The business case for corporate virtue, namely that firms can do well by doing good, underlies much of the enthusiasm among corporations for social responsibility. Echoed endlessly in books and articles, that argument appeals to the business community because it suggests that managers need not make trade-offs between decisions that benefit society and those that benefit shareholders.

Unfortunately, there’s not much basis for the claim that corporate social responsibility (CSR) systematically “pays. ” Most consumers are unaware of and indifferent to where, how, and by whom the vast majority of products they consume are made. The most prominent “ethical” label in the United States—Fair Trade coffee—has a market share of less than 1%, and boycotts and protests have not measurably affected sales or share prices of other brands. While the assets of ethical mutual funds have grown substantially, they still make up only 2% of mutual fund assets in the United States.

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Publication/Copyright: Harvard Business Review