Corporate Social Responsibility (CSR) is no longer just a matter of charity. In an age when much of society is defined and engineered around value-creation, corporations can no longer afford to design business models that are dissociated from environmental and social responsibility. The failure to reconcile business activity with society's wellness is no longer free of consequences.

Case in point: in the weeks following the explosion at the Deepwater Horizon oil rig, BP's stock price lost roughly 50% off its April 22nd high of $US 57.91. This heavy toll was further deepened by a government-imposed $36 billion price-tag for reparations and claims.

BP's saga is certainly not representative of every business in all markets, but it highlights the increasing primacy of CSR thinking as a sine-qua-non requirement of sustainable profitability. In order to thrive, 21st-century commerce needs to adopt integrative thinking and blended-value business models with regards to its relationship with society and nature. Failure to do so, as the BP oil spill demonstrates, will be punished in capital markets worldwide.

How did the rules change all of a sudden? A simple answer is that much of the theorizing about business operations is based on out-dated assumptions about the separate spheres of business and society. Society is now so integrated with the world of business that failure to account for ourselves and the environment responsibly can cause near instant and momentous damage on the financial side.

Integrative thinking and blended-value business models are two approaches to overcome the conceptual handicap that plagues much theorizing about business. Integrative thinking, as defined by Roger Martin, Dean of the Rotman School of Commerce at the University of Toronto, is the ability to constructively "face the tensions of opposing models" and generating a "creative resolution of the tension in the form of a new model that contains elements of the individual models, but is superior to each."

As Paul Collier aptly discusses in The Plundered Planet, much of the debate around how best to address the environmental question is polarized by the "plants first" camp and the "profit first" camp, and neither of which demonstrates enough respect for the other's perspective. Integrative thinking around the question of how how best to optimize environmental factors in the creation of sustainable profit would serve greatly to prevent debacles such as BP's.

An even better approach would be to adopt blended-value business models. These are profit-making enterprises that have a positive social and/or environmental impact. Indeed, if businesses such as BP were to design their future business operations along the lines of minimizing their ecological footprint, or maximizing their positive socio-environmental impact, they would probably suffer much lower liabilities when faced with certain types of operational failures.

Blended-value enterprises would also be able to create more sustainable and larger profits because of the value-add their intelligently designed products offer. A clear example of this is Canada's very own Bullfrog Power, whose business model is shaped very precisely along these lines.

Jed Emerson's research with the Skoll Centre for Social Entrepreneurship at the University of Oxford accurately points out the reality that capital markets DO, in fact, assess for social and environmental factors when determining company valuations (See, From Fragmentation to Function by Jed Emerson).

Corporate Social Responsibility is increasingly costly and punitive to reactive companies. Proactive companies and business models that maximize their socio-environmental impact will beat more conventional ones on the path to sustainable corporate profitability.

Photo credit: http://www.flickr.com/photos/rootology/4727588751/

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