Environmental Protection and the Social Responsibility of Firms Perspectives from Law, Economics, and Business

Everyone agrees that firms should obey the law. But beyond the law -- beyond compliance with regulations -- do firms have additional social responsibilities to commit resources voluntarily to environmental protection? How should we think about firms sacrificing profits in the social interest? May they do so within the scope of their fiduciary responsibilities to their shareholders? Is the practice sustainable, or will the competitive marketplace render such efforts and their impacts transient at best? Furthermore, is the practice, however well intended, an efficient use of social and economic resources? And do some firms already behave this way?

Until now, public discussion has generated more heat than light on both the normative and positive questions surrounding corporate social responsibility (CSR) in the environmental realm. In Environmental Protection and the Social Responsibility of Firms, some of the nation's leading scholars in law, economics, and business examine commonly accepted assumptions at the heart of current debates on CSR and provide a foundation for future research and policymaking.

Distinguished contributors to this book include Einer Elhauge and Mark Roe of Harvard Law School; John Donohue and Daniel Esty of Yale Law School; Paul Portney of Resources for the Future; Dennis Aigner of the University of California, Santa Barbara; Forest Reinhardt of Harvard Business School; David Vogel of the University of California, Berkeley; and Eric Orts of the Wharton School at the University of Pennsylvania.

Everyone agrees that firms should obey the law. But beyond what the law requires-beyond bare compliance with regulations-do firms have additional social responsibilities to commit resources voluntarily to environmental protection? How should we think about firms sacrificing profits in the social interest? Are they permitted to do so, given their fiduciary responsibilities to their shareholders? Even if permissible, is the practice sustainable, or will the competitive marketplace render such efforts and their impacts transient at best? Furthermore, is the practice, however well intended, an efficient use of social and economic resources? And, as an empirical matter, to what extent do firms already behave this way? Until now, public discussion has generated more heat than light on both the normative and positive questions surrounding corporate social responsibility (CSR) in the environmental realm. In Environmental Protection and the Social Responsibility of Firms, some of the nation‘s leading scholars in law, economics, and business examine commonly accepted assumptions at the heart of current debates on corporate social responsibility and provide a foundation for future research and policymaking.

About the Contributors Overview The Four Questions of Corporate Social Responsibility: May They, Can They, Should They, Do They? Bruce L. Hay, Robert N. Stavins, and Richard H. K. Vietor Part I: The Legal Perspective Corporate Managers Operational Discretion to Sacrifice Corporate Profits in the Public Interest Einer R. Elhauge Comments on Elhauge: Does Greater Managerial Freedom to Sacrifice Profits Lead to Higher Social Welfare? John J. Donohue On Sacrificing Profits in the Public Interest Mark J. Roe Summary of Discussion Part II: The Economic Perspective Corporate Social Responsibility: An Economic and Public Policy Perspective Paul R. Portney Comments on Portney: Does Corporate Social Responsibility Have to Be Unprofitable? Dennis J. Aigner On Portney‘s Complaint: Reconceptualizing Corporate Social Responsibility Daniel C. Esty Summary of Discussion Part III: The Business Perspective Environmental Protection and the Social Responsibility of Firms: Perspectives from the Business Literature Forest L. Reinhardt Comments on Reinhardt: Ethics, Risk, and the Environment in Corporate Responsibility Eric W. Orts Opportunities for and Limitations of Corporate Environmentalism David Vogel Summary of Discussion Index

Bruce L. Hay is a professor of law at Harvard Law School. Robert N. Stavins is the Albert Pratt Professor of Business and Government at the John F. Kennedy School of Government, Harvard University. Richard H. K. Vietor is the Senator John Heinz Professor of Environmental Management at the Harvard Business School. Distinguished contributors to this book include Einer Elhauge and Mark Roe of Harvard Law School; John Donohue and Daniel Esty of Yale Law School; Paul Portney of Resources for the Future; Dennis Aigner of the University of California, Santa Barbara; Forest Reinhardt of Harvard Business School; Eric Orts of the Wharton School at the University of Pennsylvania; and David Vogel of the University of California, Berkeley.