The social responsibility revolution

It's not just about PR anymore. Firms see big profits in green solutions.

By Bruce Piasecki

from the August 9, 2007 edition

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Saratoga Springs, N.Y. - Business educators may be in for a surprise. Something extraordinary is happening in the global marketplace that defies classic principles taught at virtually every business school.

Superior product quality and competitive pricing may no longer stand above all others as the most critical variables in the equation for business success. In the evolving global marketplace that I call World Inc., a third strategic factor is coming into play: social responsibility. By that, I mean making products and delivering services that generate profits but also help society address challenges such as climate change, energy security, healthcare, and poverty.

This business trinity of quality, price, and social response is emerging even as multinational corporations acquire unprecedented economic power. Consider these eye-opening facts about their clout at the dawn of the 21st century:

•Of the world's 100 largest economies, 29 were corporations, not nations.

•The combined sales of the top 200 global corporations were the equivalent of 28 percent of world gross domestic product.

•Roughly a third of all world trade took place among multinational corporations.

A growing number of multinational business leaders is already demonstrating that tomorrow's most successful enterprises will be those willing to devote unprecedented time and effort to incorporate social responsibility into their business models. If the trend continues, it will change the way giant enterprises do business.

At first glance, social response initiatives may appear to be superficial public relations stunts. A closer look at the 300 largest firms in this new century reveals that most are really all about business opportunities, profit gains, and expanding market share.

Take, for example, the culture shift occurring at General Electric. GE's "Ecomagination" campaign features a lovable dancing rain-forest elephant that projects a friendly corporate face for CEO Jeffrey Immelt that is very different from the hard-edged, calculating one offered by his legendary predecessor, Jack Welch.

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