‘Business Week’: Companies Focus on Social Causes

Business executives “are increasingly seeing social responsibility as a strategic imperative,” reports Business Week (August 15).

For instance, Home Depot’s chief executive, Robert L. Nardelli, gathered executives from 24 companies and foundations to discuss community service — and encourage more businesses to promote volunteerism among employees. Several chief executives have now agreed to start a “month of service” starting September 1, an effort designed to link employees with at least 2,000 projects nationwide. Mr. Nardelli says he and his colleagues do not view such activities as ancillary, but instead look at them “with the same eye that we look at business.”

In addition to the month of service, the interest in social responsibility has shown up in many ways, the magazine says. It notes that in June, General Electric Company released its first “citizenship report,” with the goal of enabling the public to gauge its social performance in areas as wide-ranging as pollution control and employee volunteerism. And in May, the company announced a major effort to invest in environmentally friendly technologies.

Companies have many reasons for focusing on social causes, the magazine notes, including “Increased regulatory scrutiny; a global 24-hour news cycle; and communities hostile to scandal-tarred big businesses.”

But more important, the magazine says, businesses are embracing “stakeholder theory,” which holds that “companies are beholden not just to stockholders — but also to suppliers, customers, employees, community members, even social activists.”

The concerns of customers, the magazine says, is “why last year Gap halted relationships with 70 of its overseas factories over alleged labor issues, and has for the past two years issued a social responsibility report. Or why Nike is now a world leader in setting safety standards for overseas workers. When the controversy over its sweatshops erupted several years ago, managers mistakenly believed they could afford to ignore the outcry simply by cranking out hip shoes.”

Companies are also hoping that an emphasis on social responsibility will help them attract and retain more young workers.

“Employees are trying to marry their work and nonwork lives,” C.B. Bhattacharya, associate professor at Boston University’s School of Management, tells the magazine. “If the companies give them a chance to do that, they’re happier.”

The article is available at http://www.businessweek.com