10th Spring Meeting of the Friends of Aspen – Corporate social responsibility: Culture, society and the environment

The meeting of the Friends of Aspen, held in conjunction with a debate on a specific topic, offered an opportunity to introduce the new members of the group, elicit suggestions for topics for future events and announce the group’s upcoming annual conference (the 13th in the series) to take place in Rome on October 21. This 10th meeting of the Friends of Aspen was held in Milan at the Teatro alla Scala, in the evocative setting of the Ridotto dei Palchi (or Box Foyer), thanks to the generous support of the Fondazione del Teatro alla Scala. The debate, which featured a speech by guest speaker Lorenzo Sacconi, Director of the EconomEtica Center (an interuniversity center based at the Università Milano – Bicocca), and contributions from many prominent participants, got underway with a look at two special reports published by The Economist on the topic of corporate social responsibility in 2005 and 2008. In the first and rather critical report (January 22, 2005), motivated by a suspicion that corporate social responsibility (or CSR) was a means for managers to practise philanthropy at the expense of others, it made light of the phenomenon by quoting the old adage of Milton Friedman that the sole responsibility of business is to generate profits for its shareholders. Subsequently, it radically changed its tune in a more recent special report (January 19, 2008), which turned its previous approach on its head and maintained that CSR is nothing more than good business practice. This revised view takes a first step towards a better understanding of CSR, as it gives a sense that social responsibility is not foreign to corporate strategic management and highlights the process of its progressive integration among governance and management “best practices”. It could also be said that this approach would see economics return to its roots, since it will once again reconnect with the moral sciences from whence it originated (suffice to recall that the two seminal texts by A. Smith, “The Wealth of Nations” and “The Theory of Moral Sentiments”, were interdependent). It was only later that economics became independent, when the 1781 revolution of Jevons and the Marginalists introduced mathematics into economics, thereby distancing it from the moral sciences. Today, social responsibility takes the guise of a corporate governance and management model. According to this model, those who perform managerial functions or run a company or its board have duties of a fiduciary nature vis-à-vis a wide range of stakeholders, whether they are stakeholders in the strict sense, that is, those who in various ways invest in a company, or whether they are stakeholders in the sense that they are affected externally, in a positive or negative manner, by the company’s operations, including to the extent that these impact on the environment. The contention of the guest speaker was that CSR is a good tool not because it is another – more effective – way of maximizing value for shareholders, but because it promotes values such as economic wellbeing generated by the corporate system and fairness which fosters confidence and investment. It thus translates into an increase in common wellbeing that, at the same time, reduces morally reprehensible inequalities, making a better society possible. Greater attention to the teachings of CSR would reap undoubted benefits for Italian companies too. One need only consider the problem of the still poor growth in the size of firms, precisely because there is a lack of confidence stemming from a fear of the loss of control which occurs when mergers take place. And yet a socially responsible company is precisely the type of company where a merger with a relinquishment of control is feasible, in the knowledge that the value of its innovation will not be dealt with unfavorably. Another example is the issue of the improvement of industrial districts, which by definition are a network of companies that are stakeholders in each other that in turn deal with local institutions, municipalities, provincial administrations, professional colleges, universities and research bodies. These networks of relationships are well served by CSR, which offers a “multi-stakeholder” governance model that adapts perfectly to the opportunities for improving and revitalizing districts constituting a key element of the Italian economy. In short, it is a governance and management model that brings about a change in management style and which is put into effect by the adoption of a series of what are by now widely-accepted and applicable procedures. It is a merely a question of having the will to understand and implement them so as to fall into line with internationally-recognized practice, without fearing procedural innovation.