OTTAWA—Although Milton Friedman wrote in 1970 that “the social responsibility of business is to increase its profits,” a new survey finds that companies would in fact make more money by being socially responsible.
They would also benefit in terms of recruiting talent, according to a national poll sponsored by the Corporate and Community Social Responsibility Conference held at Ottawa’s Algonquin College on Tuesday.
More than six in ten Canadians polled said they would be willing to spend more on a $100 product or service if a version was available from a socially responsible company.
Women would spend more on average than men ($10.11 vs. $7.03), and younger Canadians would spend more than older Canadians. Those 18 to 29 would spend $11.88 more on average.
In addition, one in two said they would be willing to take a pay cut to work for a socially responsible company. The average cut they said they would accept was 4.8 percent. Eight percent would be willing to take more than a 10 percent pay cut.
Importance of Connectivity, Information
Speaking at the Ottawa conference, Barbara McInnes, president and CEO of Community Foundation of Ottawa, noted that philanthropic organizations like her foundation are noticing that “when people talk about making positive change or tackling wicked societal problems, they’re no longer looking for leadership.”
“It’s ‘connectorship’ they’re after,” Ms. McInnes said, adding that the most effective organizations today are those that understand the importance of connectivity and how to make powerful connections happen.
“Enhanced disclosure would give investors better insight as to the long-term viability of their investment,” said Laurel Broten, Ontario’s Minister of Children and Youth Services and Minister Responsible for Women’s Issues.
“Investors today want to know more than just limited financial disclosures. They want to know where a company buys its supplies, how it treats the planet, is it a good neighbour to the community, and how its actions compare to its competitors.”
In April 2009 Ms. Broten introduced a resolution that was passed unanimously in the provincial legislature and led to a review by the Ontario Securities Commission of the reporting standards for Ontario corporations.
“Each of us individually can start to have quite a significant impact if we think through what we are buying and who we’re doing business with,” Ms. Broten said.
‘Sustainable Profits’
Sophie L’Hélias, Senior Fellow at the Samuel Heyman Center on Corporate Governance at the Cardozo School of Law in New York and the Telfer School of Management at University of Ottawa, suggested viewing corporate social responsibility (CSR) from the lens of governance and risk.
“The new risk that we’re facing today is environmental and social risk,” Ms. L’Hélias said.
Noting that “the ultimate guardians of a corporation are the investors,” she said that as the public—the investors—are becoming more concerned about these issues, “we’re seeing a number of pension funds, also religious funds, environmental funds, even hedge funds, go against companies that are not doing the right thing.”
While Milton Friedman talked about profits, he did not talk about “sustainable profits,” said Ms. L’Hélias.
She said that this is something pension funds need.
“As the population is going older, as people need to get their pension paid, we need sustainable profits. We can’t go in this boom and bust cycle constantly,” she said. “So sustainability is also the notion of the new economic model for businesses.”
Legislative Response to CSR
Liberal MP John McKay spoke about Bill C-300, his private member’s bill which was aimed at improving corporate practice but was recently defeated by six votes at third reading.
The bill would have required Canadian companies carrying out mining, oil, and gas activities abroad to comply with guidelines that incorporate various international CSR policies.
Speaking to the need for a legislative response to CSR rather than a voluntary approach, Mr. McKay said his bill received huge international attention and that he has done “well over 100 interviews.” His Facebook page received almost 40,000 views from 109 countries, he added.
“There’s been a huge evolution in terms of where we are, and no doubt there’s been lots of issues with some companies out there as well,” said Ross Gallinger, Senior Vice President, Health, Safety & Sustainability of IAMGOLD Corporation, responding to an audience question about the bill.
“Things on the ground are very complicated at times . . . and people do make mistakes,” he said, noting that IAMGOLD has been working with the governments in countries where it operates to increase their capacity to deal with these issues through legal means.
He added that McKay’s bill had ramifications related to competition and “would have not allowed us to acquire operations that had problems associated with them, and wouldn’t have allowed us to bring our expertise to try and fix those problems.”
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