Review: Profits with Principles

Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.” – Margaret Mead

Many years have passed since corporate social responsibility (CSR) made its entrance as a major issue for companies. Performance on social and environmental levels has also become important for organizations to consider. Since CSR’s inception, many initiatives have arisen.

Businesses around the world have sought to take account of sustainable development to conform to the general trend across industries toward better management of global regulatory requirements and a reduction of environmental impact. On the other hand, since globalization has become a crucial aspect of organizations economically, organizationally, politically, technologically, and culturally, it has pushed them towards making adjustments in order to incorporate these new requirements into existing processes.

“Business leaders face complex economic challenges, political uncertainty, and changing societal expectations. Regardless of their industry sector, they are under growing pressure to demonstrate outstanding performance in corporate competitiveness, governance, and responsibility.”[i] – Kofi Annan

The book I’ve chosen to review, Profits with Principles: Seven Strategies for Delivering Value with Values, helps clarify the definition of CSR. The volume (which presents more than 60 case studies on corporate social responsibility) follows a pattern of six projected main values, and focuses mainly on how practicing CSR can help organizations accomplish sustainable development—that is, to fulfill the needs of our current generation without compromising those of future ones. It was put together by Ira A. Jackson (a fellow at the Center for Public Leadership at Harvard University) and Jane Nelson (a senior fellow and director of the Corporate Social Responsibility Initiative at Harvard’s Kennedy School of Government, and director of Business Leadership and Strategy at the Prince of Wales’ International Business Leaders Forum).[ii]

The book is organized in two sections: “Doing Business in a Turbulent World” and “Putting Principles into Practice.”

Part One: Doing Business in a Turbulent World

This section of the book focuses mainly on the fact that the way we do business has changed tremendously over the past years. Indeed, globalization can be used by companies for the better of humanity, that is, to make a more equitable society and undo the deterioration of the environment we are to leave for future generations. Because of that, there is a rising need for companies to associate with governments and other stakeholders in order to look for the best means to achieve these objectives.[iii]

The authors note several issues currently affecting free market conditions that are prompting that new rules be created within capitalism, since expectations are rising and new challenges appearing. These issues can be summarized as follows:

the current global economic downturn, and the previous bursting of the dot-com bubble (the crash of dot-com companies after 2001)

• the failure of corporate governance and ethics
• growing geopolitical uncertainty—war against terrorism, international trade tensions and anti-globalization campaigns
• ongoing environmental degradation—global climate change, loss of biodiversity, and water insecurity

These situations are creating new challenges for enterprises, which nowadays are facing new crises (e.g., trust, inequality, and sustainability). Unfortunately, after scandals such as Enron and Andersen, trust has become one of the main concerns for companies searching for long-term positioning in the market. Furthermore, there is now without a doubt a global crisis regarding inequality. According to a survey conducted in 2000, the general trend for options distribution in companies is as follows: 75 percent are top five company executives; 15 percent are the next 50 executives; and 10 percent, all other employees.[iv] Furthermore, sustainability is indeed a central concern not only for companies but for our entire civilization, as humanity’s ecological footprint continues to grow. Therefore, the roles of businesses, as well as governments and non-governmental organizations (NGOs), have to be adapted to confront these new realities.

Part Two: Putting Principles into Action

These principles, identified by the authors, serve as a framework for building CSR and long-term value for any companies. Each of the seven principles is illustrated with case studies throughout the book.

Principle #1: Harness Innovation for Public Good

In a business framework as globalized as today’s is, corporate competitiveness is central to achieving sustainable growth. Many companies have come to understand that incorporating ethical and environmental innovation has indeed helped create a distinctive advantage. Companies examined throughout this chapter are amongst those that, through sustainable innovation, have become leaders in many industries.

One example that caught my attention is DuPont, a leader in the chemical industry. Going back to the late 1980s, when concerns about chlorofluorocarbons (CFCs) and the ozone layer were rising, DuPont strategically decided to invest in finding an alternative to using substances that deplete the ozone layer. After the 1990s, some of these tactics, formerly seen as expensive and not worthwhile, have now become comparative advantages (win-win approaches) which have given enterprises a distinct advantage over their competitors.[v]