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January 25, 2005
Book Review--Faith and Fortune: The Quiet Revolution to Reform American Business
    by William Baue

Fortune magazine writer Marc Gunther documents the growing link between spiritual values, which he defines broadly to include sustainability, and business conduct.

Faith and Fortune is a deceptively simple title for a book that addresses the complex issues at the intersection of spiritual values and secular business. Author Marc Gunther explodes the myth that the two realms are mutually exclusive, not by means of theoretical mumbo jumbo, but rather through straightforward profiles of real people incorporating their spiritual values into the companies where they work.

"For the most part, these people don't use the language of spirituality to describe their work; instead they talk about corporate social responsibility or sustainability or business ethics," writes Mr. Gunther. "The purpose of business, they argue, is not to generate profit."

"The purpose of a business is to better the lives of the people that it touches--and to serve the common good," he continues. "Profits are essential, but they are no more than the fuel to sustain a business, just as food, water, and oxygen sustain us so that we can serve a higher purpose."

By way of introducing the profiles, Mr. Gunther contextualizes the "finance model" of corporations as amoral entities existing solely to benefit their owners in history, noting it is not a long-lived concept but was born in the twentieth century and advanced by Milton Friedman and others. Ironically, the advent of the twenty-first century may have rung its death knell, as the Enron/WorldCom/Tyco debacles proved that business can certainly be immoral, and thus by extension can be moral as well. In the final chapter, he notes the additional irony that Enron CEO Ken Lay is a trustee of a Methodist church, WorldCom CEO Bernie Ebbers is a Baptist deacon, and Tyco (ticker: TYC) general counsel Mark Belnick was president of a Jewish synagogue before converting to Catholicism.

Mr. Gunther, a writer for Fortune magazine (where the seed for the book was planted in a July 2001 article entitled "God and Business: The Surprising Quest for Spiritual Renewal in the American Workplace"), exhibits a healthy skepticism for the mixing of faith and business.

"I'm bothered, for example, by what's known as the prosperity gospel--the claim that God will reward true believers with material wealth," Mr. Gunther writes. "Faith does not lead to fortune, nor should it."

"Nor does religion per se belong in the workplace," he adds. "Even devout executives say they don't want to impose their own beliefs or practices on diverse workforces."

Instead of proselytizing, those profiled in the book set examples of how their faith informs their business conduct, inspiring them to take a more holistic view of the consequences of corporate decisions. For example, several years ago McDonald's (MCD) helped form a coalition of companies promoting sustainable fishing that, if successful, would drive up the price of fish in the short term.

"So, I asked a McDonald's executive, why worry about the fish?" Mr. Gunther writes. "'Simple," he replied. 'We want to be able to buy fish ten years from now.'"

"This tension between short-term and long-term thinking is the key theme of this book: a willingness to think about the long term sets exemplary companies apart from those that conduct their business with an eye on the day's closing stock price," he continues.

As with the sustainable fishing example, many of the profiles reveal how the reconciliation of spiritual and business issues is mutually beneficial. The profile of Southwest Airlines (LUV), focusing on Chief Operating Officer Colleen Barrett, reveals how the company's values-based idiosyncrasies, such as its prioritizing employees first, customers second, and shareowners third, has served to create enormous shareowner value.

The chapter profiling Domini Social Investments and KLD Research & Analytics co-founder Amy Domini questions the assumption that ethical business conduct necessarily sacrifices profit, citing data showing competitive financial performance by socially responsible investing (SRI).

"At minimum, Amy Domini and her [SRI] peers have proven that there's no penalty for investing with your values," Mr. Gunther writes. "At best, their experiences suggest that companies that practice social responsibility outperform their peers in the long run, albeit by the slimmest margins."

Mr. Gunther returns to this issue in the final chapter, interviewing Lloyd Kurtz, an expert on SRI research and a Moskowitz Prize judge, and Matthew Kiernan, founder of Innovest Strategic Value Advisors, which researches the link between CSR and financial performance. Mr. Gunther's contention that no research provides irrefutable evidence that practicing CSR builds shareowner value is challenged by the 2004 Moskowitz Prize-winning study that performs a "meta-analysis" of 52 studies over 25 years and finds a positive link. (Innovest studies routinely document this link, but since Innovest's research methods are proprietary, their findings cannot be independently verified, the book points out.)

Of course the 2004 Moskowitz Prize, awarded annually by the Social Investment Forum (SIF) to the best empirical research on SRI, had not been announced when Mr. Gunther was wrapping up the book. But the book rightly points out that justifying values-based business conduct on its profitability is wrong-headed.

"As Lloyd Kurtz put it: 'If you're only acting ethically when it's profitable, the concept of ethics goes out the window,'" Mr. Gunther writes. "'It's a pretty corrupting way to think.'"


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