1. Does it pay to be
environmentally/socially
responsible? If so, under
what conditions does it pay?
Clara Melot
Jennifer Steeves

2. Outline
 Definition of CSR
 The case against CSR
 The case for CSR
 Tangible vs intangible benefits
 Short term vs long term
 When does CSR pay?
 Opportunities for raising revenues
 Opportunities for decreasing costs
 Conclusion

3. Definition of CSR
 CSR = Corporate Social Responsibility
 Activities that “represent firms’ efforts to do more to
address a wide variety of social problems than they
would have done in the course of their normal
pursuit of profits” (Vogel, 2005:4)
 Beyond the law
 Accountability to stakeholders

4. Old vs. New CSR
 Doing good to do good vs. doing good to do well
(Vogel)
 Zero-sum to win-win (Fiorino)
 CSR sells, but does it pay?

5. The case against CSR
 Greenwash
 Costly
 Customers don’t really care
 Socially responsible funds don’t outperform other
funds

6. Bottom line?
 Company’s main responsibility is to maximize profit
for shareholders
 CSR doesn’t guarantee payoff

7. The case for CSR
 Intuitively, CSR should not pay
 Porter Hypothesis (applied to VEPs) allows us to
draw a different conclusion.

8. Business as usual
 Good business relies on good practices because
trade is based on trust.
 Part of CSR is achieved through efficient business

9. Tangible and intangible
short term benefits
 CSR activities and outcomes can pay
 Why separate activities and outcomes?
tangible= accountancy view
intangible = economic benefits which can be
tricky to value.

10. Tangible and intangible
long term benefits
 CSR activities can pay economically
speaking.
 Through tangible and intangible benefits
(marketing assets)
…under certain conditions

11. Relationship between
environmental and economic
performance
Lankoski, 2008

12. When does CSR pay?
Opportunities for raising revenues

13. Better access to certain
markets
 IF said firm sells to the public sector or is in a BtoB
model.
 United Kingdom:
Public procurement policy

14. Differentiating products
 IF there is :
- credible information about the product’s added value
- Consumer Willingness To Pay
- Barrier to imitation
 Toyota was the first company to develop an accessible series model for
hybrid technology

15. Selling pollution control
technologies
 More likely if the company already has R&D
facilities.
 Ciba Specialty Chemicals Co. And the Cibacron Ls Pattern

16. When does CSR Pay?
Opportunities for reducing costs

17. Risk management &
stakeholder relations
 IF firms are in highly regulated and publicly
scrutinized industries
 APP

18. Cost of materials, energy
and services
 IF firms:
 Have flexible production process
 Are in highly competitive industries
 Are in industries where MBIs were implemented
 Already have R&D facilities
Dow Chemicals’
Waste Reduction
Always Pays (WRAP)

19. Cost of capital
 IF firms have shares exchanged on stock markets
Exxon Mobil’s share price drop after Exxon Valdez oil spill

20. Cost of labour
 IF:
 Firm’s emissions affect workers’ health
 Firms seek to attract young, well-educated employees
 Firms are located in areas with strong environmental
values
97% of MBAs willing to forgo average of 14% expected
income to work for firm with better CSR reputation

21. Conclusion
CSR is not a panacea but a tool which is
efficient under certain conditions

22. Strategic implication
 What contextual elements should
business policy makers consider
before implementing CSR strategies?

23. References
 Ambec, S. & Lanoie, P. (2008). Does it pay to be green?
A systematic overview. The Academy of Management
Perspectives 22 (4), pp.45-62
 Fiorino, D. J. (2006). The new environmental regulation.
London: MIT Press.
 Lankoski, L. (2007). Corporate responsibility activities
and economic performance: A theory of why and how
they are connected. Business Strategy and the
Environment 17 (8), pp.536-547
 Vogel, D. (2005). The market for virtue the potential and
limits of corporate social responsibility. Brookings
Institution, Washington, D.C.