• 07.19.10

Freeland’s Washington Post Op-Ed Is Wrong: CSR Does Maximize Corporate Profitability

“The cult of corporate social responsibility” is one of the culprits in the BP oil spill, claims Chrsytia Freeland, global editor at large for Thomson Reuters, in her opinion piece in yesterday’s Washington Post. How is that? Because, claims Freeland, “The problem with CSR is that it muddies the waters.


That’s where Freeland gets it wrong. CSR isn’t about puppy dogs and ice cream. CSR is about conducting business with integrity and attention to the community in a way that benefits shareholders.


I vigorously disagree with Freeland on a number of issues:

  1. CSR, when interpreted correctly, is purely and simply about maximizing profitability. BP is an example of a company that is on the brink of financial collapse precisely because it violated its corporate social responsibility. BP reportedly cut corners in their oil drilling at the expense of generally accepted environmental precautions.
  2. In order to maximize profits, it is absolutely necessary for companies to have workforces and customers who are educated and healthy, communities that are safe from crime and terror, and economically vibrant neighborhoods. In order for companies to maximize profits, they will also need adequate supplies of water; that’s an environmental issue. PepsiCo understands this and is leading the way. Companies that address such matters are wisely investing in CSR for their own interests, as well as the community.
  3. CSR builds a company’s long-term value. Failure to invest in CSR is a narrow, short-term, quarterly report type of strategy, which undermines the company’s long-term profitability and shareholder value.
  4. By referring to BP’s Beyond Petroleum campaign, Freeland is confusing marketing with strategy. It’s in BP’s interest to think about sustainability and what it will do when oil runs out. The problem is that BP talked the talk, but didn’t walk the walk. The fact that ExxonMobil “became religious about safety standards” after the Exxon Valdez disaster, as Freeland notes, is a perfect example of CSR in action. ExxonMobil has the true PR story to tell about walking the walk.

CSR isn’t the problem. It’s the solution.

About the author

Korngold provides strategy consulting to global corporations on sustainability, facilitating corporate-nonprofit partnerships, and training and placing hundreds of business executives on NGO/nonprofit boards for 20+ years. She provides strategy and board governance consulting to NGO/nonprofit boards, foundations, and educational and healthcare institutions.