"…there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

His arguments are valid in the perfect world of economic theory but his “so long as” qualifier admits we aren’t there. Empirical studies are a way to determine whether and in which direction imperfections reward or penalize businesses with a proactive stance on social responsibility—and other SDR elements.

Many studies available online suggest such behavior is rewarded; only a selection is given here with extracts selected or summaries provided by OconEco (in italics) to highlight distinctive features. All studies that seem to suggest no or negative financial benefit are listed here because so few were found.

Most of the studies test whether shareholder value, measured by market capitalization, varies with whether companies report on some specific element(s) of SDR. Few differentiate between corporate governance, now generally mandatory (e.g., Sarbanes-Oxley), and other SDR elements; none systematically distinguishes between mandatory and voluntary reports (which varies by country). There are good reasons why these limitations remain but they leave ample scope for those who want to argue their companies are special cases, particularly without a coherent model that addresses concerns skeptics raise about direction of causation.

That is why OconEco only views empirical evidence as proof that shareholders see assets (or liabilities) that business accountants don’t; develops a wealth “model” that considers what factors of production business accountants may be missing, including but not limited to SDR elements; and recognizes that the materiality of such factors will vary by industry and ultimately by company. It is not a fully quantitative model but, as shown in the SD&A Map it has clear, objective, defaults to qualitative data via SDR^Prep where quantitative data, summarized in KSI^b and KSI^c, are inadequate. It is not the model so much as the materiality filter a client selects that determines what reaches SD&A. While it remains to be proven, this approach is expected to yield unique financial benefits by using sustainability metrics to inform strategic planning, and reporting as a networking strategy.

Financial Benefits of SDR > Proponents of SDR > Skeptics About SDR