Good corporate citizenship is just plain good business

The business-page headlines on a recent day juxtaposed two sharply divergent stories: "Corporate Gifts to Aid Victims of Hurricane Katrina Could Top $1 Billion" and "Oracle CEO to Settle Suit Revolving Around $900 Million Gain."

On a day not unlike most days, the surge of simplistic good guy/bad guy stories about business can leave even the most informed reader with whiplash. On top of that, we continue to be treated with the Milton Friedman vs. corporate citizenship debate as if this were new, deep and relevant.

Let's face facts. The real world is complicated and at any given time a business can be good, bad and everything in between. There's no company that doesn't embody that maxim more than Wal-Mart. The behemoth retailer is regularly pilloried for a bevy of bad behaviors — from mistreatment of workers to sundering social and economic landscapes. But it then lands on the top of Fortune Magazine's 2004 list of "Most Admired Companies in America" and in 2005, Hispanic Magazine named the retailer one of the Top 50 Vendor Programs for Latinos. And when Hurricane Katrina struck, CEO Lee Scott shifted their vaunted distribution system into high gear. Critical supplies rolled into the battered region.

Wal-Mart's $15 million gift to relief and recovery startled some while it satisfied the expectations of others. All told, this one company can cause extreme whiplash to someone trying to understand the role of business in today's complex society.

In 2005, the only simple fact is that the business sector's resources and influence are at historic highs and rising. The consequence is that the decisions and actions of business leaders influence more than the bottom line. It is the responsibility of business to create value while remaining consistent with our highest and best values. The two are intertwined. As GE CEO Jeff Immelt observed, "great businesses are good businesses." It's no longer a question. Good corporate citizenship is good business.

A new study brings a sharper focus to the complex picture of how U.S. businesses are fulfilling their responsibilities to do well and be good.

The Centers for Corporate Citizenship at Boston College and the U.S. Chamber of Commerce Center for Corporate Citizenship, with support from The Hitachi Foundation, surveyed more than 1,100 executives from small, medium and large businesses. These leaders were queried about their attitudes toward and practice of corporate citizenship. The State of Corporate Citizenship 2005 confirms that the question is no longer whether corporate citizenship is a valid business concept, but rather how best to translate values into practice.

For example, 81 percent of executives say that corporate citizenship needs to be a priority for companies. Sixty-nine percent agree that the public has a right to expect good corporate citizenship. And 64 percent believe that it makes a tangible contribution to the bottom line.

Efforts to be good citizens are motivated from within most businesses.

Seventy-three percent of business leaders surveyed say that upholding business tradition and values is what drives their corporate efforts.

And 44 percent report that corporate citizenship is an integral part of their business strategy.

The efforts of companies go beyond philanthropy or organizing volunteers, as important as these actions are. Almost all large businesses and most businesses regardless of size are engaged in addressing or helping to address societal issues. For example, 28 percent are actively involved in improving K-12 education, and 25 percent in strengthening community colleges and higher education.

And those efforts extend across the economic ladder as well. One half of all companies and 70 percent of large businesses report they are helping to meet the needs of lower-income people and to strengthen the economic structure of poor communities. Thirty-one percent of all respondents are providing training and development of lower-wage employees. And 24 percent look to economically distressed communities for employees — twice the rate of two years ago.

The "story" that emerges from the report is not simple, but we find it encouraging. It counters Milton Friedman's frequently cited argument that such endeavors are "fundamentally subversive" because they undermine the profit-seeking purpose of public companies. Most business leaders have charted a different course. Few would consider their approach subversive. And all of us recognize, after a disaster as profound as Hurricane Katrina, that if we are to make real progress toward solving society's most pressing problems, business must be an active partner.

Barbara Dyer is the president and CEO of The Hitachi Foundation. Steven Rochlin is the director of Research and Policy Development at The Center for Corporate Citizenship at Boston College.