Companies Should Focus on Bottom Line Not Social Responsibility

A new report from Dalberg Global Development Advisors argues that companies would achieve more social good by focusing on the bottom line rather than social responsibility programs, double- and triple-bottom-line accounting, and hybrid structures with nonprofit and for-profit arms, the New York Times reports.

Written by Daniel Altman and Jonathan Berman, The Single Bottom Line (PDF, 14 pages) contends that companies’ efforts to adopt double and triple bottom lines — which include measurements of a company’s social and environmental impact as well as profit when evaluating its overall performance — are distractions from their real business and not necessarily sustainable. “The real social value comes overwhelmingly from what companies do through their core business, the skills and supply chains built up around them, and then the revenue that comes into government as a result of their profitability,” said Berman.

The report highlights examples of how companies that focus on achieving profitability over the long term can generate public benefits as a byproduct. For instance, Minnesota-based Cargill, the largest privately held company in the country, has for years been giving African cotton farmers seeds to grow a second non-cotton crop, which is better for the soil and helps farmers affiliated with the company diversify their revenue stream.

“Again and again, we’ve seen the most efficient way to create social benefits is by looking at how those benefits redound to the bottom line,” Altman told the Times. But, he added, that doesn’t mean corporate giving or social responsibility programs should be abandoned. “I think they should simply be subjected to the same level of rigor as all other investments companies make with the aim of improving profitability.”

Strom, Stephanie. “To Be Good Citizens, Report Says, Companies Should Just Focus on Bottom Line.” New York Times 6/14/11.

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