CSR VS TRIPPLE BOTTOM LINE

CSR
• The aptly named CSR view is that corporations are members of the
moral community. Instead of separating them from society as
Friedman would, they are viewed as citizens in the world.They have
responsibilities that are analogous to those of other members of the
moral community, and these responsibilities fall into four groups:

• Economic Responsibility
• Legal Responsibility
• Ethical Responsibility
• Philanthropic Responsibility
• The Economic Responsibility is the responsibility of a business to
make money. "Required by simple economics, this obligation is the
business version of the human survival instinct. Companies that don’t
make profits are—in a modern market economy—doomed to perish.
So, as long as we believe that the business ought to exist, it must be
allowed to try and make a profit. Otherwise, we are condemning it to
death.
• The Legal Responsibility is the responsibility to obey the letter and the
spirit of the law. This is not just the obligation to follow the law as it is
written, but "this obligation must be understood as a proactive duty. That
is, laws aren’t boundaries that enterprises skirt and cross over if the
penalty is low; instead, responsible organizations accept the rules as a
social good and make good faith efforts to obey not just the letter but also
the spirit of the limits.
This responsibility is a heavier one than it may seem. Many corporations
have broken the rules when the profits that they stand to gain are much
higher than the penalties that they might have to pay for breaking the rules.
According to this responsibility, they must not do so, because they are
required to view obeying the law as something that creates the best results
for everyone.
• The Ethical Responsibility is the responsibility to do the right thing
even when neither the spirit nor the letter of the law apply to the
situation. This is a key obligation, and it requires the firm to act as any
other citizen must. We might make allusions to the Good Samaritan
or to handing our change to someone who asks for it on the street,
but the core of the responsibility is that firms ought to act like
persons who live in a civil community. This requires that we view
firms (and that they view themselves) as responsible members in a
community.
• The last category, the Philanthropic Responsibility, is a responsibility "to
contribute to society's projects even when they're independent of the particular
business."4 This responsibility requires the business person to do some things
which stem from generosity towards the community that they exist in. This is
likely to be a controversial requirement, but it speaks to the connections between
the community and the firm. These public acts of generosity represent a view
that businesses, like everyone in the world, have some obligation to support the
general welfare in ways determined by the needs of the surrounding community."
It might require that an affluent business person stop and buy a lemonade or a
hotdog from a stand that contributes to a neighborhood project or to buy some
cookies from the local Girl Scout troop. It might require that they open their
business to local youth who want to learn about how it works and get inspired to
become entrepreneurs. Whichever form it takes, it requires that businesses do
something that benefits the community without having anything to gain, directly.
• Think of laws on the highway. There are good reasons for following the
speed limit. It keeps us from getting speeding tickets (economic), shows
respect for the law and the common rules we all share (legal), and it helps
to prevent traffic accidents through safe driving (ethical). I might be
allowed to break the law (and thereby risk a ticket), however, if there are
really strong ethical reasons to drive quickly. Perhaps there is someone in
the car that requires medical help. In such a case, the strength of that #3
responsibility might force me to override the other two above it.

• It might also be the case that I could make a huge amount of money by
doing something that is illegal and very harmful. Perhaps my firm could
save a great deal of money by dumping a toxic substance (like PCB) along
the roads in a rural area of North Carolina. It would save the company a
huge amount of money and time, while contaminating the soil in some 14
counties. In that case, the business would have been prohibited from
taking the action that they did by the illegality of it and the huge
environmental harms imposed on nearby residents and upon the state.
TRIPPLE BOTTOM LINE
• Another theory of corporate social responsibility is the Triple Bottom Line.
Like the CSR theory we just discussed, Triple Bottom Line works on the
assumption that the corporation is a member of the moral community, and
this gives it social responsibilities. This theory focuses on sustainability, and
requires that any company weigh its actions on three independent
scales: economic sustainability, social sustainability,
and environmental sustainability.
• These three tabulations are all aimed at long-term
sustainability. Economic sustainability must focus on the long term because
this is the nature of a persistent company. A decision which creates an
economic boon in the short-term (like the Ford Pinto), but causes long-
term harm, would likely reduce this bottom line to such a degree that the
action would be untenable.
• Social sustainability gives precedence on the balance of economic
power in the society. Competition in the business arena is common,
and encouraged, behavior, but maximizing the bottom line in social
terms requires that a business foster an environment in which all can
succeed. This might seem counterintuitive, but in the big-picture it is
better for a whole society to thrive than for one single corporation to
thrive alone.
• This will allow the company to continue to exist, and it will foster
good-will between the company and the society that it exists in. The
PCB dumping alluded to in above created an environment in which
that company could not exist, and it is no longer present in NC.
• The requirement of environmental sustainability stems from the
recognition that resources are not infinite, and leads to the reasoning that
too much degradation will worsen the lives of ourselves, our children and
so on. Members of the moral community ought not cause undue harm to
the people around them and the people who will come later, and so this
bottom line values some protection of the environment. The word "some"
in the previous statement introduces vagueness in the calculation, but it
might be necessary because there is some risk of environmental
degradation in many necessary business activities. The question of how
much environmental degradation is acceptable is one that must be
answered, but it need not be answered in this module.
• Suffice it to say that this calculation must be made even if it is a rough
calculation. Business cannot operate in a world which is poisoned or "used
up." Efforts should be made to renew some of the environments that have
been harmed in the past, and these environmental harms and gains belong
on this bottom line.
• The reasoning behind this tripartite theory is that if businesses
calculate their gains and losses in this way they will be more likely to
take actions which are to the benefit of both the business and the
community. It is easy, when the numbers are large enough, to ignore
the social and environmental dimensions of a business decision. This
is because the average business decision is made by comparing the
expected costs and benefits in terms of dollars and, only then,
considering the other dimensions of that decision.
• In order to combat this order of operations, the Triple Bottom Line
requires that a business decision be composed of all of these
elements from the beginning. When the data shows each of these
dimensions along the same line, and measured with the same metric,
it will be much easier to see the impact of a decision and to judge the
fittingness of that decision.