Responsibility Is Still Good For Business

That view is echoed by Mark Bateman, IW Financial's director of research, who cites a recent PricewaterhouseCoopers report that found companies that report sustainability data get better returns on assets than those that don't.

Fair enough. But people such as Keefe and Bateman are bound to support the logic of CSR, which reflects the mandate of their companies. What about the companies at the bottom of the list? We called the three companies that ranked lowest on the list -- Eastman Chemical, Lockheed Martin, and ExxonMobil -- to see what they thought about CSR. You might think they would agree with Friedman that a company's first duty is to its shareholders, especially during a downturn. But they turned out to be less interested in talking about the limitations of corporate responsibility than explaining what they were doing to achieve it.

We started with Eastman Chemical, which ranks 496 out of 498 companies. "I'm surprised to hear we're at the bottom of the list," said company spokeswoman Wanda Valentine, who noted that Eastman had just hired a vice president for sustainability and that the company intends to honor all its philanthropic commitments despite the downturn.

Lockheed Martin, company No. 497 of 498, objected even more adamantly. Scott Lusk, a company spokesman, noted that Lockheed Martin employees have logged some 5 million volunteer hours since 2002 and make $17 million in charitable donations each year. "I think those facts speak for themselves," said Lusk.

But none of the companies was more thorough in listing its CSR bona fides than ExxonMobil, which ranked 498th of the 498 on the list. Spokesman Rob Young provided a long list of the company's good deeds, from reducing its greenhouse gas emissions and instituting a "global diversity framework" for its work force to transparency agreements with countries where ExxonMobil operates, such as Chad and Nigeria. On the day we spoke, a company called Medicines for Malaria Venture announced a new pediatric drug to fight malaria -- thanks in part to $1.5 million in funding from ExxonMobil.

On one level, the comments from these companies illustrate the ambiguity of what, exactly, constitutes corporate responsibility. Bateman, of IW Financial, says an important distinction in measuring CSR was whether to include philanthropy as a criterion. (The Big Money's SRI Stock Scanner does not.) He says philanthropy can be difficult to measure consistently across companies and says that, unlike measuring how companies behave in their day-to-day operations, philanthropy can sometimes serve to "greenwash" bad behavior while diverting profits that shareholders could otherwise choose to donate to their own preferred causes.

However you define CSR, and whether you agree with the financial arguments in favor of it, as a cultural phenomenon the idea seems to have some staying power. Suppose that IW Financial's criteria are reasonable, that its data are accurate, and that Eastman, Lockheed Martin, and ExxonMobil really are the least socially responsible large companies in America. What does that say about their arguments to the contrary? Since their products are in demand whatever the state of the economy, these companies are largely shielded from the vicissitudes of consumer taste; if any company were willing to challenge the demands of CSR, and echo the arguments of Milton Friedman, it should be them.

Instead, their unwillingness to do so can mean only one thing: That whatever these companies actually think about the norms entailed in CSR, they've decided they have no choice but to play along, recession or no recession. Call it lip service if you like, but that's the way behavior changes: Step one is getting everybody to agree to the rules, and step two is getting everybody to follow them. If CSR proponents can hold on to step one through this downturn, reaching step two can't be far behind.

The Big Money is a financial news and analysis Web site from the Slate Group. It thanks Alex Acs, a graduate student in policy analysis at Columbia University's School of International and Public Affairs, for his statistical analysis of the performance of companies on the SRI Stock Screener.