ESG and Corporate Social Responsibility

Watch

• The Birth, Life, Death and Afterlife of ESG Ratings | Pavan Sukhdev | TEDxGateway ↗TEDx Talks
• The social responsibility of business | Alex Edmans | TEDxLondonBusinessSchool ↗TEDx Talks
• Could 'degrowth' save the world? | BBC News ↗BBC News
• Greenwashing: When Companies Aren’t as Sustainable as They Claim | WSJ ↗The Wall Street Journal
• The Evolution of Ethical Investing to ESG and Beyond ↗Thomson Reuters

Read

• The Social Responsibility of Business Is to Increase Its ProfitsA foundational polemic arguing that a corporation's sole social responsibility is to maximise shareholder wealth, a view that continues to shape debates on corporate purpose.Milton Friedman
• The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational StakeholdersPresents a widely adopted framework categorising corporate social responsibilities into economic, legal, ethical, and philanthropic tiers, offering a practical model for understanding CSR.Archie B. Carroll
• The Corporation: The Pathological Pursuit of Profit and Power ↗A trenchant critique of the modern corporation's legal structure, arguing its inherent design prioritises profit over all else, often at societal cost.Joel Bakan
• Strategy and Society: The Link Between Competitive Advantage and Corporate Social ResponsibilityIntroduces 'shared value' as a strategic framework, demonstrating how companies can create economic value by addressing societal needs and challenges, moving beyond mere philanthropy.Michael E. Porter and Mark R. Kramer
• Conscious Capitalism: Liberating the Heroic Spirit of Business ↗Advocates for a purpose-driven business model that serves all stakeholders, demonstrating how companies can achieve superior performance by integrating social and environmental concerns.John Mackey and Raj Sisodia

Voices to follow

• Paul Polman ↗A prominent advocate for stakeholder capitalism, he demonstrated at Unilever that ambitious sustainability targets can drive long-term value and competitive advantage.Co-founder and Chair of Imagine; former CEO of Unilever
• Rebecca Henderson ↗Her incisive work explores how businesses can transition to a more sustainable and equitable form of capitalism, offering a compelling blueprint for corporate transformation.John and Natty McArthur University Professor, Harvard Business School
• Andrew Winston ↗He provides pragmatic, data-driven counsel on integrating environmental and social considerations into core business strategy, proving their financial and strategic imperative.Author, speaker, and consultant on sustainable business strategy
• Alex Edmans ↗His research offers a robust, evidence-based counter-narrative to short-termism, demonstrating how stakeholder-centric approaches ultimately enhance long-term shareholder value.Professor of Finance, London Business School

Glossary

• Carbon FootprintA carbon footprint is the total amount of greenhouse gases (like carbon dioxide) released into the atmosphere by a person, organization, or product. It measures the impact on global warming. For example, driving a car, using electricity at home, and buying new clothes all contribute to your personal carbon footprint.
• Community EngagementCommunity engagement is when a company actively works with and supports the local communities where it operates. This can involve listening to their concerns, offering help, or participating in local projects. For example, a local bank might sponsor a youth sports league, organize financial literacy workshops for students, or volunteer its employees for a neighborhood clean-up day.
• Corporate Social Responsibility (CSR)This is when a company takes responsibility for how its actions affect society and the environment, beyond just making money. It means they try to do good for people and the planet. For example, a clothing company might donate a portion of its profits to charities that help educate children, showing its commitment to social well-being.
• ESG (Environmental, Social, Governance)ESG stands for Environmental, Social, and Governance. It's a way to measure how responsible a company is by looking at its impact on the environment (like pollution), its treatment of people (like employees and customers), and how well it's run (like honest leadership). For example, investors might choose to put their money into a company with a strong ESG score, meaning it's good for the planet, treats its workers well, and has fair leaders.
• Ethical SourcingEthical sourcing means buying materials or products from suppliers who follow fair labor practices, respect human rights, and operate in an environmentally responsible way. It's about making sure the things a company buys aren't made by exploiting people or harming the planet. For example, a chocolate company that only buys cocoa beans from farms that pay fair wages to farmers and don't use child labor is practicing ethical sourcing.
• Fair TradeFair Trade is a system designed to help producers in developing countries get fair prices for their products, ensuring better working conditions and promoting sustainability. It's about making sure farmers and workers are treated justly. For example, when you buy coffee with a "Fair Trade" label, it means the farmers who grew those beans were paid a fair wage and worked in safe conditions.
• GreenwashingGreenwashing is when a company pretends to be more environmentally friendly or socially responsible than it actually is, often through misleading advertising or claims. They try to make themselves look good without making real changes. For example, a fast-food chain might put up posters saying they use "eco-friendly packaging" but still use huge amounts of non-recyclable materials and contribute to deforestation for their ingredients.
• StakeholdersStakeholders are all the people or groups who are affected by a company's actions or who have an interest in its success. This includes employees, customers, suppliers, investors, local communities, and even the government. For example, when a factory decides to expand, its stakeholders include the workers who might get new jobs, the neighbors who might be affected by noise, and the local government that collects taxes.
• SustainabilitySustainability means meeting our own needs today without making it harder for future generations to meet their needs. For businesses, it means operating in a way that doesn't harm the environment or deplete resources for the long term. For example, a coffee shop that uses reusable cups, composts its waste, and buys coffee from farms that don't damage the rainforest is practicing sustainability.
• TransparencyTransparency means being open and honest about a company's actions, decisions, and impacts. It involves sharing information clearly and allowing others to see how things are done. For example, a smartphone company that publishes a detailed report every year showing where all its materials come from, how much energy its factories use, and how it treats its workers is being transparent.

Threads 3

Where this connects to other fields, and why it's worth knowing.

• Biogeochemical Cycles Environment

  In nature, nothing is truly trash: a dead leaf feeds the soil, and the loop closes with zero waste. When a factory dumps its mess on everyone else, economists call that an 'externality,' which is really just a loop left hanging open. So asking business to be ethical is basically asking it to close the loop nature never leaves open.

• Immunology Health

  Your immune system normally protects you, but in an autoimmune disease it turns around and attacks your own body. A company chasing only profit can do the same thing: it squeezes its workers and trashes the environment it actually depends on, until it starts wounding itself. Feeding on your own host is a losing strategy for germs and for businesses.

• Religion and Morality Religion

  Today companies talk about serving more than just profit. But religions were doing this centuries ago: banning loans-with-interest, forcing a day of rest, demanding a slice of income for the poor. Each rule was a way of telling the market it had to answer to something bigger than money.