How have CSR and its affiliated notion of sustainability shaped business, shareholders, stakeholders and the fields of finance and accounting? Professors Adrian Zicari, ESSEC Business School, and Qinqin Zheng, School of Management Fudan University explore.
Performance and profit for better business, better society, better planet, by Adrian Zicari and Qinqin Zheng.
Responsible Finance & Accounting
For a long time, the fields of Accounting and Finance seemed to be detached from social responsibilities and ethical considerations and for many people, both in practice and in academia, those issues were of course important, but they still remained alien to the essence of business. They were considered unimportant for the business model and irrelevant for corporate strategy. Moreover, they were neither a central issue to research or learning at business schools. At most, these issues would be seen as a kind of afterthought or perhaps an issue to relegate to a compliance officer.
We may see here the long shadow of the famous Friedman (1970) article, so frequently cited and so frequently “mis-cited”. While this is not the place to begin (another!) discussion on that article, we can safely say that most people retain Friedman’s idea of a strict separation between efficiency and social responsibility. The role of management would be exclusively to make the “wheel” turn faster as long as the rules of the game were respected. Only in that context can we understand Friedman’s famous claim, “the social responsibility of business is to increase its profits”. Nothing else would matter.
However, recent studies indicate that social performance does matter. We used to think that it was of concern only to clients, employees and the community. The novelty is that social responsibility matters to shareholders as well. These shareholders care about the social impacts of the companies whose shares they own. Indeed, throughout this book on responsible finance and accounting, much of the content consistently supports the idea that this trend is increasing everywhere, and that it goes well beyond the specific niche of socially responsible investing.
As such, we can claim that CSR/Sustainability/Business Ethics are becoming more and more relevant for Accounting and Finance. They are no longer merely good intentions or praiseworthy considerations. Indeed, they no longer constitute a public image “strategy” or a choice for others to implement. Today, in the context of environmental, social and governance responsibilities, as well as the lasting impact of the pandemic and cycles of crisis, they are (or are becoming) the normal way to conduct responsible and ethical business.
- Browse Adrian Zicari and Qinqin Zheng‘s academic profiles and publications
- Link up with Prof Zicari on LinkedIn and follow him on Twitter
- Read a related article by Prof Adrian Zicari: Social Accounting: Measuring sustainability
- Read a related article by Prof Qinqin Zheng:
China: Accounting firm influence on client conduct
- Study at ESSEC Business School, France-Singapore-Morocco, and School of Management Fudan University, China.
Learn more about the Council on Business & Society
- Website: www.council-business-society.org
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The Council on Business & Society (The CoBS), visionary in its conception and purpose, was created in 2011, and is dedicated to promoting responsible leadership and tackling issues at the crossroads of business and society including sustainability, diversity, ethical leadership and the place responsible business has to play in contributing to the common good.
In 2020, member schools now number 7, all “Triple Crown” accredited AACSB, EQUIS and AMBA and leaders in their respective countries.
- ESSEC Business School, France-Singapore-Morocco
- FGV-EAESP, Brazil
- School of Management Fudan University, China
- IE Business School, Spain
- Keio Business School, Japan
- Trinity Business School, Trinity College Dublin, Ireland
- Warwick Business School, United Kingdom.