Q&A
Trina Hamilton
Trina Hamilton, assistant professor of geography, studies corporate, environmental and social responsibility.
How have financial companies been viewed as corporate citizens?
The most high-profile corporate responsibility initiatives in the finance industry have had to do with the adoption of social and environmental standards for the financing of large-scale development projects, particularly in developing countries. While there have been concerns about predatory lending—and activist shareholders have been submitting shareholder proposals on the issue for years—it had not become part of the broader public debate until this current financial crisis got out of hand.
Which companies have traditionally been seen as good corporate citizens?
In terms of the finance industry, Fannie Mae has topped some of the more influential corporate citizenship rankings in the past based on its philanthropic activities, and other companies, such as Citigroup, have seen their reputations attacked and then bolstered with the adoption of social and environmental standards. One of the big problems in evaluating corporate responsibility is that most of the ranking systems tend to obscure specific issues and problems by averaging a corporation’s performance on a wide range of measures. So I don’t think it’s surprising that a company that rates well on some measures, such as philanthropy, would find itself in the middle of the current crisis.
How do you think the Wall Street crisis has impacted public perception about the finance industry?
Wall Street for years has been painted as the bastion of excessive greed. Think about the excesses of the 1980s as portrayed in the film “Wall Street.” But I think the current crisis has the potential to shift the debate from one about a few bad apples in an otherwise legitimate system—which was how the Enron scandal was characterized—to a questioning of the incentives and rules of the system itself. “Regulation” is no longer being portrayed as a four-letter word, and I think it has as much to do with other recent scandals and crises—including concerns over lead-tainted toys and other product safety issues—as it does with the current crisis. We may be witnessing a final tipping point.
Do society’s views of who is and is not a good corporate citizen affect a company’s business operations?
The evidence seems to be mixed on this one. My own research has shown that, in general, consumer brands—those companies with direct ties to consumers—are more responsive to social and environmental concerns. Consumer brands have much more reputational capital at stake; therefore they’re particularly vulnerable to public pressure and I found that a majority of those companies targeted by social and environmental campaigns did make changes that went beyond so-called greenwashing or public relations defenses. I would have to agree with David Vogel, a professor at the University of California-Berkeley’s Haas School of Business, and author of “The Market for Virtue,” who argued in a recent book that while there’s plenty of room for virtuous companies in the current marketplace, there’s also plenty of room to profit from less virtuous and even unethical behavior.
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