Does CSR Pay? It Depends Who You Ask!

Many people have been asking my opinion of the recent Forbes Opinion piece, “CSR Doesn’t Pay,” David Vogel concludes that a company’s responsible business practices will not positively impact its bottom line. He bases this on roughly evaluating a handful of Fortune 500 companies.

My response is, in short, that for every CSR proponent, there is a detractor. Like Vogel, others have undertaken similar analyses, but the conclusions are very different:

  • A 2007 Goldman Sachs report showed that among the six sectors covered – energy, mining, steel, food, beverages, and media – companies that are considered leaders in implementing environmental, social and governance (ESG) policies to create sustained competitive advantage have outperformed the general stock market by 25 percent since August 2005. Additionally, 72% of these companies have outperformed their peers over the same period.
  • According to the Domini 400 Social Index, companies with positive ESG performance have compared stronger than the S&P over the last 18 years.

While Cone agrees that the business case for CSR cannot be directly linked to improved financial performance, there is a broader business case to be made for CSR (when done right); namely, that it can increase engagement among employees, bolster corporate reputation, lead to product innovation and differentiation, help manage risk, decrease environmental impact and contribute to solving social problems. 

At the end of the day, however, as Vogel points out and the current situation among financial institutions is a telling example, CSR is not going to save a company that has made poor business decisions. 


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