A recent op-ed published in the Wall Street Journal by Aneel Karnani has stirred up quite a reaction in the corporate responsibility (CR) community. For those not familiar with the op-ed, Mr. Karnani argues that "the idea of corporate social responsibility is irrelevant" because companies always do everything they can to increase profits, regardless of social impact. Ever since I started PricewaterhouseCoopers' (PwC) CR program more than three years ago I have heard similar arguments. As such, I often have to champion the case for CR and why, in today's world, being a successful company and being socially responsible are not mutually exclusive pursuits.
A recognized commitment to CR is no longer a "nice to have," but is an essential business strategy that mitigates risk and leads to profitability. Research has shown that companies that consider environmental, social and governance issues outperform competitors that don't. Since 2005, the number of Fortune 250 companies that release CR data has doubled to 80 percent.
For CR commitments to have the greatest impact, they must be integrated into the organization's core business competencies. A vested CR commitment needs to align with the company's growth objectives and competitive advantages to intrinsically create both shareholder and stakeholder value. Overall, the commitment should be a natural segue for the company to invest its time and efforts. By making CR efforts a seamless fit into the company's main objectives, they don't derail from the overall profit-making goal.
It should be understood that our culture is shifting and no longer distinguishes between companies doing the right thing and making a profit. That fact is not an "illusion," but a reality companies ignore at their own peril. Whether it's consumers buying products, talent applying to corporations or potential clients looking for business partners, they all judge companies using criteria where financial success is no longer the only concern.
Society understands that a socially responsible company has a better chance of surviving an attack on its reputation because it's been established as a company with a genuine interest in responsible behavior. What Mr. Karnani and others may not realize is that a successful CR commitment betters a company. From increasing goodwill in communities and among regulators to attracting talent and realizing cost savings, such distinctions ultimately contribute to financial success. Simply put, CR makes good business sense, proving that the good guys don't always finish last.