More firms do good

Apr 28, 2008 @ 12:01 am

By Sara Hansard

A growing number of businesses are finding that they can do well by doing good.

That is the conclusion of a report on corporate social responsibility issued this month by two researchers from Southern Methodist University's Cox School of Business in Dallas.

"Creation of shareholder wealth, once widely considered the ultimate corporate objective and yardstick of organizational value, is slowly becoming overshadowed by a broader agenda and conception of organizational success," according to the report, which was written by SMU management professor Peter Heslin and alumna Jenna Ochoa.

In 2006, about $1 of every $10 of assets under management in the United States — some $2.3 trillion of $24 trillion — was invested in companies that rated highly on some measure of social consciousness, the report found.

Last year, 64% of the Fortune Global 100 published a social- consciousness report outlining those corporations' economic, environmental and social performance.

Investors increasingly are directing their money toward explicitly socially conscious organizations, the report said.

Investments in "green" mutual funds in the United States have risen 695% in the past six years, according to the report.

Firms such as Citibank NA and The Goldman Sachs Group Inc., both of New York, carefully assess the environmental impact of their lending decisions in developing countries.

"Wall Street and investors worldwide are paying attention to [corporate social responsibility]," the report concluded.

However, the report cautioned: "Organizational leaders tend to inadequately appreciate the subtle though critical differences in organizational competencies and contexts whereby a given practice enables one organization to fly but leads others to flounder."

Companies need to analyze their ability carefully to take advantage of particular opportunities, the report said.

It listed seven principles for corporate social responsibility and gave examples of companies that have performed well in those areas.


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