Philip Kotler presenta "Corporate Social Responsability ... and Sustainability"

1. Corporate Social Responsibility…
and Sustainability
Philip Kotler
Kellogg School of Management
Northwestern University
Perugia, Italy
June 9, 2016

2. Greetings
• I want to thank all of you for coming to Perugia to celebrate
the launching of my new book, Confronting Capitalism,
published by Hoepli, titled: Ripensare il Capitalismo
• I want to thank particularly:
• Alberto Mossone, for finding a publisher for the Italian
edition of Confronting Capitalism and conceiving this
event together with Marco Raspati of Nexo Corporation,
who had also organized a great PKMF Italy 2015 in Milan
• Brunello Cucinelli who wrote a foreword to my book and
hosted this event in his wonderful Theatre in Solomeo
• Oscar Farinetti, who also wrote a foreword to my book.

3. Confronting Capitalism
• I did not write the book to replace
Capitalism, only to make it better.
• I listed 14 shortcomings of modern
Capitalism and proposed reasonable
solutions to each.
• The biggest problem is the growing
inequality of income.
• If workers are not paid enough, it will hurt
capitalists as well.

4. Is Slower Economic Growth Inevitable?
Pessimists
• “I think growth probably is going to be slow in terms of aggregate
GDP over the next 50 years…Larry Summer, former President of
Harvard
Optimists
• “We will soon be able to meet and exceed the basic needs of
every man, woman and child on the planet. Abundance for all is
within our grasp.” Peter H. Diamandis, founder of the X-Prize
and of the new Singularity University, in his new book
Abundance.

5. Other Problems of Capitalism
• How to provide enough jobs?
• A factory can be operated by one person and a dog.
• Robots will do most of our tedious work.
• Will financial institutions take over most of our industries?
• How to prevent industry from polluting and damaging our
environment and climate?

6. Still Other Problems of Capitalism
• How to smooth the business cycle?
• How to get companies to cover their social costs?
• How to get companies to practice sustainability?
TO GET DEEPER ANSWERS TO THESE QUESTIONS, PLEASE
READ MY BOOK.

7. Democracy is at Risk
• Not only do we have to repair Capitalism. We also have to repair
Democracy!
• We are moving from a Democracy to an Oligarchy.
• We vote in politicians.
• Politicians need funding and get it from big companies and the
wealthy 1% and vote their interests.
• Neither voters or Congress runs the country.
• “Capitalism is eating our Democracy.”

8. Democracy in Decline
• So I wrote the book shown on the right. It
will be published this July.
• Note that I represent the American flag
using a great number of $ signs.
• I identified 14 problems in Democracy,
• Voter problems
• Campaign finance,
• Gerrymandering
• Lobbying, etc.

9. Companies Must Choose Goals
• Capitalism originally assumed infinite resources and infinite
human needs. We now recognize this endangers Planet
Earth.
• Paul Polman, CEO of Unilever, made the following
statement: “Our ambitions are to double our business, but
to do that while reducing our environmental impact and
footprint… It has to be done via more responsible
consumption.”
• Can economic growth and sustainability really be
reconciled?
• What does Polman mean by “more responsible
consumption”?

10. Business Mindset 1.0
Build Efficiency
1. Find a need or create a need and fill it
2. Buy labor and supplies as cheaply as possible.
3. Maximize the near term profits of the owner or
shareholders
Company examples
• Robber Barons
• Chemical companies dumping in water
• Timber companies not replenishing trees
• Overfishing

11. Business Mindset 2.
Build Preference and Satisfaction
• The company now focuses on fine tuning its 4Ps to meet
the target customers evolving wants and values better than
the competitors.

12. Business Mindset 3.
Building a Strong Brand
• Much of the company’s effort in this stage goes into
exploiting its brand potential by multiplying new and
successful offerings.
Unilever Dove brand

13. Business Mindset 4.0
Stakeholder Beneficience
• The company starts thinking beyond its shareholders to its
stakeholders: its employees, suppliers and distributor partners and
the communities where it operates. It aims “to create shared
value.”
• Run the business to be long-lasting
• Invest adequately in R&D and innovation
• Maintain a strong infrastructure
• Protect and enhance the brands
Company examples
• Starbucks, Patagonia, Lego

14. Business Mindset 5.0
Reduce Social Harm
1. Reduce harm to the environment (factory smoke or coal
burning)
2. Reduce fat, salt and sugar in our food products
3. Build cars with lower fuel costs
Companies:
• DuPont
• Timberland
• Toyota
• Kraft

15. Business Mindset 6.0
Society Improvement
The company starts thinking about the welfare of (1)
communities and (2) the planet
1. Take a leadership position in sustainability
2. Help build better communities where you operate.
3. Support higher minimum wages and more adequate incomes.
Company examples:
• Starbucks
• Benefit Companies

16. Listen to the Voice of the Consumer
• Middle class customers learn that the industrial food
system is filling them with too much sugar, salt, fat and
preservatives, making them obese. People will increasingly
buy from companies who care about their health.
• Global consumers worry that their chickens and meats and
food products are impregnated with chemicals.
• They worry about GMO (genetically modified organisms)
modifying the gene structure of their foods in the pursuit of
disease resistance but resulting in a significant number of
allergy risks to people.

17. Listen to the Voice of the Planet
• We are witnessing more storms, hurricanes, and earthquakes in
addition to melting ice caps.
• Since the 1970s, we have lost 768,935 square kilometers of
rainforest, which is more than twice the size of Germany.
• In the middle of the Pacific Ocean, there is an estimated 270,000
square mile area the size of Texas of debris and plastic particles.
• The CO2 levels are higher than they have been at any time in the
past 400,000 years.
• Over the past 500 years, we have lost 322 species as a result of
human activities.
• The number of blue whales in the Antarctic used to be 239,000, now
estimated at between 5,000 to 12,000.

18. We Need a Better Metric than GDP
• GDP says nothing about the quality of the outputs.
It ignores the costs that have been incurred with that
growth: more air and water pollution, more traffic
congestion, more long hours of work and less leisure
time. It says nothing about how the increased
wealth is distributed.
• Better metrics would be captured by Happiness
Indices, Well-being indicators, etc.

19. Companies Must Decide
• We do not state that businesses must accept lower
profitability for the sake of ethical behavior.
• Sustainability is not just a matter of adding an extra cost.
Its benefits hopefully will exceed its extra cost.
• We would argue, along with CEO Paul Polman of Unilever,
that higher profitability is compatible with higher ethical
behavior.

20. Pessimism vs. Optimism
• Each attitude will lead to a self-fulfilling outcome.
• Pessimists will refrain from doing things to produce
strong economic growth.
• Optimists will encourage innovation, investment, and
entrepreneurship and produce strong economic growth.
• Optimism beats Pessimism!!