NCPA - National Center for Policy Analysis

CORPORATE SOCAL RESPONSIBILITY

January 13, 2006

What obligations do companies have to be socially responsibly? It's a question that prompts dramatically different answers from different quarters. A growing number of nongovernmental organizations push for ever more corporate action on issues ranging from pollution and global warming to AIDS and poverty. But investors typically want companies in which they have a stake to focus on the bottom line so they can get the best possible returns, says the Wall Street Journal.

According to Ilyse Hogue, director of the global finance campaign for Rainforest Action Network (RAN), Corporate Social Responsibility (CSR) reflects the need for social institutions to do more to assure a world that prioritizes health and justice.

However:

  • For development to take place, societies must develop an institutional infrastructure, as well as an economic one, that will allow for investment growth and a balance between equity and efficiency, says Benjamin Heineman, senior vice president for law and public affairs at General Electric (GE).
  • The most important public health strategy is to increase wealth around the world, and companies should seek to alert people in the developing world of the risks they face if the CSR model is allowed to suppress economic development any further, says Fred Smith, president of the Competitive Enterprise Institute (CEI).

Some Wall Street Journal readers say that they invest to make money and can do good deeds on their own. They believe that corporations exist solely to make a profit for their owners; it's the owners' risk and the owners' reward. This simple, greed-based concept, they say, results in an economic engine that creates the wealth of nations.

Still others say that CSR is just another name for extortion.

Source: Benjamin W. Heineman Jr., Ilyse Hogue and Fred Smith, Jr., "Corporate Social Responsibility: Good Citizenship or Investor Rip-off?" Wall Street Journal, January 9, 2006.

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