At Last, a Business Case for CSR That Even Milton Friedman Could Love: The Sustainability Effect.

From a recent article by Mark W. McElroy, Ph.D.

In 1962, Nobel Prize-winning economist Milton Friedman famously proclaimed, “… there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits …” And while most of us in the CSR and sustainability worlds have tended to recoil in horror at those words, some of us have longed for a way to live up to them. Isn’t it possible, we’ve asked, for sustainability to be good for society, the environment and shareholder value, all at the same time? What better way to achieve sustainability in commerce than to disarm its most formidable foe - the lack of a business case?

But that's all changed.

Now, for the very first time, the prospect of connecting strong sustainability performance to the market value of a firm is at hand. Moreover, it is not just incremental improvements in CSR or sustainability performance we're talking about, but sustainability performance in its most rigorous, context-based and authentic form. Indeed, it is only genuine sustainability that can bring forth the highest reputations and the highest market values because of it. Put simply, the more authentically sustainable a firm is, the higher its market value can be, thanks largely to what the new science of reputation tells us is the sustainability effect on market caps. Friedman himself couldn't be happier!

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