Making profits and creating a better world
From the Fall 2010 issue of Reaching Higher: The Binghamton University School of Management Magazine
By Steve Seepersaud
Pick up a bottle of Poland Spring water and it won't take long to find language on the label touting how the company is selling its product in bottles with smaller caps - using less plastic in the process. As you eat a Big Mac and french fries, you can read on the soda cup how McDonald's helps the environment and even received an Energy Star award.
On the surface, these claims may appear to be little more than self-promotional horn blowings. However, these are just two examples of how companies are integrating socially responsible actions into their marketing messages. As the concept of corporate social responsibility (CSR) has gained traction in the business world, it has also gained a foothold within the School of Management, both inside and outside the classroom.
Corporate social responsibility is the idea that companies should consider their stakeholders such as workers and the larger community when making decisions. Thomas F. Kelly (pictured at right), professor of strategy and ethics, and former SOM dean, says CSR has, within the business vernacular, adopted the term "sustainability." That means fulfilling present needs without adversely affecting the ability of future generations to meet their own needs. Simply put, being eco-friendly or going green.
Kelly says businesses today are concerned with CSR guru John Elkington's concept of the triple bottom line – people, planet, profit.” Instead of solely focusing on profit and loss, companies see the value in assessing their performance from social and environmental perspectives.
"Corporations for their own good, of course, need to perform well financially, but doing well in the other two areas [social and environmental] helps a company to do well financially," Kelly said.
At the same time, Kelly points out that CSR gives us a new take on the age-old question: Which came first, the chicken or the egg? Does a company such as McDonald's engage in CSR activities because it has ample money to spend? Or, does a business profit because it's perceived as a good neighbor?
What is more clear is that, as CSR has become ingrained in corporate culture, investors have their choice of a plethora of mutual funds that focus on eco-friendly companies. In fact, socially responsible investing is now a $3 trillion industry.
Kelly says more than 150 non-governmental organizations monitor, certify, assist, study, and rate companies on CSR. He and Steven Scalet, associate professor of philosophy in Harpur College, who recently left Binghamton for the University of Maryland, studied the impact of CSR rankings [see sidebar] and found that companies are eager to publicize their positive activities, and that ratings have seemingly very little impact.
Arieh Ullmann, associate professor of strategy, says that, while companies are quick to accentuate the positive, it's difficult to measure the value of good news. It's much easier, he says, to quantify the downside, pointing to the sharp decline in the value of BP stock following the oil spill in the Gulf of Mexico.
"Decision makers can tell you that CSR is worth something, but they can't say how much," Ullmann says. "CSR is often believed to augment social capital. There have been efforts to measure this, but they have not been conclusive. The opposite is much more obvious."
We can say how interested tomorrow's business leaders are in learning about CSR. A 2008 study by the Aspen Institute found that nearly 80 percent of students said the MBA curriculum at their schools should include more content related to sustainability and CSR. While no such hard data exists within SOM, faculty members say students are very concerned about these topics.
In his International Business course, Ullmann requires students to choose products and devise strategies to market them in different countries. He sees the combination of profit motive and the desire to do good in projects such as the marketing of water filters in countries that struggle with maintaining clean water supplies.
"Students are aware of an existing problem and they pick projects where there is the possibility of making a profit, but not at the expense of others. They can make money by doing good. That's the best thing," Ullmann said.
In Kimberly Jaussi's Organizational and Strategic Leadership course, offered each spring, nearly 60 students volunteer a total of more than 9,000 hours to consult for nonprofit organizations in the Binghamton area. Consultant teams assess the strengths and weaknesses of organizations in order to craft a strategic plan; Manley’s Mighty Mart donates $2,000 to the organization with the best student project, so the non-profit group can implement the students' recommendations. During spring semester 2010, ASANI Consultants earned this prize for the American Civic Association, where an immigrant killed 13 people before fatally shooting himself in April 2009. Jaussi says this community outreach program would not be possible without a $150,000 donation from Manley's, which supports a coach and supplies for Jaussi's course.
"Students will tell you this class is the hardest one they've ever taken, but the
most rewarding," Jaussi says. "It's because Manley's is so socially minded that we
were able to do this. Manley's wanted its investment to go right back into the community."
Jaussi wants eventually to offer a course in which students are able to help implement their strategic plans. Some of her students, she says, already take the initiative to stay in touch with the agencies they’ve worked with after their class project has concluded.
"It changes [the students'] career trajectory after they graduate, " Jaussi says. "They start out on Wall Street or investment banking, and after a while, they're not fulfilled, so they want to work with non-profits."
SOM students have shown their desire to help the community, even outside the auspices of a for-credit class. Take, for example, Students in Free Enterprise (SIFE), a group - under the direction of Angelo Mastrangelo, instructor in entrepreneurship - which engages in a number of local sustainability projects [see graphic].
Incoming SIFE president Elliot Nasser, a senior majoring in financial economics, says he wants the group to focus on helping underprivileged Binghamton-area students and making the community more green.
"It ‘s very rewarding to see the positive impact not only on the people we work with, but also in the students involved in the club," Nasser said. "SIFE has been critical in shaping my career goals after graduation. I look forward to working for a company that will challenge me, and that also gives back to the community."
Faculty members say students will find that CSR is creating career opportunities that didn't exist several years ago, pointing to job titles like vice president of corporate social responsibility - a position that actually exists at The Coca-Cola Company.
"When I talked to young people seven to 10 years ago, I'd hear a lot about investment banking, consulting and corporate law," says SOM Dean Upinder Dhillon. "Those were the fields they most wanted to get into. Now, students say 'Where can I make an impact?'"
Eco-friendly and going green are certainly hot buzzwords now, and it's hip to be a good corporate citizen. However, is there potential staying power for CSR? Kelly believes there is.
"Think of fads like total quality management," Kelly says. "You have some of that going on now, but not nearly as much as when it was hot in the 1990s. Many consumers, especially young people, are more in tuned to CSR so, in response, companies have incorporated this concept into their mainstream business practices."
See photos of student service projects at the SOM Facebook page.