A sound business strategy

On Sunday the Washington Post ran a piece questioning CSR (http://bit.ly/cQdgbw) as a sound business strategy.

Ms. Freeland partially quotes Milton Friedman's famous maxim the the social responsibility of business is to increase its profits. The entire quote reads: "there is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

I submit that the rules of the game have changed, that businesses are being held accountable for their actions, whether they be polluting the environment, subjecting workers to harsh conditions or practices or engaging in nefarious practices such as collusion with the regulators that are supposed to be monitoring their actions. In each of these cases, short-term profits are persued rather than the long-term best interest of the company, its shareholders, customers and the larger community.

I much prefer the term 'corporate sustainability' to describe the model of having both a long and a short-term strategy. After all, companies like Enron made a lot of money but ultimately failed to stay within the rules of the game.

Goldman may not have been in the business of educating women, but educating the population that controls the purse-strings of the majority of households (around the world) IS a sound business strategy if they're educated about the value of investment and that results in increasing investors using Goldman Sachs. BP was not in the business of leading the 'green' revolution - but the first energy company that does come up with a solution to our dependence on foreign oil will have a strategic advantage.

As a leader of the Sustainable Business Network of Washington (SBNOW) and an experienced director of corporate sustainability programs for more than 10 years, I can say with certainty that there are business benefits including license to operate, speed to market, increased productivity and reduced turn over, reduced legal and compliance costs - including health care - as well as access to investment capital that are true business benefits that companies enjoy by engaging not in charity (which they are ill prepared and designed to do) but rather in remembering that 'built to last' is a business model that served this country very well. Maximizing short-term shareholder value is the way to build economic bubbles rather than true growth.

John Friedman
Annandale, Va