Booth student James Epstein-Reeves explores evolving field of corporate responsibility.

Corporate responsibility shouldn’t be done purely for the sake of itself but should also make good business sense, said Evening MBA Program student James Epstein-Reeves, president of DoWell Do Good, LLC, a Chicago-consultancy that helps companies develop social responsibility strategies.

“The central question of this field of business is: How do you get business value out of social value? And how does business value create social value?” said Epstein-Reeves in April at Boeing Center, an event sponsored by the student group Net Impact.

Epstein-Reeves, a Net Impact co-chair, defined corporate responsibility as a “set of actions that a company takes to change business operations to improve, maintain, or mitigate a company’s impact on society and the environment.”

He praised companies whose social responsibility message is carried through “from the CEO level on down.” In fact, failure to identify company values and integrate them from the top down is one of the three major mistakes companies make, Epstein-Reeves said.

Two other common mistakes: companies fail to properly communicate their responsible actions to the public, or companies exaggerate their corporate responsibility - claiming to be “green” after taking a one-time action.  

The textbook example of “greenwashing” is BP.  Prior to the Deepwater Horizon oil spill, the company had advertised its environmental awareness, and boasted about its investment in new field technologies, dubbing them “beyond petroleum.” But BP overlooked a fundamental responsibility: safety. “It’s a great shining example of what happens when a company kind of exaggerates one area,” Epstein-Reeves said, “and forgets a very important part of the broad-based approach to corporate responsibility.”

Perceptions about corporate responsibility have changed over the decades. Nobel laureate Milton Friedman’s views reflect old guard ways, Epstein-Reeves said. Friedman would approve of making donations to reduce a company’s tax burden, but the economist would not approve of donating “the very next penny” more, Epstein-Reeves said, if no long-term business interest was served.

A new guard came into being in the early- to mid-1990s, “when brands’ image came into the living room.” Media revelations of child labor and sweatshop conditions damaged the reputation of Nike and Kathie Lee Gifford’s clothing line, Epstein-Reeves said, and companies had to start examining their supply chains and overseas manufacturing operations.

During his talk, Epstein-Reeves displayed a “social value map,” that charted how a platform of corporate responsibility strategies (efforts related to the environment, diversity, health and safety, philanthropy, government relations, and employment practices) are funneled up through stakeholders (employees, company leaders, customers, nongovernmental organizations, and investors). This leads to emotional changes (pride, reputation, brand exposure, loyalty, and trust) in employees and customers, which ultimately result in business value (profits or improved brand image).

Epstein-Reeves’ discussed an opinion survey conducted by DoWell Do Good, LLC that showed 88 percent of respondents agree that companies should accomplish their business goals while improving society or the environment. To see what motivated people to change their behavior, the survey posed scenarios of potential corporate embarrassment, and asked whether employees would seriously consider finding a new job.

If media exposure showed credible evidence that their company was employing child sweatshop labor, 83 percent agreed that they would seriously consider finding employment at a new company. If the company was exposed for substantially harming the environment, that number dropped to 65 percent. If the company was exposed for giving little or no charity, 32 percent said they would seriously considering seeking employment elsewhere.

“It’s nice to hear what is actually going on in the field,” said Josh Gantz, a first-year student in the Full-Time MBA Program. Corporate responsibility is known as “an up and coming field, but we don’t really talk about the pros and cons,” he said. “We just talk about the fact that it is important.”

—Mary Sue Penn