STANFORD, Calif.- Big companies are rewarded for maximizing profits, not necessarily social benefits. As a result, the corporate social responsibility movement — which assumes that companies can do well by doing good — is lulling the public into a false sense of security, warns Deborah Doane, author of the featured article in the Fall 2005 issue of Stanford Social Innovation Review (www.ssireview.com).

“CSR as a concept simplifies some rather complex arguments and fails to acknowledge that ultimately trade-offs must be made between the financial health of the company and ethical outcomes,” argues Doane, who is a writer, lecturer, activist, and campaigner on CSR and global sustainability issues. When trade-offs are made, she adds, profit undoubtedly wins over principles.

Doane contends that four key myths of CSR prevent the movement from effecting fundamental change:

Myth 1: The market can deliver both short-term financial returns

and long-term social benefits.

Myth 2: The ethical consumer will drive change.

Myth 3: There will be a competitive “race to the top” over ethics

among businesses.

Myth 4: In the global economy, countries will compete to have the

best ethical practices.

Among alternatives to CSR that Doane proposes is a change to the legal structure of the corporation both in Europe and the United States, so that company directors would view as company stakeholders not just shareholders, but communities, employees, and the environment as well.

More information on this and other articles is available online: www.ssireview.com

The Stanford Social Innovation Review is published by the Center for Social Innovation at the Stanford Graduate School of Business. Building on the Business School’s 34-year commitment to public and nonprofit management, the Center promotes solutions to social problems through a unique combination of interdisciplinary research and teaching that extends beyond the classroom. The Center dissolves traditional sector boundaries to bring together nonprofit leaders, corporate executives, government officials, and philanthropists to discuss, debate, analyze, and take action to strengthen our communities.