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Nice Girls Don't Finish Last
Business Week
May 06, 2008
It’s still unclear how much a company profits from doing good, but a new study of international executives shows it certainly doesn’t hurt business.
It is one of the biggest questions in corporate governance: Is there really any financial payoff for promoting enlightened social, environmental, and ethical practices? Or are companies that get the most attention for doing good merely those that can afford to do so?
An extensive survey of 1,254 international executives (half from the C-suite; 26% of them chief executive officers) by the Economist Intelligence Unit on corporate responsibility doesn’t exactly answer this chicken-or-egg riddle. But it does reveal at least one interesting finding: The business community clearly believes that such a causal relationship exists. And that means the interest in social and environmental concerns is unlikely to abate soon.
Do-Gooders Stay Competitive
Companies that pay the most attention to so-called sustainability issues, such as climate change or treatment of workers in developing nations, far outperform those that do not, concluded the study, titled “Doing Good: Business and the Sustainability Challenge.” The study was sponsored by several blue-chip companies, including Bank of America (BAC), Orange, A.T. Kearney, and SAP (SAP).
Do-gooder companies that were surveyed saw profits rise 16% last year and enjoyed price growth of 45%. Companies that rated their own sustainability practices poorly registered only 7% profit growth and 12% price growth. While not necessarily proving that it pays to be good, says Gareth Lofthouse, the EIU director who supervised the survey, “it scotches the idea of skeptics who say that if you adopt corporate social responsibility practices you will become uncompetitive.”
