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Book Review: What Matters Most

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by Jeffrey Hollender and Stephen Fenichell

Basic Books ©2004, 318 pages

The Future of Corporate Social Responsibility

While many people might assume that corporate social responsibility emerged with the Ben & Jerry’s and The Body Shops of this world, the concept of a corporation having more responsibility than just making money for its owners is not new. As Jeffrey Hollender points out in his important new book, What Matters Most: How a Small Group of Pioneers Is Teaching Social Responsibility to Big Business, and Why Big Business Is Listening, the Quakers “began screening their investments according to moral and ethical criteria as early as the 17th century. The highly industrious Quakers tended to have a fair amount of money to invest, and they raised a few eyebrows when they first started steering money away from companies that profited from activities of which they violently disapproved.”

Of course, and unfortunately, the Quakers remained in the minority. Even in the 20th century, “greed is good” advocates such as Milton Friedman maintained that not only did corporations not have any responsibility to society, but that to assume such responsibility was “fundamentally subversive.”

Hollender quotes Friedman’s 1963 book Capitalism and Freedom, in which Friedman argued that “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” If corporations start believing that they have any responsibility to society, Friedman continues, the result can only be the end of freedom, for corporations will be ruled by “the iron fist of Government bureaucrats.”

Doing Well While Doing Good

Hollender, the CEO of a houseware products company called Seventh Generation, rejects the idea that social responsibility endangers capitalism. First, it is hard to argue that Ben & Jerry’s Homemade, Inc. and Stonyfield Farm, which makes organic yogurt, are capitalist failures. Both became international brands and have been acquired by giant conglomerates (the Dutch firm Unilever and the French firm Danone, respectively). As Stonyfield Farm founder Gary Hirshberg explains to Hollender and co-author Stephen Fenichell, the commercial success of Stonyfield Farm or Ben & Jerry’s has “legitimized, rationalized and validated our hypothesis” that businesses can be both successful and socially responsible.

Economic success is not the only reason for corporations to be socially responsible. Hollender points to Harvard Professor Lynn Sharp Paine’s argument that “[a]s a purely pragmatic matter, a society cannot survive, let alone thrive, if it exempts its most influential and pervasive institutions [corporations] from all notions of morality.” As Hollender explains, “Today, in a world in which the market capitalization of Microsoft makes a single company worth more than many nation-states, private enterprise is increasingly being called upon to take on responsibilities commensurate with that power.”

And government is not the only, and in fact may not be the most effective, source of pressure on corporations to be socially responsible. The Quakers, Hollender points out, are not the only investors paying attention to how the corporations in which they invest are making money. Customers are also paying attention. As a result, writes Hollender and Fenichell, “a new factor has become the most vulnerable corporate pressure point: reputation. Only relatively recently have many corporations realized that the ‘good will’ often carried on their balance sheets is their most valuable asset, worth far more than a dozen factories or office buildings.”~

Why We Like ThIs Book

What Matters Most stands out for its moderate and thoughtful analysis of a controversial issue. Hollender avoids easy characterizations and oversimplification of the issues involved. He does not argue that big business is automatically bad business or that globalization is completely incompatible with corporate social responsibility. “Nike’s labor practices certainly were not flawless. In fact I believe there were negligent, naive, and utterly unfocused on what should have been both a core concern and competency,” Hollender writes at one point. “But I would also contend that they have made enormous strides toward improving conditions in their contract factories, and should be proud of those efforts.” Like Lynn Sharp Paine before him, Hollender is a voice of reason in today’s important debate on corporate responsibility. ~

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