"The CFO needs to be involved at the conceptual stage of sustainability planning so that he can be sure there is a return on investment. That makes it a lot easier to explain to Wall Street," says Savitz. "CFOs get much more comfortable with sustainability programs when they see an actual return. This is not philanthropy. It's not a giveaway."

The return on investment in CSR depends on three things: the industry, the company's existing reputation, and the way the company approaches the issue. "Each industry has its own set of challenges," says Googins. "Some have more environmental issues, some have more employee-relations issues, but none are immune" (see "Who Should Care?" at the end of this article). Some companies view the CSR movement as a threat to be minimized by preemptive action, while others see opportunity. Toyota, which has experienced dramatic success with its hybrid car, the Prius, is one example of a company that capitalized on consumers' growing interest in environmental concerns. A company that cleans up toxic waste at its manufacturing plants to avoid community outrage or government intervention might reduce its costs, but might not derive as much upside benefit.

For companies in industries that pollute, like the chemical or oil-and-gas industries, the cost of benevolent environmental policies can be calculated as part of a sound risk-management strategy. The same can be said for a company with a strong consumer brand, like Nike or Gap, both of which faced criticism for using sweatshop labor overseas. "So much of the value of a company is intangible. Reputational issues can have a dramatic impact on share price and the bottom line," says Savitz. Both Nike and Gap responded to critics by implementing supplier-monitoring programs that have earned them accolades.

Even service businesses, with fewer obvious social-responsibility risks, can see a benefit from employee- and community-relations programs. Edward Nusbaum, CEO of Grant Thornton LLP, says the accounting firm has seen a 4 percent drop in turnover in the past year. He attributes the decline in part to the company's increased focus on community outreach as well as fund-raising and volunteering for community events. "Every percentage point that we increase our retention saves so many millions of dollars in training," he says. "But it's as important that these events increase employees' passion for the firm. A positive experience for employees translates to a positive experience for clients."

Good and Good for You
Many CFOs are eager to stress the linkage between their CSR efforts and profitability. "It's not social responsibility versus profitability," says Jim Lawrence of General Mills, the $12.5 billion food company. "It's social responsibility and profitability." For example, he says, one of the company's long-running social-responsibility efforts is the Box Tops for Education program, in which consumers collect the box tops from most General Mills food products and turn them in at their local schools. Cash back from General Mills then allows the schools to purchase needed items such as sports uniforms or library books. The program has raised $175 million for schools since its inception in 1996. "In essence, it's a loyalty program for General Mills products," says Lawrence. A.C. Nielson data has shown that households that participate in the Box Tops program buy more General Mills products than the typical household. Creating goodwill with schools, whose cafeterias the company may also supply with snacks and cereal, can't hurt either. The company also runs a separate Box Tops program, in which school cafeterias can earn money for equipment. "It's an example of social responsibility and financial benefit," says Lawrence.

General Mills also prides itself on its environmental initiatives, which include working to reduce its use of packaging. Cereal boxes bear the "100% recycled material" stamp. The company has constructed a new plant in Covington, Georgia, that boasts onsite wastewater-treatment and a recycling facility, which the cereal maker believes will save it $400,000 in city wastewater-treatment surcharges and $440,000 in water-utility costs each year.

The company spends more than 5 percent of pretax profits on social-responsibility initiatives and charitable giving. But Lawrence doesn't balk at the hit to the bottom line. "I don't see any of what we do as contrary to the interests of shareholders. I see it as not only beneficial to the immediate recipient, but also as something that is building the value of the General Mills enterprise," he says. "Someone could say, 'Why don't you add to your EPS by cutting out some of your spending on social responsibility?' and I guess you could do that, but what's going to happen to sales growth in the longer term?" In addition to building the brand, says Lawrence, social-responsibility programs help the company build its workforce. "A lot of the things we do to support the communities we're in make the working environment better for employees and help us recruit people," he says.

Fran Rathke, finance chief at Vermont-based coffee roaster and wholesaler Green Mountain Coffee Roasters, which also spends 5 percent of pretax profits on such initiatives, echoes Lawrence's sentiment. "That's a chunk of money," acknowledges Rathke. "But a large portion of that goes to our supply chain and helping [the coffee farmers] become more sustainable, which improves the quality of our product and reduces our supply-chain risk."

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