boards start acting “as agents of society, rather than shareholders.” Starbucks founder Howard Schultz used the same forum to promote his public campaign urging CEOs to step up job creation efforts across the board.
There are many reasons why corporate social responsibility is on the table these days. One is that the sharp rise in business profits since the 2008 crash hasn’t produced a commensurately sharp rise in hiring. Occupy Wall Street and its coast-to-coast offspring have catalyzed public disaffection with the gulf between the banking industry’s health and its millions of home foreclosures.
Philanthropy experts say corporate giving has ticked up recently, possibly in response to signs of public discontent. One in four major companies surveyed by the Committee Encouraging Corporate Philanthropy, which has current or former top executives from 22 major companies on its board, have increased their giving by 25% or more since 2007. (On the other hand, 21% of the surveyed companies cut their giving by 25% or more.)
“We’re seeing a whole new approach in corporate responsibility,” Charles Moore, the committee’s executive director, told me. Corporations are integrating philanthropy into their business strategies, say, by supporting charitable programs serving their suppliers, customers or markets — PepsiCo paying to train the Mexican farmers who provide it with its corn syrup or Novartis delivering health education in rural India to residents who might end up buying its drugs.
The question always is whether companies undertake these ventures because they’re the right thing to do or because they want to look altruistic for marketing purposes. In other words, are improved profits a collateral benefit or the main point?