Top CSR Stories of 2010

My colleagues Dirk Matten and Andy Crane posted their take on the top 10 CSR stories of 2010:

Looks like the BP Oil Spill is taking most of the votes.

Have a look and cast your vote

One Man's Quest to Change a Gasoline-Based Transportation System

Shai Agassi, CEO of Better Place, is calling for the end of gasoline cars by 2020. If you’ve ever heard this guy speak, I think you’d find yourself believing it.

I’ve blogged about Better Place before. They have raised $700 million from investors who see the potential in Agassi’s business model. Better Place is a global provider of electric vehicle infrastructure, network and services. The company isn’t in the car business nor is it in the fuel business. They are instead in the systems changing business.

I’m particularly impressed with this company because they demonstrate the capability of business to enact social change. This approach to sustainability is much different from what we hear of in a typical corporate social responsibility report where companies demonstrate their commitment to reducing CO2 emissions, waste or energy use by trivial amounts. Better Place’s version of sustainability is not about making incremental improvements to existing models; it is about trying to change the taken for granted and unsustainable transportation system that locks us into an oil-centric society.

There are many companies like these, companies that relentlessly work to change systems that many would argue are impossible to change due to the highly inertial and institutionalized norms associated with their existence. Grameen Bank, Interface Carpets, Patagonia, Terracycle (photo of founder to left). VanCity, and many others are doing hard work to change a highly established set of practices that lead to social inequity and environmental destruction.

But the challenges are enormous – more enormous than any typical entrepreneur would face. For this is not a matter of filling a small gap in the marketplace such as selling a new brand of detergent or opening a restaurant in a neglected area of the city. This is a matter of building new supply chains, unconventional partnerships, and new markets that did not exist before. Better Place needs to build up new suppliers to provide the vehicles to fill these stations, the batteries to fuel the vehicles, and the technology to provide the service. They also need to inspire the consumer to engage in this new system which is not just about purchasing an electric vehicle but about changing the way they think about refueling and driving more generally. They also need to build strong partnerships with unconventional actors like NGOs, communities, and governments. Without the Israeli, Danish and Australian governments’ buy-in, any system-changing endeavor like this one would be quickly disbanded.

Another challenge is the fact that they are facing a brick wall of embedded actors who would be severely threatened if something like this were to happen. Agassi mentions ‘oil’ as his primary competition. Courageous entrepreneurs like Agassi who meddle with a system that a small wealthy elite group has worked to institutionalize will face enormous resistance, much like the electric car industry faced in the 1990s.

So in effect, a firm like Better Place is thinking at the systems level rather than introducing a new product or accessing a new market within an existing system or supply chain. As John Elkington puts it, engaging in this type of entrepreneurship requires a special kind of person, one that is unreasonable and insanely ambitious.

Our Science-Based Society: Solution or Self-Fulfilling Prophecy

CBC aired a documentary called “Playing God with Planet Earth” where they explore the latest on geoengineering and engage in a very thoughtful debate about the potential opportunities and dangers of pursuing this highly controversial area of science.

I was particularly struck by the following quotation from scientist David Keith:

“These are technologies that give us enormous leverage over the planet where once you know how to put a kind of aerosol in the stratosphere, then an incredibly small amount of money allows you to manipulate the entire planet. It gives you enormous god-like powers”

During the documentary, there is a debate about whether we should use computer models to test the effects of geoengineering or whether we should conduct small-scale experiments to monitor their effects. Isn't this missing a bigger issue? On the one hand, computer models are limited to capturing the variables it is programmed to include. On the other hand, the use of experiments falls victim to a naïve assumption that the effects are merely small-scale versions of global phenomena – something that complexity theory would disagree with.

In both cases, it’s important to ask whether we have grown over-confident in our ability to use the scientific method to resolve global issues. The documentary nicely chronicles a geoengineering strategy off the coast of Senegal where government officials responded to flooding upstream by cutting a drainage canal in a sandbar that protected small villages from the strong ocean currents. Within a matter of months, the canal exploded in size from a few meters wide to several hundred meters. The resulting waves wreaked havoc on small villages ill-prepared for the onslaught. The point CBC was trying to make is that we are ill-equipped to fully understand our very simplistic responses to nature's complexity.

To explore this further, it may be worthwhile to consider the debate on what is meant by “sustainable development”. The “weak” interpretation of sustainable development is guided by a perspective that views humans as superior to nature and thus in a position to exploit the natural environment as part of an economically rationalized agenda. Here, sustainable development is overpowered by the scientific-industrial paradigm whereby development should be determined by science and economics. The very idea that we have control over nature and that the coveted scientific method will come to the rescue falls within our socially constructed worldview, resulting in, what some would argue, a self-fulfilling prophecy. Are we falling victim to what Einstein warned: “We can’t solve problems by using the same kind of thinking we used when we created them”

The “strong” interpretation of sustainable development views humans merely as one strand of the web of life with no privileged place in nature. Advocates of this perspective argue for changing the ends of social actions away from economic and scientific ideals to morals and values using participatory, transparent and democratic processes. The Dalai Lama, in a book called The Universe in a Single Atom: The Convergence of Science and Spirituality, argues that the separation of science and spiritually is a false distinction that must come to an end if we are to address some of the more complex phenomena in our society. Some physicists, stumped by the unpredictable and completely irrational nature of particles at the subatomic level, are beginning to turn to spirituality and non-science based thinking for answers.

Could a greater incorporation of non-science and non-rational based thinking play a critical role in highly complex decisions? Applying this question to geoengineering at a simplistic level might suggest that any scientific pursuit must be tempered by considering the behavioral element or, as the documentary calls it, our habitual addiction to activities that cause climate change. In other words, resorting to science as a panacea for these sorts of systemic issues is not only dangerously naïve but goes against the very fabric upon which we exist. It arguably omits a whole spectrum of non-science and non-rational responses that make up our society and the ecological environment in which we reside.

What are the implications for business? You could argue that the business version of the above discussion comes out in the overall purpose of why the business exists. The weak approach pushes for an economic-based business model while the strong approach pushes for a moral-based business model. Will the latter companies be better positioned to deal with complex issues such as climate change, poverty, and human rights? Time will tell.

Geo-Engineering: The Ultimate Mask for the Elephant in the Room

I recall a couple of years ago reading an article in the Globe and Mail that I had originally thought to be a farce because it spoke of three geo-engineered solutions to combat global warming. One was to place giant mirrors in space to reflect the sun intermittently as needed. Another was to catalyze volcanic activity to spew sulphur into the atmosphere (sulphur acts like tiny mirrors, deflecting light and heat back into space) while the third was to launch dust particles in the atmosphere to weaken the sun’s intensity on the Earth’s surface. I never thought the day would come where such ideas would make the front page of The Economist (online version). Geo-engineering is the term used to describe man-made technologies meant to reverse global warming. But unlike any mitigation strategy that reduces emissions at its source, geo-engineering involves recognizing that global warming is inevitable and subsequently designing technological fixes to deal with it.

More and more scientists are taking this idea seriously. In addition to polluting the stratosphere with sulphuric acid, another more recent idea is to deposit lime into the oceans to free up space for carbon dioxide. The article also discusses the idea of locking sections of Greenland’s glaciers to prevent them from falling into the oceans.

The fact that these ideas represent serious conversations among some of the brightest minds out there may be a cause for concern. The very idea that they are using computer models to project the outcome of injecting large amounts of sulphuric acid into the atmosphere is a fine illustration of the pervasive anthropocentric worldview that dominates our civilization. We tend to think that we’ve mastered nature and through this mastery can develop technologies to manipulate the planet’s ecosystems in a way that will reverse any negative impacts we have on it. I don’t think there are many scientists out there that would disagree with the conjecture that nature is incredibly complex and that our understanding of such complexity has only reached tip of the proverbial iceberg.

In response to a limited understanding combined with an egocentric disposition, we engage in reductionism where we examine seemingly simplistic cause and effect relationships limited to a small number of nature’s systems. Launching sulphuric acid in the air or liming our oceans to combat global warming says nothing about the consequential impact on other systems on which we depend. These band aid-like solutions only address symptoms of a more fundamental and underlying issue, which quite naturally, results in the need for more band aid solutions as unpredictable outcomes emerge from the original uneducated and vain response.

What happens if we do find a solution that would combat global warming, then what? What symptoms arise next? Do we jump from band aid solution to band aid solution learning about the complexities of nature the hard way? And if we are successful, however temporarily, does that not send humanity the message: “keep on consuming, technology will always provide the solution”?

There’s an elephant in the room here that we keep avoiding – our behaviour. No one wants to talk about the fact that we simply cannot stop extracting, manufacturing, producing, packaging, consuming, and wasting nor can we develop the courage to make decisions that represent a change in lifestyle today for future generations. As a result we want the best of both worlds – we want to keep our behaviour the same and rely on technology to fix the consequential externalities. Is this any different than consuming to a state of obesity and then relying on a pill to make it all better or driving your SUV to the grocery story and then pulling reusable shopping bags out of the back or indulging in flights around the world only to buy offsets, or making millions of dollars in profits at the expense of indigenous communities only to donate to a charity that advocates for human rights?

One of my students rejects any notion that the issues we’re facing today are any different from the issues we’ve faced in the past and points to technology and human ingenuity as the savior to all our problems. To me, this is a specious argument and ultimately a further reflection of our anthropocentric worldview. While I acknowledge the strong powers of innovation, there comes a point where we can’t have everything; where there are limits to our consumption, limits to the Earth’s carrying capacity, limits to growth. To deny this is to deny our interdependence with nature and the corresponding limits it imposes on us.

What is the Investor's Role in Sustainable Business?

A couple of days ago, my students and I attended a presentation by Bob Walker, Vice President of Ethical Funds Limited, a company that prides itself on being a leader on what is known as socially responsible investing (SRI). Unlike many other SRI fund houses that influence companies based on their decisions to invest or not invest in their business, Ethical Funds Limited invests in companies with the intention to influence their business through shareholder resolutions and a subsequent engagement process. One of my students felt that this was more of a marketing campaign than a positioning strategy.

So which has greater impact? Investing in a "not-so-good" company and using your role as an investor to change company behaviour OR pulling your investment as a message to the company that despite the potential return you would get, you will not stand for their activities?

Answering this question might depend on how much influence an investor can have. In his blog, Felix Salmon argues that at the end of the day, unless you’re a significant investor, your influence on a firm is minimal. Salmon nicely describes a 'slap in the face' scenario where a conscious investor who owns 1/220,000 of a company naively thinks that he's changing behaviour when all the while the company is using his money for a $4 million lobbying effort to void the firm from California’s 2006 Global Warming Solutions Act.

On the flip side, one can argue that pulling your investment likely doesn’t have that much of an impact either. So perhaps the question is not so much about impact as much as it is about leadership. Leadership to me is going against the mold by taking a courageous stance that conforms to your values in a way that aspires others to follow. Is Ethical Funds a leader?

Some would argue that Ethical Funds is having their cake and eating it too. A substantial investor in the oil sands affords the firm with massive returns on investment. Is their discreet shareholder activism merely a means to greenwash their greedy investment strategy? Does it afford them enormous returns while at the same time making it seem like they are doing good things to mask those 'dirty' returns? Is this any different from indulging in carbon intensive products and than purchasing offsets?

Or is this indeed a genuine effort on the part of an investor trying to make a difference in the behaviour of the companies in which it invests? I have a feeling this debate will grow in popularity as more and more investors get involved in this space.

Canadian Cosmetics Need a Makeover

You can't help but use the pun when these stories come up. The David Suzuki Foundation issued a report today saying that Canada needs stronger rules to keep toxic chemicals out of personal care products. The study asked 6200 consumers to inspect ingredient lists for 12 sets of potentially harmful chemicals used in cosmetics. Almost 80% of the products reportedly contained at least one of these dozen ingredients and more than half of all products reportedly contained multiple ingredients.

Pretty scary stuff.

Click here for more info on the study

PepsiCo Pulls Sunchips

PepsiCo (aka Frito-Lay) recently pulled the plug on their compostable chip bags, changing back 5 of the 6 sun chips flavors to traditional packaging, citing noise complaints from consumers as the main reason. Seems like the ecological benefits of the chip bag trump the noise burden that comes with it. If we’re seeing resistance to what, comparatively speaking, is a trivial sacrifice for environmental benefit, imagine the kind of resistance we’d see from more fundamental changes.

The Colbert Report presented a rather amusing spoof on this, extending it to resistance to wind farms. He goes on to suggest that to avoid the noise, we should build quiet coal technologies, and breakthroughs in silent oil. And when the coastal cities are underwater from the arctic ice melt, their wish for being quiet will be fulfilled. Hilarious!

Rebooting How We See Things, says Hollywood Director James Cameron

"It's a Complete Reboot of How We See Things", says James Cameron, director of Avatar when commenting on the need to change how our industrialized society works. Having now watched Avatar, I can certainly add this film to the growing list of films that tend to vilify the private sector. I think Avatar does a fantastic job at illustrating the disassociation our society has with nature and indigenous people, their culture, way of life and the surrounding environment. Interestingly, the actor most disassociated was the business driving the military to blast their way to the centre of the Niva people. The movie nicely depicts our very human-centered or anthropocentric perspective where we, as humans, are superior to nature. Business is predicated on the notion that natural resources represent an infinite bucket of cost-free inputs, of which we have the ‘right’ to exploit because of our superiority and intellectual prowess. Indeed, scientists are now debating whether the last millennium should be called the anthropogenic era in light of humanity’s profound impact on the natural environment.

But clearly this is an exaggerated portrayal of business’ impact on indigenous communities and the environment, isn’t it?

In many ways, Avatar represents an amplification of much of what has already happened or is presently happening in many regions around the world. Not long ago, Shell applied to the Supreme Court of British Columbia to forcibly remove elders of the Tahltan who were blocking access to exploration sites. Shell claimed that the environmental risks on the community’s sacred headwaters were exaggerated and that government permission gave them rights to these lands. In Sudan, Talisman Oil was accused of playing an enabling role in civil strife that still exists today. In Nigeria, Shell recently settled out of court and paid $15.5 million dollars in damages to the Ogoni people in Nigeria. Although they never admitted guilt, there was public sentiment that Shell was at least complicit if not involved in the execution of 9 human rights activists, not to mention the environmental devastation imposed on the Niger Delta during their tenure there. Oil company Tullow Oil PLC has been keen on drilling for oil beneath Murchicson Falls National Park in Uganda. “We don’t sleep” says Akelo Oliver, a fisherwoman on the shores of Lake Albert on the outskirts of Buliisa. Standing in front of an oil rig she explains frustratingly that "No one has talked to me or told me about what they're doing."

What about Canada’s oil sands? In response to an invitation of First Nations activists in Fort Chipewyan, Hollywood powerhouse James Cameron visited the Alberta oil sands this week. Since filming Avatar, Cameron has been getting involved in a number of conflicts between industry and indigenous people. Visiting the Amazon to support a battle against a dam project, he said, “This is how the civilized world slowly, slowly pushes into the forest and takes away the world that used to be”.

Unfortunately most of the media in Canada covered extensively the first part of Cameron’s trip where he met with oil executives and government but barely touched upon the outcome of meetings with the aboriginals who invited him to the oil sands in the first place – at least not yet. Ironically, what was meant to be an opportunity to communicate the negative externalities of the oil sands to the rest of the world was somewhat hijacked by interests who felt that this was an opportunity to show the world that the oil sands is an excellent place to invest and source energy. Smaller media sources communicated that Cameron was quite adamant about the need to slow "the pace of oilsands development and to do more to protect the environment"

What caught my attention was Cameron’s reflection after meeting separately with the Canadian Association of Petroleum Producers, oil and gas companies like Synrude and Cenovus, and government. He said that “all of these sources have their own specific agenda” implying that they all wanted to show him things that would pull him to their side of the argument. This reflects an “us versus them” mentality that has pervaded the relationship between industry and community activists for decades. We see this all the time when business executives perceive certain stakeholders as a threat to the achievement of their objectives and vice versa. I see this mentality in my business students regularly who, to their defense, are trained to adopt a war-like mentality where any stakeholders that represent a threat to the objective of shareholder value should be approached as an enemy. This is no exaggeration. Business students, as part of their program requirements, take a course on strategic management, a topic that carries with it an underlying metaphor of war where customers, suppliers, government, communities, and the environment should be handled strategically as in warfare.

Clearly, what was portrayed in the Avatar movie was a war between business and indigenous people and by default, the environment. Perhaps this is what Cameron means by a reboot. CEOs, themselves, are becoming dissatisfied with how our industrialized society works. Consider these quotations:

“The way I’ve been running Interface is the way of the plunderer. Something that is not mine. The day must come when this is illegal, when plundering is not allowed. So I said to myself, ‘someday people like me will end up in jail’” (Ray Anderson, CEO, Interface)

“I am convinced that when our kids are fifty, and they look back at us they are going to ask” What were you thinking”…why were you so slow to do the right things?” (Jeff Immelt, CEO General Electric)

"The same stale, business-as-usual thinking that has driven us to our current state of emergency will continue to endanger our safety, our livelihoods, and our planet. We need new thinking, new leadership, and innovation to create a post-carbon economy" (Richard Branson, founder Virgin Group)

What is this telling us? I strongly believe that most actors – business, government, communities, consumers, investors – do not want to negatively impact the environment or the sacred traditions of indigenous peoples. But we keep on doing it. Is it inevitable? Are managers uncontrollably drawn into a zero sum game where tradeoffs are a natural part of development? In an increasingly complex operating environment where tradeoffs created by business start to become a reflection of an outdated simplified worldview rather than a natural consequence of modern capitalism, only those managers rebooting their worldview and their organization will survive.

Let's Brand Oil Sands as the Ethical Oil Source!

That's the argument put forth by Ezra Levant in his new book entitled "Ethical Oil" where he compares Fort McMurray to Saudi Arabia, Venezuela, Nigeria, and other oil rich parts of the world. His argument expressed in the Globe and Mail last week is that in comparison to a "fascist barrel from Saudi Arabia, a misogynist barrel from Iran and a dictatorial barrel from Venezuela", a barrel from Fort McMurray requires far less blood to be spilled. To Levant, that's how Canadians should sell the oil to countries like the US who have consistently argued for less dependence on oil coming from politically unstable and unethically oriented countries.

"Ethical Oil" does come across as oxymoronic when we consider the fact that systematic extraction of the oil from the earth's crust, regardless of its location, is unethical. The Star noted that recent studies on bird deaths in the oil sands were 30 times more impactful than what was previously estimated (official counts, by the way, were primarily based on oil company employees discovering dead birds). The Pembina Institute highlighted some of the significant environmental impacts, including “emissions of greenhouse gases and other pollutants, surface water withdrawals, contamination and disruption of groundwater, toxic seepage from tailing lakes into groundwater, habitat fragmentation and impacts on wildlife”. According to the Institute, the problem is that while the Alberta government collects a reclamation fee, it is not based on any knowledge of what the potential costs might be throughout the life of the mine. Selling the oil sands as being the ethical source of oil seems illogical when we don’t have any systems in place to mitigate the true and accurate environmental impacts. Therefore, imposing taxes on future generations in the form of pollution and environmental devastation doesn't sound very ethical to me.

But the counter argument here, posited by Levant, is that avoiding the extraction of oil from this location is unethical because it would mean more support for repressive regimes while severely disrupting our economic and social wellbeing in the West. That sounds unethical as well. But using a relative comparison like this invites an equally valid response. If I were representing governments in other countries, I would respond by branding my oil as the ecologically efficient option in light of the fact that oil sands production requires 2 to 3 times more energy to produce oil than its crude oil counterpart. Both arguments are valid only because they are relative in nature (one is better than the other). This is akin to promoting Canadian landmines as being more ethical because they only kill in a 10 meter radius rather than a 20 meter radius and, in response, international governments arguing that the material used in their landmines is much less ecologically harmful than what is used in Canada. Notice that this diverts our attention away from the larger issue of having landmines in society at all. The private sector does this all the time when competing on which product is greener (relative to the original toxic one) even though all of them still cause major ecological harm. I’ll get back to this larger issue but for now, let me discuss how this debate speaks to how society would define sustainability.

This debate nicely shows that the question of whether oil sands are sustainable is left open to interpretation and judgment. If I’m a strong environmentalist, then I completely disagree with Levant’s argument. Yet, if I’m a human rights activist or an NGO working to curb oppressive regimes, I might agree with Levant’s perspective. To me, this variation in interpretation is a reflection of the challenge associated with achieving a “sustainable society” where balance between economic, social, and ecological dimensions is achieved. What is balanced is largely subjective, highly dependent on the perspective of a given stakeholder. One would argue then that the only way that we will achieve a sustainable society is if stakeholders representing different systems have equal power to voice their concerns, the product of which theoretically represents a balance of perspectives and systems. The problem of course is that power across stakeholders is by no means balanced. Recognizing this, powerful stakeholders work to preserve their power to make sure that their perspective carries more weight than others.

In my view, power to influence decisions has resided with too few stakeholders for the last several decades, which helps to explain today’s predicament. While I recognize that there are local and global social and economic consequences of moving away from oil production in Alberta, we have to step back and understand why we are so dependent on oil in the first place. Canada has made and continues to make economic decisions that lock us into an over-reliance on our non-renewable resources. The same can be said for international oil production where a small and very powerful elite has worked very hard to ensure world dependence on oil. So to suggest that moving away from oil has greater social and economic consequences than it does ecological is naïve and perhaps another strategy through which powerful elites aim to continue world dependence on this substance.

WSJ Ignores the Growing Complexity of Corporations in Society

Recently, the Wall Street Journal published an article outlining the “case against corporate social responsibility”. This was well written and is indeed a provocative piece for students of business, practitioners, academic scholars, and even policy makers. While I think the author brings up some very important points with which I agree, there are some elements of his logic that I find disturbing, or at least misguided.

Where I Agree

First, the author states, “in cases where private profits and public interests are aligned, the idea of corporate social responsibility is irrelevant”. This is a very interesting and important point because it suggests that companies may be promoting themselves as responsible or doing something different when they are merely meeting market demands that have increasingly aligned with what is good for society. So DuPont’s claim that producing environmentally sustainable cleaning products is part of their new found responsibility could be perceived as a mirage because they are engaging in business behaviour that is no different than responding to any other market trend. To the author, these businesses merely advertise instances where their behaviour and society’s interest align and then label such behaviour as some kind of revolutionary shift. But there is an underlying assumption here that managers are at the mercy of their regulatory and market environments - something that I'll get to later.

Second, there is good logic behind the author’s and Milton Friedman’s argument that any activity taken on by the firm that is in direct opposition to shareholder value is NOT responsible. The author put it nicely when he said that CSR, when it is in opposition to creating shareholder wealth, is in violation of corporate governance whereby managers are accountable by law to the owners of the firm. One could argue that this usurps the very ideology of corporate social responsibility given that managers are breaking the law. This same argument was put forward by the Economist (see Profit and the Public Good) in 2005. Theoretically, spending money on some charity or social cause that has nothing to do with the company’s value proposition could have been money used for research and development of a more sustainable means of producing an existing product or the creation of a new product line that is more sustainable. I would agree that this could be irresponsible when these social causes are perhaps less urgent and there are other actors available with more skills to address them – again, two important assumptions that I get to later.

Third, the author realizes that solutions to social issues need to come from a mixed bag of actors – government, social activists, civil society organizations, and business – implying that business needs to be pushed in the right direction so that market and regulatory trends make it profitable for them to do so. This is important because the author recognizes the growing complexity of the different actors in society and the collaborative role needed to address these issues.


Where I Disagree

1) Business as Passive Recipient: My greatest concern with this article is the author’s presumption that business merely represents a passive recipient to market and regulatory trends as reflected in his examples of the auto sector and health food sector. We’ve known for quite some time though that companies have played a proactive role in shaping the market and regulation for food, vehicles, and many other products and services. General Motors played a very influential role in curbing government imposition of taxes on gasoline so that larger gas-guzzling vehicles would still be attractive to the market. The private sector’s role in ‘killing’ the electric car was, according to many, not a result of any lack of market demand but the preservation of corporate interests, suggesting that business exercises the power to build and dismantle markets. So while I agree that companies will respond when the market demands change, I disagree that companies sit by idly in response with no influence on this market and on public opinion through political lobbying or strong marketing.

While it is true that companies have adapted to the changing demands of consumers in, for example, healthier food, this was not without strong corporate interest in preventing such trends through strong lobbying for regulation that supports practices that undermine the health of consumers. Examples here include the subsidization of corn and soy to support the processed food industry and the strong lobbying for the allowance of trans fat in food. And as an aside, the author’s argument that social activists have had little impact on changing company ways is unfounded. Many would argue that civil society organizations, non-governmental organizations, and activists play an important role in shaping market demand and consumer behaviour in spite of corporate efforts to preserve the status quo. Consider Greenpeace’s ability to catalyze a massive boycott of Shell in 1995 or the Asian-American Free Labor Association’s ability to boycott Nike products in early 1990s. More recently, the New York Times reported that banks are becoming more wary about lending to mining companies in light of growing criticism by environmental advocates such as the Rainforest Action Network and Sierra Club.

2) Business as a Political Actor: I would argue that there are indeed situations when firms are best positioned to respond to social and ecological issues regardless of the relevance to business operations. This is especially the case in the global south where substantial public service gaps exist and companies have stepped in to fill governmental roles like, for example, the efforts of several multinational corporations in Kenya to address public service gaps after the post-election conflict in 2008. While I agree that in an ideal world, government or other public bodies may be best positioned, in reality these actors are not always available and it is instead business that finds itself better positioned (see Private, but Public WSJ, 2009). Regardless of the reality of the situation, the article implies that companies should stand by and do the responsible thing which is to continue with daily operations that maximizes profitability when its surrounding communities don’t, for example, have access to food and water.

But governmental gaps exist as a consequence of an increasingly complex socio-economic environment rather than because government has lost its capacity. Similar to the economic models that are built upon a ‘theoretical’ assumption of perfect competition, the ideal scenario of which the author speaks may not exist, however logical his argument might be. So while it is true that, in theory, “governments are a far more effective protector of the public good”, the reality is that their ability to do this is waning when we consider the rather pervasive loss of power of government to regulate and provide public services, the ability of corporations to transcend state level regulation, and the growing privatization of public services. We can either keep beating a dead horse and try to revert back to a simplistic design that relies on the separation of the public and private sectors or we can begin to adapt to the reality that these lines are blurred and business might have to be involved in the solution to these problems. This is a frightening thought of course because it suggests that a profit-making entity is influencing public discourse. The truth is that this has been happening for quite some time. Perhaps our efforts should be directed to understanding this growing phenomenon, building theories to guide it, and advising managers and policy makers how to use it to align corporate and public interests.

3) Managerial Choice to be Part of the Solution: Even when activists, NGOs, and civil society groups do exist to address some of these issues, we find that business is typically brought in as part of the solution. Many unique business models of the global south represent innovative responses, suggesting that business is not merely a passive recipient to market trends but an active player in the solution to these issues. The point is that firms represent architects in finding ways to align profit with social goals. This gets to an important presumption that the author makes regarding the view that managers do not have control over the alignment of profit with public goals and that factors beyond its control determine this alignment.

Exemplary scholars like Ed Freeman argue that it is the responsibility of business to migrate to areas that ultimately maximize value for multiple stakeholders, including shareholders, concurrently. Put another way, managerial options may not be limited to being responsible on the one hand and sacrificing profits on the other OR vice versa. A manager’s job is to think outside of the box to understand how profit maximization can take place in conjunction with the maximization of value for different stakeholders; stakeholders who represent social interests. So, for example, let’s say an automotive manufacturer is pondering their next line of vehicles to be designed and manufactured. The author’s view is that the firm can do one of two things – either ‘responsibly’ make a green car at the expense of profits because no market yet exists or maximize profitability and make an SUV where the market currently resides. As already mentioned, companies have a very strong ability to create new markets and influence public policy in a way that shapes society’s behaviours. To Freeman and others, the challenge of business is to find a way to make responsibility (or ethical behaviour) and profitability commensurable. So being responsible here may involve pushing for regulation that supports sustainable vehicles and building marketing campaigns that educate the market about such products and thus make such strategies profitable.

In sum, the views put forward in the WSJ article, while relevant at a time when public and private roles were distinct and clearly defined, are quite outdated. It may be time to let go of the theoretical niceties associated with pigeonholing roles and responsibilities to different actors and recognize that the blurring lines between them may represent a future reality that requires the attention of managers, business scholars, and policy makers.