Framework

Evidence check for 'doing good pays' claims

The question it answers

When a CEO is pitched an ESG, diversity or CSR programme on the grounds that "doing good pays", does the evidence show it raises profit or only a correlation?

Origin
Vogel, 2005; Norman and MacDonald, 2004
Diagram type
Decision flow
Level of analysis
Firm
Topics
Ethics & corporate governanceCorporate finance
Clay balance scale with two level glass pans, icon for business ethics

Diagram

Evidence check for 'doing good pays' claims

  1. MIs there a clear method for measuring the ESG effect?The claim cannot yet be tested.
  2. CHas reverse causation been controlled (profit funds ESG, not the other way round)?It is only correlation.
  3. GDoes the evidence go beyond correlation in aggregate data?Do not use it as the main reason.
  4. IAre managerial motives limited to what still pays?If so: do not generalise to every case.
The claim holds in a narrow range; state the specific conditions.

Sources

References

Listed A–Z by author surname, Harvard style. A source with a DOI links to https://doi.org/…; one without links to its page or says plainly that it has no DOI.

  1. Norman, W. and MacDonald, C. (2004) ‘Getting to the bottom of "triple bottom line"’, Business Ethics Quarterly, 14(2), pp. 243–262.doi:10.5840/beq200414211Source page
  2. Vogel, D. (2005) The market for virtue: the potential and limits of corporate social responsibility. Washington, DC: Brookings Institution Press.No DOIbrookings.eduSource page