Corporate Social Responsibility Through an Economic Lens

Forest L. Reinhardt; Robert N. Stavins; Richard H.K. Vietor

Article | Review of Environmental Economics and Policy | summer 2008

Corporate Social Responsibility Through an Economic Lens

by Forest L. Reinhardt, Robert N. Stavins and Richard H.K. Vietor

Abstract

Business leaders, government officials, and academics are focusing considerable attention on the concept of "corporate social responsibility" (CSR), particularly in the realm of environmental protection. Beyond complete compliance with environmental regulations, do firms have additional moral or social responsibilities to commit resources to environmental protection? How should we think about the notion of firms sacrificing profits in the social interest? May they do so within the scope of their fiduciary responsibilities to their shareholders? Can they do so on a sustainable basis, or will the forces of a competitive marketplace render such efforts and their impacts transient at best? Do firms, in fact, frequently or at least sometimes behave this way, reducing their earnings by voluntarily engaging in environmental stewardship? And finally, should firms carry out such profit-sacrificing activities (i.e., is this an efficient use of social resources)? We address these questions through the lens of economics, including insights from legal analysis and business scholarship.

Keywords: Profit; Governance Compliance; Governing Rules, Regulations, and Reforms; Corporate Social Responsibility and Impact; Business and Shareholder Relations; Environmental Sustainability;

Format: Print

Find at Harvard

Citation:

Reinhardt, Forest L., Robert N. Stavins, and Richard H.K. Vietor. "Corporate Social Responsibility Through an Economic Lens." Review of Environmental Economics and Policy 2, no. 2 (summer 2008).

American Electric Power, like most utilities in the USA, is currently exposed to distributed generation and the problem of net-metering. Solar installations in particular have been heavily subsidized, by the state and by regulation, which does not allow grid operators to recover their fixed costs. This results in stranded assets and cross-subsidies from poor to rich.

The American shale revolution has upended oil and gas markets for nearly a decade. Prices have risen then plunged, production has surged and then waned, LNG has boomed, and technology and productivity have improved. The U.S. energy policy, under the Obama administration, authorized a handful of gas exporters, despite pressure from domestic chemical and utility interests, and approved oil exports for the first time in 40 years. Environmental issues and questions remain unresolved. No one knows for certain what America’s energy trajectory will look like in the next decade.

In the last decade, Noble Energy and the Delek Group have discovered almost 40 trillion cubic feet of natural gas, offshore of Israel. For Israel, this has been an extraordinary turnaround, from energy dependence on Arab producers to energy independence and exporter. For Prime Minister Netanyahu, this abundance poses a huge foreign-policy opportunity to lock in national relationships. For Noble, it poses significance operational challenges, funding issues, and long-term political risk.

Faculty & Research

Corporate Social Responsibility Through an Economic Lens

Abstract

Citation:

About the Authors

More from these Authors