The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Monday, May 12, 2014

Strategic CSR - Markets vs. Governments

The article in the url below weighs the value of markets (and, in particular, for-profit firms) over government mandates in terms of being able to solve the largest problems we face as a society:
“… it's multinational corporations, and not governments or non-profits, that have the vast human and financial capital, advanced technology, international footprint, market power and financial motivation to solve the world's the world's most daunting problems.”
For example:
“… Johnson Controls joined real-estate firm Jones Lang LaSalle to retrofit the Empire State Building for energy efficiency in 2012. The Clinton Climate Initiative and Rocky Mountain Institute also collaborated on the project. The groups estimate the project will cut energy costs by 38%, saving $4.4m annually and reducing carbon emissions by 105,000 metric tons over 15 years. Given that the building sector consumes up to 40% of the world's energy, energy efficiency is key to reducing our energy use. Retrofitting for energy efficiency is good for the world, while also generating profit for Johnson Controls. The power of financial motivation, not just the desire to do good, solved this problem.”
The essence of the article, however, is not to demonstrate the isolated brilliance of for-profit firms, but to emphasize the instrumental nature of collaboration. Specifically, the article seeks to demonstrate the self-interest for firms of engaging with stakeholders to solve market-based problems:
“… many companies are starting to understand that energy efficiency, poverty reduction and access to healthcare, for example, are preconditions to their success and also offer rewarding business opportunities. Furthermore, customers, employees and investors are driving corporate accountability, transparency and adherence to labor and environmental norms. Reports indicate that businesses that ignore labor groups, grassroots organizations, consumers and civil society do so at their peril.”
Take care
David Chandler & Bill Werther
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Business can do what governments can’t: Solve the world’s biggest problems
By Alice Korngold
January 7, 2014
The Guardian