Will Corporate Social Responsibility Survive the Recession?

In last week’s The Big Money, published by Slate, Christopher Flavelle examined whether or not corporate social responsibility (CSR) would be jettisoned for the bottom line during these very difficult economic times.

While the concept of corporate social responsibility might seem a bit oxymoronic given the stories about executive pay and other business-related scandals and malfeasance, CSR has been embraced by more companies over the last few years. The article quotes Geoffrey Heal a leading expert on CSR and author of When Principles Pay: Corporate Social Responsibility and the Bottom Line:

Since the concept of CSR became popular, there’s never been a recession like the one we’re going into right now. Profits are going to be very hard to come by for many corporations. If they see CSR as contributing to their bottom line, they’ll continue to act responsibly. If they see CSR as a kind of a PR campaign, they’ll probably cut back on it.

So, does CSR contribute to the bottom line? Using an interactive tool called the Socially Responsible Investing Stock Screener, Big Money looked at the stocks of the 100 most responsible and the 100 least responsible companies and compared their stock price on February 11 2008 to their price on February 10, 2009. The result:

The stock price of both the more responsible and less responsible companies fell by approximately the same amount—about 37 percent. (In fact, the stock price of the more responsible companies fell by 1.4 percentage points less than the price of the less responsible companies, but that difference isn’t statistically significant for a total sample size of 50 companies.) In the worst economic turmoil in decades, when investors had every reason to shed pretensions of political correctness, companies that put time and energy into behaving responsibly seem, thus far anyway, to have performed no worse than those that didn’t.