BUSINESS and SOCIETY; Father of Corporate Social Responsibility
Byline: Bernardo Villegas
Peter Drucker, one of the greatest minds of the 20th century and who died last November 11, has been called the father of modern management. I would like to add to his many well-deserved titles that of "the father of corporate social responsibility." Much before the phrase CSR came to be fashionable in business circles, Drucker was already insisting that social responsibility is in the very essence of making a profit.
In his first article for the Asian Wall Street Journal on February 5, 1975 (when I was at the height of borrowing his ideas in giving advice to top executive), he wrote about the "delusion of profits": "Businessmen owe it to themselves and owe it to society to hammer home that there is no such thing as aprofit.a There are only acostsa: costs of doing business and costs of staying in business; costs of labor and raw materials, and costs of capital; costs of todayas jobs and costs of tomorrowas jobs and tomorrowas pensions.
"There is no conflict between aprofita and asocial responsibility.a To earn enough to cover the genuine costs which only the so-called aprofita can cover, is economic and social responsibility a" indeed, it is the specific social and economic responsibility of business. It is not the business that earns a profit adequate to its genuine costs of capital, to the risks of tomorrow and to the needs of tomorrowas worker and pensioner that arips offa society. It is the business that fails to do so."
Peter Drucker anticipated the clearest statement about the role of profit to come from a Catholic Pope. In his social encyclical entitled Centesimus Annus, Pope John Paul II declared: "The Church acknowledges the legitimate role of profit as an indication that a business is functioning well. When a firm makes a profit, this means that productive factors have been properly employed and corresponding human needs have been duly satisfied. But profitability is not the only indicator of a firmas condition. It is possible for the financial accounts to be in order, and yet for the people a" who make up the firmas most valuable asset a" to be humiliated and their dignity offended. Besides being morally inadmissible, this will eventually have negative repercussions on the firmas economic efficiency. In fact, the purpose of a business firm is not simply to make a profit, but is to be found in its very existence as a community of persons who in various ways are endeavouring to satisfy their basic needs, and who form a particular group at the service of the whole of society. …