FREAKONOMICS
THE HIDDEN SIDE OF EVERYTHING
(Photo: Tom Raftery)
Our latest Freakonomics Radio on
Marketplace podcast is called “Is Good Corporate Citizenship Also Good for the Bottom Line?” (You can download/subscribe at
iTunes, get the
RSS feed, listen via the media player above, or read the transcript below.)
The short answer: yes. That’s the finding of
Robert G. Eccles,
Ioannis Ioannou and
George Serafeim from their recent paper “
The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance” :
“We show that there is significant variation in future
accounting and stock market performance across the two groups of firms.
We track corporate performance for 18 years and find that sustainable
firms outperform traditional firms in terms of both stock market and
accounting performance.”
You’ll hear Serafeim explain his findings and you’ll also hear from
Georg Kell, executive director of the
UN Global Compact.
Its mission is to help companies around the world adopt the behaviors
of Corporate Social Responsibility (CSR) — which include not only good
environmental stewardship but also fighting corruption and the ethical
treatment of employees and customers. All of this is, alas, easier said
than done:
KELL: “Well, if you were to ask me for
the Global 1,000 corporations, how many of them are sincere and serious
about sustainability and long-term value creation? Our own
implementation survey and others done by other leading think tanks will
probably suggest we are probably at 15 percent.”
You can
search here for companies that participate in the Compact. And, perhaps more interestingly, you can look up which companies the Compact
has expelled for non-compliance (and
here’s an update of the expelled list).
One key component of a “high-sustainability” company is thoughtful
long-term planning. One interesting example is Dow Chemical, an
upstanding member of the UN Global Compact since 2007 and the focus of
an HBS case study
by Robert Eccles. Dow has gone through two cycles of 10-year
goal-setting and is now debating whether to set goals for the next 100
years. Here’s what
David Kepler, Dow’s chief sustainability officer, told us:
KEPLER: “What our first set of goals
were that were 10-year goals started in 1996. Energy efficiency was a
big part of that. In that period of time, we saved almost $5 billion
around energy efficiencies. So there’s an economic story, but there’s
also an environmental story in that.”
Unfortunately, we didn’t have space in our
Marketplace piece for the Kepler conversation, nor for our conversation with Intel’s chief operating officer
Brian Krzanich, (who
may be the firm’s next CEO). Intel has been issuing corporate responsibility
reports since
2001, and keeps a running
CSR blog:
KRZANICH: “I think those things come
hand in hand — they’re properties of what makes a company great. It’s
just being exemplified in a different arenas. It takes good strategic
thinking to think far enough out in advance and say, ‘I’m going to get a
return on investing in the communities and the education systems so
that my workers five, seven, eight, ten years out are going to be
stronger and better and the kind of workers I want.’ That same kind of
strategic thinking delivers better products and better product road
maps.”
Audio Transcript
