Clean, Green, and Not So Mean: Can Business Save the World?

2010 BRASS Program Planning Committee

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No matter how you define it, corporate social responsibility (CSR) is a hot topic. From community investing to business ethics to environmental sustainability and beyond, proponents of CSR view the business landscape through a lens that focuses less on profitability and more on the greater good. This article will provide an overview of the 2010 Business Reference and Services Section (BRASS) Program at the 2010 ALA Annual Conference in Washington, D.C. titled “Clean, Green, and Not So Mean: Can Business Help Save the World?” and present a brief orientation to several of the subtopics that fall under the CSR umbrella. A video recording of the program will soon be available on the BRASS website (www.ala.org/rusa/brass). If you are interested in BRASS or want more information about joining BRASS, please contact the committee chair, Andy Spackman.

Conference Program Summary

“Doing well by doing good” is the business world’s new mantra. Concepts of CSR, green business, social entrepreneurship, and peace through commerce have become a focus of research and are inspiring the next generation of businesspeople. The 2010 BRASS Program gave attendees an expert’s view of certain niches within the broader realm of ethical or socially responsible business practices. Michael Matos, business and economics librarian at American University Library, spoke first. He described sourc-es for corporate social responsibility indexes and rankings and illustrated the complexities of evaluating sources in this developing field, using BP as an example. BP, until recently, was ranked as one of Fortune’s 10 Most “Accountable” Big Companies, but since the Gulf of Mexico oil spill, has been delisted from the Dow Jones Sustainability Index.1 The next speaker was Lisa Hall, the executive vice presi-dent and chief lending officer of the Calvert Foundation (www.calvertfoundation.org). Hall previously worked for Fannie Mae and as a senior policy advisor at the National Economic Council during the Clinton Administration. She holds a BS in Economics from the University of Pennsylvania and an MBA from Harvard University. Hall explained Calvert Foundation’s pioneering role in the field of community (or “impact”) investing, which delivers both social and financial returns. Calvert’s model allows investors to align their money with their values, while using the tools of financial markets to make capital available to social mission organizations. Investors purchase Calvert’s notes, selecting a term and rate of return, and Calvert, with more than $500 million under management, makes capital available to organizations that provide affordable housing, microfinance, job creation, and community development around the world.

David Deal, the third speaker, is chief executive officer and founder of Community IT Innovators (CITI), a DC-based, employee-owned company committed to helping social mission organizations effectively use green technology (www.citidc.com). CITI combines expert IT, web, and data services, and consulting with a genuine commitment to make the world a better place.

Deal shared the story of CITI and his own story as a social entrepreneur. He defines social entrepreneurship as business resourcefulness plus serving a purpose greater than profit. CITI’s employees are dedicated to its mission of sustainability, including financial, social, and environmental sustainability. It’s in the meeting of sustainability, entrepreneurship, and a culture of service that Deal sees potential for a positive answer to the question, can business help save the world?

The final speaker, Timothy L. Fort, is executive director of the Institute for Corporate Responsibility and Lindner-Gambal Professor of Business Ethics at George Washington University Business School. He holds BA and MA from the University of Notre Dame and both a JD and PhD from Northwestern University. He is a pioneer in “peace through commerce” and has published four books and dozens of articles on the topic.

The concept of peace through commerce begins with the premise that violent conflict has a negative impact on most industries, and societies that engage in trade with one another have incentives to resolve conflicts through nonviolent means. Peace through commerce extends to the idea that peace can be fostered through ethical business activity. In The Role of Business in Fostering Peaceful Societies (Cambridge, 2004) Timothy Fort and Cindy Schipani show that the level of corruption in countries correlates with the propensity to resolve conflicts with violence. While business benefits from the stability peace brings, Fort goes farther in Business, Integrity, and Peace (Cambridge, 2007), arguing that businesses also have an ethical imperative to foster peace. Much of Fort’s work, as did his presentation at Annual Conference, focuses on how business can foster peace through legal, economic, and moral approaches.

While a single program at a single conference cannot possibly cover every aspect of ethical or socially responsible business, these speakers shared their passion with attendees, giving a positive outlook on the question, can business help save the world?

Corporate Governance

When defining corporate social responsibility, an essential building block is “corporate governance.” The concept of governance has been in existence since there have been corporations, but the phrase itself did not show up in financial literature until the latter part of the twentieth century.

Corporate governance is a series of checks and balances that ensure the “long-term, sustainable value of the firm.”2 It also is “the determination of the broad uses to which organizational resources will be deployed and the resolution of conflicts among the myriad participants in organizations.”3 It takes account of all the interests that affect the viability, competence, and moral character of an enterprise.4

Corporate governance is a set of policies that limit and direct individual actions in pursuit of the corporation’s welfare and survival. The key players in creating and implementing corporate governance policies are the board of directors, the shareholders, and the corporate executives. These key players form a checks-and-balances system to oversee the operation of the company. The board of directors does not manage the company: it is responsible for monitoring corporate performance and senior management. The shareholders own the company and expect economic gains in return for their financial risks. Executives are responsible for implementing specific strategies that dictate the overall performance of the firm.5 Corporate governance examines the connection between these key players to the corporation and to one another.6

Many aspects of corporate governance only gained prominence in the last decade. In response to high-level mismanagement from companies such as Tyco, Enron, Adelphia, and WorldCom, the U.S. government realized the need to pass legislation that would prevent other companies from engaging in similar financial practices that could threaten the global economy. Five of the largest corporate bankruptcies of the early 2000s erased more than $460 billion in shareholder value.7 On July 30, 2002, President George W. Bush signed into law the Sarbanes-Oxley Act of 2002. This mandated, among other things, increased accuracy and transparency of the financial reporting and auditing of publicly traded companies. Highlights included having a majority of independent directors, the creation of an audit committee entirely composed of outside directors, and the creation of a compensation committee entirely composed of outside directors.8

Current legislation includes the Restoring American Financial Stability Act of 2010. The majority of the bill aims to tighten regulation of the financial industry, but it also includes measures that expose the actions of upper-level executives. Items on the bill that have corporate-governance implications include requiring a company to disclose the relationship between company performance and executive compensation and gaining shareholder approval for executive compensation.

The nineteenth century legal concept of the corporation is inadequate today.9 In response to the changing concept of the organization, corporate governance has to constantly evolve. Previously it was viewed as a way to monitor the fiduciary responsibilities of management and the protection of shareholder rights. Today, it also encompasses how corporate decisions affect both employees and the larger community. This current view is further evolving into a transparent moral- and value-based system that promotes disclosure of nonfinancial initiatives.10 This updated era of corporate governance aligns itself with the corporate social responsibility movement by emphasizing “corporate ethics, accountability, disclosure and reporting.”11

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