The Never-Ending Debate: How “Real” is Corporate Social Responsibility?

August 13, 2011; Source: New York Times | Nonprofits look to corporate social responsibility (CSR) programs as sources of philanthropic support. Corporate foundation giving is no longer seen simply as a matter of corporate citizenship, but a component of an integrated corporate strategy combining profitable and charitable endeavors. But CSR still generates lots of controversy, as some business leaders and investors invoke Milton Friedman’s admonition that corporations best fulfill their social responsibilities by being profitable, by employing people, and by stimulating the economy.

In a recent essay in the New York Times, reporter Steve Lohr takes a tough line: “Corporate social responsibility efforts have always struck me as the modern equivalent of John D. Rockefeller handing out dimes to the common folk. They may be well-intentioned, but they often seem like small gestures at the margins of what companies are really trying to do: make money.” Lohr cites Friedman’s 1970 statement that corporate social responsibility programs are “hypocritical window-dressing.”

But Lohr also highlights a possible response to Friedman: Michael Porter’s concept of “shared value,” which Porter articulated in an article in the Harvard Business Review co-authored with longtime collaborator Mark Kramer. Lohr’s interpretation of Porter’s idea is that corporations can and should pursue strategies addressing the “‘triple bottom line’ (people, planet, profit), ‘impact investing’ and ‘sustainability,’” but in the shared-value concept, “profit-making [is] not just as a possibility but [a] priority.” Porter calls shared value “a more sophisticated form of capitalism,” in which “social problems are looming market opportunities.”

Social problems as market opportunities: Does it work for nonprofits? Or is this a corporate profit-making strategy that leaves nonprofits on the outside looking in?—Rick Cohen