1/6/06

Companies and Social Responsibility

Tarred by a raft of corporate scandals from Enron to WorldCom, social outreach can be a way to regain the high ground. That's probably one reason corporate giving hit an all-time high last year, according to philanthropy research group the Foundation Center.

More than mere public relations appears to be at work here. Companies are being forced to address the concerns of customers, employees, and investors -- in order to keep them. Such pressure is why last year Gap Inc. halted relationships with 70 of its overseas factories over alleged labor abuses, and has for the past two years issued a social responsibility report.

Or why Nike Inc. is now a world leader in setting safety standards for overseas workers. When the controversy over its sweatshops erupted several years ago, managers mistakenly believed they could afford to ignore the outcry simply by cranking out hip shoes. "It is no longer an option to sit on the sidelines," says Bradley K. Googins, executive director of The Center for Corporate Citizenship at Boston College.

More important, the calls for change are coming from inside the corporate walls. A new generation of employees is demanding attention to stakeholders and seeking more from their jobs than just 9-to-5 work hours and a steady paycheck. The number of Gen Yers -- those born between 1977 and 1994 -- in the working world has grown 9.2% since 1999.

Indeed, it has been a rude awakening for companies that have not embraced a more strategic approach to social responsibility. "Society has changed," says Betsy Reithemeyer, executive director of the Wal-Mart Foundation. "If you are the gathering place of the community, then you have a responsibility to it."

[Excerpts from an a BusinessWeek article, by Brian Grow, Steve Hamm and Louise Lee]

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