Has April 1st come early? Was the Gulf of Mexico a bad dream? These might be the first thoughts of an NSFM participant on reading this "amazing" editorial from the Finance Week entitled "CSR detracts from corporate reporting agenda":
But wait one minute. BP is the proven leader in CSR reporting. And BP is held in many SRI funds and SRI indices. Is CSR reporting just a distraction?
Not so fast! Finance Week seems to have confused the issue by treating execution in meeting strategic goals as if it were the same as reporting.
However, Finance Week has stumbled across a more fundamental problem: something is missing from corporate strategic planning. If you manage what you measure (who would disagree with that?), then shouldn't investors require companies to report things that are linked to strategies for reaching the ultimate goals which the company is to achieve? Over the last 50 years, we seem to have moved toward an implicit agreement that there is only one goal for every company: to maximize short-term profit - regardless of the risks or external consequences generated.
Should investors and Finance Week really be asking, "What is the goal we want companies to achieve? Is it short-term profit, without taking into consideration the long-term costs and consequences for company stakeholders, taxpayers and the broader community?"
Let's turn the Finance Week editorial around and ask the real question: Is there still broad agreement that short-term profit maximization under the artificial rubric of accepted accounting practice remains the ONLY economic activity goal that matters? If so, what are the long-term consequences beyond each company's balance sheets? What goal(s) do we want economic activity to achieve? Only after answering those questions can we measure and report the things that are linked with achieving our ultimate goals for corporate economic activity.