McKinsey Quarterly global survey finds that “Business leaders must become involved in sociopolitical debate not only because their companies have so much to add but also because they have a strategic interest in doing so. Social and political forces, after all, can alter an industry's strategic landscape fundamentally; they can torpedo the reputations of businesses that have been caught unawares and are seen as being culpable; and they can create valuable market opportunities by highlighting unmet social needs and new consumer preferences.
The challenge is to find a way for companies to incorporate an awareness of sociopolitical issues more systematically into their core strategic decision-making processes. Companies must see the social and political dimensions not just as risks—areas for damage limitation—but also as opportunities. They should scan the horizon for emerging trends and integrate their responses across the organization, so that the resulting initiatives are coherent rather than piecemeal.
Executives around the world overwhelmingly embrace the idea that the role of corporations in society goes far beyond simply meeting obligations to shareholders." More than four out of five respondents agree that generating high returns for investors should be accompanied by broader contributions to the public good -- for example, “providing good jobs, making philanthropic donations, and going beyond legal requirements to minimize pollution and other negative effects of business”. Only one in six agrees with the thesis advanced by Nobel laureate Milton Friedman, that high returns should be a corporation's sole focus, the survey found.
According to McKinsey, “executives are hard-nosed about why companies are engaging in this new agenda. Only 8 percent think that large corporations champion social or environmental causes out of 'genuine concern.'
Almost nine in ten agree that they are motivated by public relations or profitability or by both concern and business benefits in equal measure.”
McKinsey says the most enthusiastic proponents of a social role for business are executives in India: 90 percent of them endorse the "public good" dimension.
Executives based in China are the most lukewarm, with 25 percent saying that investor returns should be the sole focus of corporate activity.
“Looking ahead,” the survey finds, “executives expect that a wide range of concerns will dominate public and political debates.
Asked which three issues will have the most impact, for better or worse, on the shareholder value of companies in their industries during the next five years, 41 percent choose job loss and offshoring.
Also at the top of many minds are corporate political influence and involvement; environmental issues, including climate change; pension and retirement benefits; and privacy and data security.”
Eesentially the study tries to highlight the fact that Corporations will go where they feel they are likely to get some of long-term value (for example, its brand, talent, and relationships) .The rationale behind the social investment is to build on the intangibles and so as to create a more socially relvent and conscious workplace.To read more click here