Corporate Social and Environmental Responsability

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Corporate social and environmental responsibility

        According to the 1976  economics Nobel price winner Milton Friedman  the only social responsibility of a company is to increase its profit^[1]. Known as the Friedman doctrine this  definition of corporate responsibility still find echo in the work of today economical commentators^[2]. Nevertheless the past summer 181 CEOs from some of the world biggest companies cosigned a statement redefining the role of companies in society, adding delivering value to customers, investing in employees, dealing fairly with suppliers and supporting communities to the list of companies responsibilities^[3]. In parallel 2019 has seen many top Companies take their first step toward becoming more sustainable and less destructive to the environment^[4]. In this paper we will try to explain why nowadays corporations feel the need to redefine their purposes and to engage themselves in becoming more mindful of their social and environmental responsibilities.

After explaining quickly what is meant by corporate social and environmental responsibility in today’s context, the first part of this paper will focus on questioning the possibility of conciliating this concept with firms’ main purposes of making profit. Then, in the second part, we will attach ourselves to demonstrate that corporate responsibility isn't only the fruit of an overall growing concern for the social and environmental impact of companies but also the consequence of the ever growing impact of public reaction to firm’s bad practices.  

In his book “Social responsibilities of the businessman'' Howard Bowen appear to be the first to raise the question of the nature of corporate responsibility outside the field of business^[5]. There had been numerous attempts since then to put a proper definition on the amorphous concept of firm’s social and environmental responsibility^[6],^[7] but as summarized by Ella Joseph and John Parkinson what most definitions seem to agree on is that corporate responsibility is now perceived as firms acting outside their legal obligation “in the public interest to promote social and environmental objectives”^[8]. However, it goes without saying that complying with social and environmental standards higher than those imposed by the law represent an additional cost for companies, doesn't corporate responsibility get in the way of the company main goal which is generating profit?  Our purpose here will be to demonstrate that not only being mindful of their social and environmental impact does not necessarily lead firms to lose money but that they can increas their own economic interest by supporting social development and environmental sustainability.  

        As Fordism^[9] demonstrated long ago, by increasing significantly it's workers salary over the wage prescribed by the industry standards, a company can benefit, not only from an increase in productivity, driven by its workers motivation, but also from a growth of its sale, because the increased of revenue induce an  increase in consumption.

In a similar fashion, the development of the tech industry in the Silicon Valley has shown us that supporting schools, universities and even students via donations and grants can be more of an investment than a philanthropic gesture, as it is a proven way to increase the number and quality of qualified workers^[10]. Therefore, on the long run the companies may easily secure high quality labor for a cheaper price (since an increase on the number of qualified worker entering the labor market drive down the price of said labor).

Likewise environmentally responsible decisions may on the long hold help firm save or even make money like for example when supermarkets started selling reusable plastic bags^[11] instead of giving away single use ones or when a company implement energy conservation measures^[12].

Another way firm can benefit from being invested in social and environmental development is in term of public relations and socially/environmentally responsible market share capitation.  There is no denying that the current environmental and social crisis have made the consumers more aware of the consequence of their consumption habits^[13]. More and more companies, such a Lush with its ''Charity pot''^[14], have learned to weaponize their good deeds in order to demarcate themselves from the competition as a socially and environmentally responsible alternative.

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