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June 17, 2004
Book Review--Profits With Principles: Seven Strategies for Delivering Value with Values
    by William Baue

Pertinent case studies that illustrate corporate social responsibility best practice abound in this well-structured and well-written book.


More than 60 case studies on corporate social responsibility (CSR)--these are the strength of the new book Profits With Principles. Authors Ira Jackson and Jane Nelson, both fellows at Harvard's Kennedy School of Government (KSG) in the Center for Public Leadership (CPL) and the Corporate Social Responsibility Initiative (CSRI) respectively, commence with a key caveat. They admit that "this book is unabashedly positive and hopeful," while also conceding that "none of the companies we profile get it right all the time." They clearly lean toward the former, enthusiastically describing corporate initiatives that successfully balance financial, social, environmental, and ethical considerations, while counterbalancing with sufficient cautionary tales to maintain credibility.

"We share a strong belief, backed by growing empirical evidence, that tomorrow’s most successful and competitive companies will be those that combine a commitment to profitability with an explicit commitment to advancing the public interest," state Mr. Jackson and Ms. Nelson in the preface.

They cite much of this empirical evidence, but keep a light touch to avoid a footnote-laden text where the back pages get more dog-eared than the chapters themselves. Instead, the book relies on anecdotal evidence, which likely proves more useful for the book's primary audience of board directors, accountants, and corporate responsibility managers, among others.

The book's structure is instructive, with chapters devoted to each of "seven strategies for delivering value with values." (In fact, strategies become "principles" inside the cover, presumably so that the section describing them can be titled "Putting Principles into Practice.") Case studies pepper each chapter to exemplify different aspects of the principle.

For example, the fourth principle, "Engage in New Alliances," contains a profile of an alliance announced in November 2002 between ChevronTexaco (ticker: CVX) and the US Agency for International Development (USAID) in Angola. The profile explains that this initiative, which invests in education, vocational training, and locally-owned small business developmeny, calls for a five-year, $50 million commitment from ChevronTexaco, which has invested close to $5 billion in Angola over the last five years.

This profile demonstrates both the strength and weakness of the book's approach. The weakness is that such brief profiles cannot possibly reveal all of the attendant complexities of CSR initiatives, and therefore tends to wax positive without delving as deeply into potential negative aspects.

The strength is that the profiles provide an accurate roadmap allowing readers to track present and future performance of the specific companies and similar initiatives at other companies. In this particular instance, after the book went to press, the Angolan government disclosed the $300 million in payments made by ChevronTexaco, an historic case of transparency that has been called for by such organizations as Publish What You Pay and the Extractive Industries Transparency Initiative (EITI). In the context of the alliance between ChevronTexaco and USAID in Angola outlined in the book, this more recent move fits more sensibly into a pattern of corporate responsibility.

Besides these shorter profiles, each chapter contains a long case study demonstrating the particular principle in question. These longer profiles, too, embody the book's strength and weakness. The FleetBoston (FBF) profile in the "Spread Economic Opportunity" chapter lauds the bank's Community Investment Group, but it lacks the space to address the criticisms of Fleet's community investment practices. For example, the National Community Reinvestment Coalition (NCRC), a community investment advocate, which similarly lauds Fleet's community investment in some parts of the country but reveals significant underperformance in other regions. Such complexity does not distill well into a four-page overview.

However, this criticism of the book is minor compared to how the longer profiles highlight the strength of its strategy. For example, the Shell (RD) profile in the "Be Performance Driven in Everything" chapter commences with a frank discussion of the company's current crisis over oil reserve restatements, first revealed not long before the book went to press. After the book went to press, another potential crisis has erupted for Shell, as an internal report questioning the viability of its Nigerian operations in the face of violence and environmental problems got leaked to the public.

Here again, the profile details Shell's crises in the 1990s, such as plans to decommission the Brent Spar oil platform by sinking it into the North Sea debacle and the Nigerian government's execution of anti-Shell activist Ken Saro-Wiwa. Surviving these made Shell a stronger company, forcing it to take a more proactive stance toward corporate responsibility. The sense conveyed by the book's profile is that Shell will weather these current crises as well because of its leadership position in corporate social responsibility. Indeed, CSR initiatives must sustain companies through the worst of times as well as the best.

 

 
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