Mind the Gap

08/27/2007 - 11:04 AM
The well-known consulting firm McKinsey recently surveyed a group of executives about whether large companies are generally contributing to the "public good". They then asked consumers the same thing.

As it turns out, 75% of North American executives rate this contribution as generally or somewhat positive, while only 40% of consumers think so. Both groups expect companies to balance shareholder interests with those of the public good, but apparently they disagree on how well large corporations are doing at it. CFO Magazine refers to this as a "trust gap".

So why the gap?

Consumers ranked the environment as their top "public-good" issue, while executives chose off-shoring and data security/consumer privacy (environment was third). Clearly, public good priorities are open to interpretation. In fact the whole concept of Corporate Social Responsibility is loosely defined. Obey the law? Do no harm? Support UN Millennium Development Goals? We have lots of buzz words, but little focus or standards, and thus a gap in expectations between consumers and corporate leaders.

Those who support the concept of green or progressive corporations (aka sustainable enterprise) might be surprised to find that the portfolios of sustainable funds such as Calvert include industry titans such as AT & T, Microsoft, Bank of America, and Pfizer. No wonder corporate chiefs have declared victory.

At the risk of repeating myself, the end game for the planet has to be sustainability. Anything less will not be, by definition, sustainable. Beyond neutral environmental impact, further efforts – particularly in social justice and third world poverty – would make the world a better place.

One group of conservative economists argues that the only job for corporations is to make money and obey local laws. At a minimum, however, it should be reasonable to expect firms to "do no harm". We obviously can’t do without commerce, but nature and commerce should be able to co-exist. I wonder how many firms in Calvert’s social investment funds are actually neutral or better in their impact?

A good starting point would be a consistent and accurate measure of the impact of business across a number of variables such as water, air, chemical runoff, and basic human rights. Then maybe we can agree on whether and which firms are really contributing to the public good, and close the gap.

Next week: News from Ecuador.
08/27/2007 - 11:04 AM
08/27/2007 - 11:04 AM