It allows proponents of corporate responsibility to challenge the idea that a manager should not be concerned about responsibility but focus entirely on making money for their ultimate bosses - the shareholders: with a business case, this becomes a false distinction, as good business is good business.

The 'business case', or financial rationale, for companies to be more responsible to our planet and its inhabitants has been essential for any proponent of corporate responsibility, be they consultant, activist, academic or manager. The business case is comprised of factors such as corporate reputation, staff morale, consumer confidence, and government relations, amongst others.1 It allows proponents of corporate responsibility to challenge the idea that a manager should not be concerned about responsibility but focus entirely on making money for their ultimate bosses - the shareholders: with a business case, this becomes a false distinction, as good business is good business.

In the summer of 2002 the business case became a little frayed around the edges. In an article for the Public Affairs Newsletter, Alexander Evans of the Institute for Public Policy Research (IPPR) questioned why, if consumers are so green, Sports Utility Vehicles have been the top-selling product line in the US. Moreover, he noted that "if green stock indices had outperformed their more traditional brethren, it was more because ethical funds tended to be overweight in technology stocks during the Long Boom of the 1990s than because of any fundamental competitive advantage attached to saintly behaviour." 2

While socially responsible investments have wobbled and fallen, the Texas-based research and investment agency Mutuals.com, which manages $240 million in assets, pointed out that 'unethical' stocks have remained strong. "Look at any public information on (defence) stocks like Lockheed Martin or General Dynamics. You'll see that they outperformed the S&P 500 Index by wide margins over the past 15 years." 3 Their 'Vice Fund' went on sale to the public in September, advertising itself as a "socially irresponsible fund" that would invest clients' assets in tobacco, gambling, liquor, in addition to defence. These industries "will continue to experience significant capital appreciation during good and bad markets. We consider these industries to be nearly 'recession-proof'." 4 For example, alcoholic-beverage stocks gained 62.57 percent over the five years, compared with an 11.8 percent gain for the Standard & Poor 500 share index.

In addition to the obvious choices, such as British American Tobacco, Boeing or Lockheed Martin, the fund managers have given themselves "lots of flexibility" to find stocks with a natural affinity with their concept. For example, Vice Fund portfolio co-manager, Dan Ahrens told the Philadelphia Inquirer that he might invest in Harley-Davidson Inc. because its motorcycles could be associated with drinking. This 'Explicitly Socially Irresponsible Investment' (ESII) might be just a fad and niche, with The Vice Fund being a clever marketing idea to gain coverage through controversy. Hence Ahren's response to the possibility of pickets outside their Dallas office: "We'd kinda like that," he said.

The existence of such funds is worth reflection. It suggests we need to analyse the context of the business case for corporate responsibility more closely. Researchers have been able to find evidence of companies making money from good or bad practices. Whether there is a business case or not depends on the company and the industry sector in question as well as the cultural, economic and political environment.

Political events in the summer of 2002 reminded us how people shape the context of doing business, and in turn the business case for corporate responsibility. Defense stocks such as Lockheed Martin (+40%), Northrop Grumman (+25%) and General Dynamics (+4%) shot up because of the US government's increase in the military budget and the threat of war. Meanwhile political developments in Germany in September had major effect on the business case for environmental investments. Reuters noted that "companies with an environmental edge saw their stocks gain after the Greens' success." The wind power specialist Plambeck shot up 15 percent in Frankfurt, while the green energy firm Umweltkontor rose 3.3 percent. 5

Perhaps once researchers remind themselves of the shifting political environment for business that turns social and environmental issues into market indicators, they will no longer look for a fixed reality to discover about good business being good business. Instead, the political and social factors that affect business priorities and performance will become more important - including activist campaigns and government regulation, two issues that featured prominently in the summer of 2002 and in this World Review.

contents © jem bendell, 2002. site design by tim concannon. hosting by futureconsiderations.com.