31
Aug

J.Pozuelo-Monfort, MPA candidate at Columbia University
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Michael E. Porter, Mark R. Kramer (2007)
· Myriad organizations rank companies on the performance of their corporate social responsibility (CSR).
· If, instead, corporations were to analyze their prospects for social responsibility using the same framework that guide their core business choices, they would discover that CSR can be much more than a cost, a constraint, or a charitable deed – it can be a source of opportunity, innovation, and competitive advantage.
· In 2005, 360 different CSR-related shareholder resolutions were filed on issues ranging from labor conditions to global warming.
· Of the 250 largest multinational corporations, 64% published CSR reports in 205, either within their annual report or, for most, in separate sustainability reports – supporting a new cottage industry for report writers.
· This proliferation of CSR reports has been paralleled by growth in CSR ratings and rankings.
· Companies should operate in ways that secure long-term economic performance by avoiding short-term behavior that is socially detrimental or environmentally wasteful.
· You can continue reading more of Porter and Kramer’s paper by following this link.
J.Pozuelo-Monfort’s comments
Michael Porter is a renowned scholar in the field of competitive advantage. In this piece he introduces the rationale behind the adoption by multinationals of corporate social responsibility.
Multinationals have the choice in today’s world of incorporaring CSR into their agendas, a choice that nobody imposes, a choice tha nobody questions, that nobody judges. A choice that should become an obligation in a world needy of enhancing, of stressing the ethical component, the social and environmental dimensions.
Corporations have to be judged by external, independent units, on their ethical manners. Corporations need to withstand the pressure of the consumer market that will (penalize) reward them accordingly for (not) being socially engaged.
Michael Porter doesn’t find a clear connection between a firm’s adoption of CSR and its success in the consumer and capital markets. Whether or not this is true, consumers have to change the current trend where multinationals with their advertising power seek to influence and impact consumer’s choice. Consumers ought to believe that their purchasing power is a weapon that has not been used in the real world thus far. Purchasing power is so powerful that is likely to push unengaged firms out of the market, and force others to become sustainable.
Society doesn’t need multinationals to prosper. The same role can be played by NGOs or Government.
Sustainability is the word of this century. Everything has to turn sustainable. There is no other way around today’s problems. There is no other way around.


· As for the concept of CSR as insurance, the connection between the good deeds and consumer attitudes is so indirect as to be impossible to measure.
· The Global Reporting Initiative, which is rapidly becoming a standard for CSR reporting, has enumerated a list of 141 CSR issues, supplemented by auxiliary lists for different industries.
· Perceiving social responsibility as building share value rather than as damage control or as a PR campaign will require dramatically different thinking in business.
· Measuring and publicizing social performance is a potentially powerful way to influence corporate behavior – assuming that the ratings are consistently measured and accurately reflect corporate social impact. Unfortunately, neither condition holds true in the current profusion of CSR checklists.
· Beyond the choice of criteria and their weightings lies the even more perplexing question of how to judge whether the criteria have been met.
· Finally, even if the measures chosen accurately reflect social iimpact, the data are frequently unreliable.
· Nestle’s approach to working with small farmers exemplfies the symbiotic relationship between social progress and competitive advantage. Nestle came to Moga to build a business. Today, Moga has a significantly highe rstandard of living than other regions in the vicinity.

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