HOOPLA! (I call BS) – an attention grabber to a post about CSR

Hello all,

I find this week’s topic and discussion particularly interesting because it has deep-tissue massaged my entire brain by contrasting the hardcore right side of financial statement analysis with the “softer” left-side of discussing corporate ethics and citizenship through social responsibility.

I plan on focusing more on how companies communicate their financials and Corporate Social Responsibility (CSR) SR efforts – and the potential effect and consequences of said communications- than on what this ratio means or pondering what CSR really is. For this post however, it’s all about CSR.

Of all the readings the one I found most appealing is The Economist’s 2008 interview with Daniel Franklin (Executive Editor). In my humble opinion Franklin writes a succinct and well exemplified summary of the CSR conundrum. Is CSR just corporate hoopla? Should it even exist? And answers the main question about CSR: what’s in it for the stake/shareholders?

In his article, Franklin mentions an article by Michael Porter and Mike Kramer from the Harvard Business Review (Dec 2006) that I think is essential reading for any discussion about CSR. Find the link to the “idea in brief” which serves as great cliff notes for the common 14-page articles in the HBR in the references for this post.

In this article, Porter & Kramer (2006) arrive to the conclusion that to become a competitive advantage, CSR must deliver benefits both to society AND to your business. Otherwise it’s just hoopla or a waste of money. A more recent study by the HBR (Eccles, Ioannus & Serafeim, 2011) confirms the bottom line value of CSR.

Eccles, Ioannus & Serafeim (2012) , conclude by saying “Firms that embrace corporate social responsibility practices significantly outperform rivals that don’t embrace those practices, as measured by both financial and stock market returns. Firms with a history of commitment to sustainability and social issues also boast more long-term investors and place a greater emphasis on making nonfinancial disclosures.

I think his makes for a great closing to this post and a great discussion starter.

Looking forward to your thoughts!

JMA

References

Franklin, D. (2008) Just Good Business: A Special Report on Corporate Social Responsibility, The Economist, January 19, pp.1-14 (full article)

Porter, M. and Kramer, M.(2006) : The Link Between Competitive Advantage and Corporate Social Responsibility - Harvard Business Review – Retrieved from http://bit.ly/wQ8vWc

Eccles, Robert G., Ioannou, I. and Serafeim, G. (2012) The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance. Harvard Business School Working Paper No. 12-035 – Retrieved from www.hbs.edu/research/pdf/12-035.pdf http://bit.ly/xGQbvn