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Monday, Nov 9, 2009
Corporate rebels are pushing a new manifesto that makes social and environmental impact as important as profit.
Aug 13, 2002 | Goaded by a rash of bad press, a very public lashing at the Congressional whipping post, and a 38% drop in the company's stock this year, banking giant Citigroup announced last week a major change in the way it does business. CEO Sandy Weill characterized the move as part of Citigroup's campaign "to be a leader in defining and adopting higher standards".
Notice he didn't say "high," but, rather, "higher." Relative to what the standards have been, yeah, I guess "higher" shouldn't be too much of a problem. And what exactly were these higher standards, deemed worthy of such public self-congratulation? The headline-grabber was that Citigroup will no longer provide financing to companies that conceal debt from shareholders. In other words: it's no longer going to aid and abet the fraudulent acts of corporate crooks. How noble. What's next, a splashy press release touting the fact that Citigroup will be raising Osama bin Laden's ATM fee?
Meanwhile, the company continues to defend its role in helping Enron hide billions in debt by claiming that it never knew that Enron was using such shady transactions to defraud shareholders. It's a bit like the driver of the getaway car proclaiming his innocence because the guys running out of the bank with masks and bags of money never told him they were robbers. Maybe they were just really shy and didn't like carrying wallets.
Saint Weill also vowed that Citigroup will start expensing stock options in 2003, and gave himself another proud pat on the back for complying with the SEC's demand to certify the accuracy of his company's financial reports. It's an indication of how low corporate America has sunk that Weill's pale concessions earned major coverage around the country. I guess we're living in a time when "Big Corporation Announces It Will Do The Right Thing" really is news.
But while the media are focusing on these belated corporate mea culpas, there's a truly important movement among American companies that is hardly getting any attention.
More than a hundred companies in America are seeking to redefine the bottom line -- moving away from conventional corporate accounting, where the only consideration is profit, to one that also includes the social and environmental impact the company is having. It's called the Triple Bottom Line.
Yes, stock price is important, say Triple Bottom Liners, but so is how you treat your workers, the effect you're having on the environment, and whether the McNuggets you sell are made from chickens raised in deplorable conditions.
The key idea is that corporations need to pay attention to both their stockholders and their stakeholders -- those who may not have invested money in the company but clearly have a de facto investment in the air they breath, the food they eat and the communities they live in.
