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February 09, 2005
Book Review--Cause for Success: 10 Companies that Put Profits Second and Came in First
by William Baue
The profiles present a wealth of information supporting the claim that corporate social
responsibility can enhance profitability, but little information critiquing this claim.
SocialFunds.com --
Cause for Success provides ample information in its profiles of 10
"high-purpose" companies (those integrating corporate social responsible (CSR) into their core
business strategies) to advance the understanding of CSR believers and to nudge fence-sitters.
Perhaps wisely, the book does not expend excessive energy trying to convince hardcore corporate
social responsibility (CSR) skeptics to change their minds, as the book does relatively little by
way of citing problems encountered by the profiled companies.
 "The evidence we present in this book is by no means
comprehensive," states author Christine Arena.
While the book falls somewhat short on
information running contrary to its hypothesis that corporate social responsibility (CSR) can
advance ethics and profits simultaneously, the slim volume presents a surprisingly robust amount of
information supporting its claim. The profiles present in-depth commentary from the executives
responsible for the CSR initiatives, as well as compelling diagrams illustrating how companies
implement their ambitious CSR plans.
In the introduction, Ms. Arena explains the complex
notion of externalities in easy-to-understand terms: "[T]he costs of treating people who suffer as
a result of the carcinogens in diesel exhaust are not covered by any of the industries that create
that exhaust," she writes. "Instead, society pays them."
Eziba, a web- and mail-order company that markets products made in
developing nations predominantly by women trapped in poverty who use traditional handicraft skills,
exemplifies a new business model that spurns negative externalization in favor of positive
externalization. For years, corporations have profited by avoiding the costs of pollution and
adverse health consequences they foist onto society and the environment. Eziba turns this notion
on it head by creating additional social benefits (instead of liabilities) beyond the
profits it generates.
For example, its Peace Baskets are made by women in Rwanda--both
Hutu and Tutsi--widowed by the genocide there, who are using their intricate weaving skills to
extract themselves from the cycle of poverty and simultaneously help Eziba reverse the cycle of
negative externalization. A diagram demonstrating how Eziba marries charity with commerce by
creating two-way benefits for investors, customers, employees, and vendors itself looks like an
intricately designed mandala that effectively conveys the strategy.
The book also does a
good job of demonstrating how Interface (ticker: IFSIA) transformed itself from a
carpet company that externalized its costs onto the environment into a company that creates
closed-loop recycling systems that minimize negative externalization. Perhaps the most effective
aspect of this profile is the reprinting of former CEO Ray Anderson's 1994 speech presenting this
shift from corporate polluter to a more environmentally sustainable corporate strategy.
Likewise, the book reprints a 1997 speech by BP (BP) CEO Lord John Browne
acknowledging the scientific basis for concern over human influence on climate change and how he
intended to address this issue at the global oil giant he ran. Ms. Arena then proceeds to
comprehensively encompass the multiple facets of BP's sustainability strategy, thereby providing a
blueprint for other companies could follow (though she explains in the introduction that all
companies face different challenges and opportunities.)
While Ms. Arena discusses in
general terms the fact that BP faces many critics, she does not detail these critiques. For
example, BP currently faces significant criticism over its lead role in financing the
Baku-Tblisi-Ceyhan (BTC) pipeline, which could adversely affect Kurds according to human rights
activists, and sturgeon stocks in the Caspian according to environmentalists, a glaring omission
from the book.
Ms. Arena devotes more attention to the 1990s backlash against the Body
Shop (BOPS.L).
Her reliance on the voices of those running the companies, such as Anita Roddick in this case,
leaves a gap of silence in terms of addressing critics of the companies in a balanced way. A more
balanced view, such as that presented at the time in a newsletter from socially responsible
investment (SRI) firm Franklin Research (now Trillium Asset Management), would have allowed readers to
judge for themselves better if the Body Shop truly walked its talk.
©
SRI World Group, Inc. All Rights Reserved.
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