Even though capitalism has suffered a catastrophic failure, the debate it has triggered has become trapped in a sterile shouting match between those who just want to reboot the system and return to ‘business as usual’ as quickly as possible and the banker-bashers who think that the answer is to simply throw around more government red tape. Neither of these solutions addresses the scale of the challenge we face. Capitalism is still the least worst system we have for generating the prosperity we need to feed, clothe and educate seven billion people and counting. But it is a system that, as Zizek says, has lost its legitimacy with what the occupy campaign calls the 99%. “The Berlin Wall fell but there are new walls, new divisions rising up everywhere within most of the states,” Zizek argues, adding a warning: “If we do nothing we will gradually approach a kind of a new, it will not be old, fascism.”

Capitalism should not be rebooted nor booted out; it needs to be reinvented. This is the challenge at the heart of philanthrocapitalism. First, in a narrow sense, it is a recognition that our economic system is based on a social contract, compact, covenant: the winners from the system cannot ignore the consequences of the system for everyone else. This motivation for philanthropy was recognised by Andrew Carnegie, the Bill Gates of his day, more than a century ago, when capitalism faced the existential threat from socialism and Communism. His ‘Gospel of Wealth’ urged the rich to accept their responsibility to tackle the negative impacts on society that threatened to undermine the economic system. In the 21st century, in a world where the rich have got richer and the rest have been left behind, this message is just as urgent. That is why, we believe, today’s philanthrocapitalists are right to use their giving to find solutions to social and environmental problems (and to argue for greater (properly designed) taxation of the rich).

Zizek does not have much truck with this idea. As a Marxist, Zizek thinks that capitalism is necessarily exploitative, so any philanthropy is a contradiction.For him philanthrocapitalism is like a “chocolate laxative” (chocolate makes you constipated, a laxative, on the other hand,…well, you get the point). He launched a blistering attack on the philanthropy of Bill Gates and George Soros in the London Review of Books back in 2006, which we discuss in detail in the book. But you do not have to be a Marxist like him to think that capitalism is on the wrong track. The financial crisis is evidence that much of the profit and growth of the boom years were just a mirage, not real prosperity (nor real capitalism, since what the financial sector did was so catastrophic for its investors and shareholders). Business that makes a quick buck by creating massive social and environmental problems is bad business in the long term.

Redesigning capitalism to better serve humanity is the deeper meaning of what we call philanthrocapitalism: the recognition that business does not operate in a vacuum but is a member of society and a part of our environment. Some businesses get this and are moving away from PR-driven corporate philanthropy to a whole organisation approach to ‘doing well by doing good’. Sadly, most firms still do not. This problem is particularly acute in the financial sector, which has failed to even engage the Occupy movement, let alone show that it is ready to change. What is needed is a fundamental reorientation of capitalism and finance towards real, sustainable value through the sort of reforms that we describe in The Road From Ruin (the updated U.S. paperback edition is coming out at the end of this month).

Getting capitalism to change is, as Zizek points out, not just a matter of blaming the bankers. It also requires a civic renewal where we all play a part in shaping a capitalism that serves society. The Occupy Movement, in our opinion, has the potential to channel some of the current popular anger into the positive engagement that is needed (here’s 10 things we can all do). The world is also crying out for leadership. Politicians seem blinkered by crisis management and partisan bickering. Civic leaders need to step up and help shape this urgent and important debate.

“You know what the Chinese say when the really hate you? ‘May you live in interesting times’. We certainly are approaching interesting times.” There is a twinkle in Zizek’s eye as he relishes the philosophical challenges of a world in turmoil, descending into authoritarianism and maybe fascism. We are more optimistic. Interesting times are an opportunity for new thinking, if we choose to rise to the challenge.

This offering was greeted with enthusiasm in some quarters, such as the World Economic Forum in Davos, yet also encountered some scepticism, both on the grounds that the idea is not particularly novel and that it may not mean anything. So it was with interest that we read a feature in the current edition of the always excellent Stanford Social Innovation Review in which Mr Kramer engaged in what was billed as a “candid” discussion of shared value with the representatives of ten major global corporations.

Do businesses recognise shared value as the next big idea? Well, the corporate folk gathered by Mr Kramer seemed to be lapping it up. Executives from a diverse range of businesses from money transfer giant Western Union to IT powerhouse Cisco happily described how their do-gooding slotted into the shared value worldview. And why not? It’s always nice to be part of the newest big idea.

Yet amid this love-in for shared value there was one jarring note. “I’m probably the only person at the table who’s not part of a corporate affairs organization or a foundation”, observed Beth Schmitt, the director of recycling for North America at metals behemoth Alcoa. Well spotted. That shared value, which is supposed to be at the heart of the business and at odds with traditional CSR, was being celebrated largely by CSR and PR people rather than core business executives strikes us as somewhat contradictory. 

This matters because tough questions do need to be asked about the role of business in society. Take the iconic mega-bank Goldman Sachs, for example, which hosted the roundtable discussion and showcased its 10,000 women project and 10,000 businesses initiative (for which Mr Porter co-chairs the advisory board, alongside Warren Buffett ad Goldman CEO Lloyd Blankfein) at the meeting. These are, in our view, good examples of smart, high-leverage corporate philanthropy. Yet, as we argued recently, such projects remain at the margin of Goldman’s business and do nothing to address bigger questions about whether Goldman’s core activity is actually socially useful.

Was the selection of participants at the roundtable actually a tacit admission that even those firms which most fervently champion shared value are really not doing much that wouldn’t qualify as traditional CSR?

“The vast majority of acivity in this area [CSR] is seen as separate from the business,” Mr Porter told a meeting of the Committee for Encouraging Corporate Philanthropy last year, as he mused on why so much corporate giving achieves so little impact: “I firmly believe that now we have to raise the bar”. We agree. But if shared value is going to be about anything more than the status quo, there need to be different people at the table.

This image of John Bulls turning up their noses at ‘foreign muck’ and calling for a plate of bangers came to mind when we read (fellow Englishman) Felix Salmon’s sideswipe at philanthrocapitalism in his counterblast against a new paper by Dalberg’s Daniel Altman (a former colleague of Matthew) and Jonathan Berman that tries to take forward the question of how businesses can get involved in ‘doing good’ as part of their commercial strategies for ‘doing well’.

Such ideas are as shocking as a plate of mahi mahi and maitake mushroom salad in a soy-yuzu broth for a traditionalist like Felix. He trumpets that “Philanthropy isn’t for profit” before, like all good bigots, simply declaring that it is not to his taste. “The good news here is that these attempts by Altman and Bishop to elide the distinction between capitalism and philanthropy — to make rapacious executives feel good about being greedy — are such transparent failures that with any luck they’ll mark the turning point at which people do good to do good, rather than simply declaring that the best way they can do good is to chase profit as zealously as possible.” God bless the equilibrium in which business is simply about nasty profit-making and doing good only happens when people are explicitly trying to do it.

Sadly, this ignores two things we have learned about capitalism in the past 20 years or so. The first is the growing realisation that business does have the capacity to create as well as destroy social value. Jed Emerson called this ‘blended value’ more than a decade ago. One-time corporate social responsibility sceptic Michael Porter christened it ‘shared value’ earlier this year. Getting business to think about how to be net positive and see the benefits of seeking out this nonfinancial value is a key part of what we call philanthrocapitalism.

This is too idealistic, say our critics. Yet the second big thing that we have learned about capitalism is that chasing financial value, if measured exclusively by short-term profits, is bad capitalism. Maybe Felix has forgotten about the financial crisis. But, as we argue in ‘The Road From Ruin’, rethinking what is real economic value at the corporate and country level and focusing on delivering the long term sort is essential if we are to build an economy better than it was before.

Figuring out how to do this is not easy. Indeed, we share some of Felix’s scepticism about Dan and Jonathan’s idea that social and environmental value can simply be captured in the “single bottom line” of profit. They may have a case in theory, but they note the chronic short-termism of today’s stock market capitalism only as an afterthought, whereas we believe it is at the heart of our problems; we think the growing discussion of CSR, corporate citizenship, corporate philanthropy and sustainability is useful precisely because it tends to encourage companies to focus less on the short-term and more on the potential for long-term profits. In that sense, we need more of it, not less, though certainly it would be useful to have more real-world examples of how taking these issues seriously leads to higher long-term profitability.

(Felix also takes aim – “profoundly silly” – at an article by Matthew in the latest Economist, in which he compares the social impact of IBM and the Carnegie Corporation as they each celebrate their 100th birthday. The article argues that a company can do considerable social good, especially when it understands it has a responsibility to society and is not obsessed with short-term profits at all cost; it also shows that philanthropy – genuine giving, not the for-profit kind – can do abundant
social good, but that philanthropies (like companies) can lose their way as the years go by, which seems to have been the case to some extent at the Carnegie Corporation, though it still does important work under its admirable current president, Vartan Gregorian. Felix thinks that Matthew is too hard on Carnegie, wrongly concluding that the article favours IBM, but otherwise seems to enjoy the thought experiment – maybe “silly” is a word of praise in his dictionary?)

As we have argued in our article, “A Capital Curve for A Better World“, this is a moment of great opportunity for philanthropy and the profit motive to connect in a socially useful way. But getting the relationship between the two forces right will not be easy, and needs serious thought rather than sneering. Debates are needed urgently about how philanthropy can harness the profit motive to good effect, and how to ensure that profit really does work for the poor in products such as microfinance. There are big challenges ahead if ‘impact investing’, the new asset class championed by JP Morgan as a way to combine making money and solving social problems, is to live up to its potential. Yet just because these ideas are unfamiliar and need to be worked on should not mean that they should be rejected out of hand – unless we want to keep eating forever the same old bangers of the short-termist, ‘greed is good’ version of capitalism.

The inspiring idea in Krugman’s analysis of English food is that somehow, perhaps through foreign travel, enough of the English started demanding better food that they achieved a critical mass that, eventually, flipped the system. The same needs to happen in our economy. We won’t get a better capitalism if we don’t demand it or if, like banger-loving Felix, we simply turn our noses up at anything new or different.

Part of that pioneering, according to Chris West, the Shell Foundation’s director, is owning up to mistakes. “We all know development is hard”, Mr West explained, “we want to inspire others to admit to mistakes.” Indeed, the report is refreshing in its admission that, in its early days “80% of the initiatives we supported failed to achieve scale or sustainability.”

What did the foundation do wrong? Above all, what many other funders are still doing: issuing calls for proposals and making short-term grants of less than $300,000 for less than three years. Such so-called ‘spray and pray’ strategies may satisfy stakeholders who get a share of the largesse and provide neat case-studies for annual reports but, in the Shell Foundation’s experience, they don’t achieve lasting change. The lesson the Shell Foundation took from these initial experiments was that “backing a multitude of short-term, solely NGO-run projects that were not market-based was not likely to generate the scale of impact or lasting change without a continued need for subsidy.”

As a result, the Shell Foundation is now focusing on a few initiatives that it believes are scaleable because they are based on entrepreneurial principles.

One that has caught the headlines in recent weeks is a partnership with Envirofit, a US-based nonprofit, to produce and market clean cooking stoves for the developing world, to save the poor money and reduce deaths from pollution. A new initiative launched at last month’s Clinton Global Initiative meeting in New York aims to take this to scale by rolling out 100 million stoves by 2020 through the UN Foundation, with backing from the US government and other donors.

Other Shell programmes include EMBARQ, a sustainable transport project in partnership with the World Resources Institute, that has got millions of people out of cars and onto buses and trains in cities like Istanbul, and GroFIn, which is trying to raise $1 billion to invest in entrepreneurs in developing countries by 2020.

The Shell Foundation report is a useful guide to the future of corporate philanthrocapitalism. Looking forward it sees three new trends. First, a shift from project-by-project grant-making to sustained partnering with disruptive organisations with the potential to transform the landscape. Second, greater use of debt and equity as tools to grow socially-impactful organisations to sustainable scale. Third, ever more focus on performance.

“More than money” is Mr West’s guiding mantra at the Shell Foundation, which counts its access to the business skills of its parent company as one of its core assets. True, to some extent, the hiving off of its philanthropy into a separate non-profit entity, and the lack of clear alignment of the foundation’s activities with the company’s core business strategy, makes the Shell Foundation somewhat old-school (in its structure, not its programmes). Yet, as Mr Brinded was careful to spell out, the foundation provides significant benefit to the business in terms of staff morale and learning for the company’s own CSR investments in local communities.

When the Shell Foundation was created 10 years ago, the company was still near the top of the anti-globalisation protestors ‘hit-list’, not least because of the rich resonance of the ‘Shell to Hell’ slogan. Has the Shell Foundation turned the company’s reputation around and sent it to heaven? No – it’s executives shouldn’t get used to being called angels. But it does show that corporate philanthropy that is run professionally and independently of the PR departments that still dominate much CSR, has a much greater impact. Let’s hope that in its admission of mistakes as much as it successes, the Shell Foundation has set a benchmark for other multinationals.

The first, by Kimberly O. Dennis, who runs the Searle Freedom Trust, takes a sideswipe at the Gates/Buffett Giving Pledge, worrying that the signatories are giving away too much money, since “the wealthy may help humanity more as businessmen and women than as philanthropists”. This is a line the Journal has run before. Three years ago, in fact, in an article by the Harvard economist  Robert Barro, which we discuss at some length in the concluding chapter of the book.

Dennis does make the important point that the idea of the rich ‘giving back’ can give the impression that they have taken something in the first place when, in fact, they have created wealth and jobs through their entrepreneurship. (A Marxist wouldn’t agree with her, of course – but you don’t have to be a Marxist to acknowledge that at least some billionaires around the world have made their money not by creating wealth but by expropriating it, through running exploitative monopolies or ripping off the public by acquiring assets on the cheap in dodgy privatisations.)

One weakness in the Dennis/Barro argument is that they think there is a contradiction between giving money away and wealth creation. That’s not how Warren Buffett sees it – as he approaches his eightieth birthday he is as focused as ever on making money. George Soros too told us how philanthropy cured his mid-life crisis and inspired him to make even more money. True, Bill Gates has stepped down from running Microsoft – but, as we report in the book, he felt that the time had come to give someone else a go at the helm of Microsoft and that his energies would be better engaged on new projects, philanthropic and otherwise. Maybe he, not a lobbyist or an academic economist, is the right person to judge in what activities he can achieve most with his time, energy and entrepreneurial gifts. (Dennis, in particular, should agree that nobody is more likely than Gates to know how to run his life and how to deploy his assets, given she runs an organisation with the mission to “promote individual freedom and economic liberty”.)

Another weakness in the argument against giving is the assumption that philanthrocapitalists will inevitably be less successful in improving the world through their philanthropy than they have been through their money-making. This is nothing more than defeatist thinking. As we describe in the book, the new generation of givers led by Gates and Buffett are applying many of the skills and strategies that they honed in business to their giving, and are starting to achieve some success. It is true that the failure rate in philanthropy is high – but, as Buffett points out, that is because the problems are often harder than those facing a business person such as himself, who he describes (perhaps with excessive modesty) as always going after the “low hanging fruit”. Our society stands to gain from the fact that our most successful business people are increasingly trying to put their skills and assets to work in tackling some of society’s biggest problems and it is premature, to say the least, to assume they are doomed to fail.

Nor do many of today’s philanthrocapitalists make the sharp distinction that Dennis does between making money and giving it away. Many of them are into making a buck while doing good. E-bay founder Pierre Omidyar has set up his philanthropic organisation Omidyar Network not as a traditional foundation but as a company that can apply the right kind of capital to the problem in hand – sometimes grants, sometime for-profit investments. He has already had some success in encouraging for-profit microfinance, falling out along the way with Muhammad Yunus, the Nobel prize-winning founder of the Grameen Bank. Others, including Gates, are also entering this growing “social investment” space – which rather than harming the process of wealth creation may actually lead to the discovery of better ways of wealth creation that will make capitalism more successful than ever.

Companies, too, are increasingly rethinking their engagement with society not out of charity but with a view to ‘doing well by doing good’ – although this too provokes the Journal‘s ire. This time it is Aneel Karnani, a strategy professor at the University of Michigan, whose arguments are so confused that he has surely been advising that state’s car makers on strategy for the past 30 years. He has the cudgels out for the corporate philanthrocapitalists because “in most cases, doing what’s best for society means sacrificing profits”. 

Karnani believes there are two possible states of the world in which business operates – one in which markets are perfectly aligned with public interests, in which case corporate social responsibility is unnecessary; the other, in which the market is not aligned with public interests, in which either the drive to make profit will overwhelm any pressure to be socially responsible, or socially responsible behaviour will harm the paramount interests of shareholders. The only real solution, he says, is government regulation – though ultimately he doesn’t seem convinced that will work either, which leaves us, er, where, exactly? Still, the Wall Street Journal‘s editors must really hate CSR if they are willing to give so much space to someone arguing (even half-heartedly) for more government regulation. The big surprise is they didn’t run our friend Chrystia Freeland’s recent article blaming the BP oil spill on CSR.

There are some grains of truth in Karnani’s article. There has been plenty of bad corporate philanthropy over the years. The phrase corporate social responsibility is certainly unattractive and clunky, not designed to excite the animal spirits as we would wish. But he, along with most of today’s critics of CSR, fails to engage with what is actually going on in leading firms in the name of CSR and, in particular, of doing well by doing good.

Above all, the description of a world stuck in two states, one of markets aligned with public interests the other not, is a fantasy. In reality, markets and their relation to public interests are constantly evolving – and the actions of companies play a crucial role (through the sort of products they introduce and through lobbying, for instance) in whether they evolve in a direction that serves the public interest or undermines it.

Much of the current focus on doing well by doing good is the result not of pressure from outside busybodies but of companies trying to figure out how to build flourishing markets in the developing countries where they hope to enjoy much of their future business growth and how to win the battle for talent in a world where workers are increasingly choosy about the ethics and mission of the firm they work for.

As we argue in our latest book, “The Road From Ruin”, the current economic crisis was caused not least by endemic short-termism in capitalism, whereby the leaders of many firms put short-term profit maximisation ahead of long-term profit maximisation. Our belief is that had they focused more on the long-term, they would have followed strategies that were much better for society and for their shareholders – who, let’s not forget, are all of us who live in society, as we collectively own many of these firms through our savings.

Corporate history is littered with companies who went for the fast buck and cut ethical corners – think of Nestle selling babymilk formula and Nike’s once-cruel supply chains – that cost their shareholders dear. (Both firms learnt the hard way that such social failures were bad for long-term shareholder value.) More of the sort of pressure on executives demanded by CSR to take off the quarterly profits blinkers and look at the wider picture would surely be a positive development in capitalism.

Karnani’s argument reminds us of the old joke about the economist who won’t pick up a $20 bill left on the sidewalk, reasoning that if it were a $20 bill someone else would have picked it up already. That jibe is made at the expense of economists who believe that markets are always efficient and that, therefore, there could never be a massive market crash. Oh dear. Yet the supporters of this idea have responded to the financial crisis by blaming all the problems on government meddling in markets rather than any imperfection on the part of the markets. This denialism now seems to have evolved into outright hostility to any suggestion that anything but capitalism red in tooth and claw is a perversion of the true faith, rather than constructive engagement with ideas designed to improve how capitalism works.

When Philanthrocapitalism came out, just as the markets crashed in September 2008, the Journal gave the book a very favourable review. In the aftermath of the biggest crisis of capitalism in more than half a century, hopefully philanthrocapitalism has not become a heresy for this influential pro-market newspaper.

While it is easy to understand the contrarian appeal of this claim – how ironic that the instinct to do good resulted in doing bad; if only they had stuck to greedily pursuing profit maximisation – it is nevertheless utterly absurd. The lack of any evidence in Chrystia’s article, beyond the fact that both BP and Goldman Sachs have long been seen as leaders in the CSR movement, is telling. We are only surprised that she overlooked the fact the Toyota has also been found wanting in its core product quality, despite its public association with greenery. Three prominent failures by CSR leaders would have met any journalist’s definition of an ‘indisputable trend’.

Let’s consider BP and Goldman Sachs in turn. The exact chain of events that led to BP creating America’s (probably) worst environmental catastrophe remain to be seen. Certainly, individual errors will be found, and corners were probably cut. Yet it is also clear that the rest of the oil industry drilling in the Gulf were as equally unprepared to deal with such a spill as BP, even those – as Chrystia presumably prefers – most committed to maximising profits regardless of the cost to the environment. All of them seemed to believe that walruses would have to be rescued in the event of disaster in the Gulf, because they had simply copied disaster response plans designed for colder parts. As The Economist reported, according to Amy Myers Jaffe, an oil expert at Rice University, the industry’s strategy on blowouts was not to have them, rather than to work out how to put one right quickly. Surely no one believes that a strategy based on zero failures is prudent.

It is true that, according to BP board member Walter Massey, its espousal of CSR did buy the firm time and greater leniancy than it might otherwise have received after the fatal accident at its Texas refinery. “The company’s reservoir of goodwill, built up over years of committed corporate stewardship, was of critical aid in helping us to weather the storm,” he said in March. But there is no suggestion that this led the firm to think it could get away with anything.

Moreover, after the initial thrill of an oil major declaring the need to go “beyond petroleum” to stop climate change, the CSR movement’s enthusiasm for BP had waned long before the recent disaster. In particular, BP had been criticised for silo-ing its renewable energy activities away from the firm’s mainstream activities, and for increasingly putting financial performance ahead of everything else. Ironically, one of the justifications for replacing Lord Browne with Tony Hayward was his lordship’s lack of technical experience.

Financial short-termism seems the likeliest explanation for the problems of Goldman Sachs – though there is again no evidence to suggest that the Goldman’s commitment to social responsibility played any part in the financial crisis nor the unpopularity of the Wall Street bank after it. Goldman actually exposed society to less systemic financial risk than its rivals, including Lehman Brothers, Bear Stearns and Merrill Lynch. Ripping off customers – for which it has just agreed to pay a large settlement to the SEC, without admitting any fault – is easier to attribute to sacrificing long-term reputation for short-term profits than it is for being blindsided by the urge to be socially responsible.

Unlike BP’s recognition that it needs eventually to move beyond petroleum if it is to survive, the 10,000 Women campaign launched by Goldman Sachs, though brilliantly designed and executed, can hardly be viewed as core to the bank’s business strategy. In that respect, it is somewhat at odds with the trend in the CSR movement to focus on the sort of doing good that helps the firm do well. (And, let’s be clear, there are plenty of things to criticise the CSR movement for – just not the things that Chrystia claims.) Goldman Sachs is notable in doing its corporate philanthropy, and encouraging the personal philanthropy of its staff, in ways that entirely ring-fence them from the every day business of making money.

Indeed, the main reason Goldman Sachs is so unpopular today is surely that it made so much money after the financial crisis, and paid its staff such large bonuses. In this respect, it failed to recognise that the world had changed – that the public had bailed out the banking industry, Goldman Sachs included, and in return expected some evidence of gratitude and remorse for the events that had made the bail out necessary. From Goldman Sachs, it got neither.

It is our belief that a firm that had been more attuned to society and more committed to engaging with it constructively – the main goals of the CSR or corporate citizenship movement – would have been far less likely to make the basic mistakes that Goldman Sachs did, the costs of which are only starting to become clear. As we have said many times, the firm would have done far better, even in PR terms, if it had paid far smaller bonuses and given away far more of the money. (A more core strategy, for the longer term, would be to use its undoubted financial skills to do good, for example by helping to develop the nascent social investment market.

Rather than justifiying Chrystia’s dismissal of CSR, the failings of Goldman Sachs and BP underscore the need for firms to take their engagement with society more seriously, and to put being on the right side of social progress at the core of their long-term profit-making strategy. A firm that did this would not cut corners with safety or show so little gratitude to taxpayers for helping it survive.

Rather than criticise firms for being part of what Chrystia calls the “cult of CSR”, we should be figuring out how to destroy the cult of financial short-termism in the business world. (Our new book, The Road From Ruin, has some suggestions for doing that!) Admittedly, the conclusion that firms need to get better at CSR, and pinning the blame for BP’s oil spill and Goldman Sachs’s errors instead on short-termism, lacks the contrarian appeal of attacking CSR. But it does at least have the ring of truth.

You can see why we have got Wayne’s goat so much, since he thinks that capitalism “has fuelled the culture of greed and excess that tipped us into a global recession” and that corporate social responsibility (CSR) “should be about how you make your money, not whether you give it away once it’s made”.

Maybe we can tempt Wayne to actually pick up the book by pointing out that he is largely agreeing with us. Philanthrocapitalism is about the way that entrepreneurial wealth creators, in their business life as well as their private giving, increasingly recognise that capitalism is only sustainable in the long term if it takes account of the social and environmental sustainability of the system. Greedy short-termism is bad capitalism. Not all business leaders understand that, but we are encouraged that more and more are doing so. That’s why we call them philanthrocapitalists.

Wayne says he won’t read the book “unless someone holds an (ethically sourced, fairtrade) gun to my head”.  Now there’s a promising idea for a for-profit/non-profit CSR partnership between Amazon.com and the National Rifle Association.

First up, Ray Anderson, chairman of eco-friendly carpet company, Interface, told how he had met WalMart’s boss, Lee Scott, shortly after he had decided to change the firm’s culture to embrace the fight against climate change. We describe this conversion in the book, in the chapter on The Good Company. Anderson said a year later he again met with Scott, who told him that when he had talked about culture change he had no idea what a powerful force he was unleashing. Anderson’s book, Mid-Course Correction, about how he got the eco bug at the age of 60 is highly recommended.

Then WalMart’s Personal Sustainability Project for employees was lauded by Haas Business School professor, Kellie McElhaney, who has just published an interesting book, Just Good Business. She waved a pack of cards, each containing tricky environmental questions, that WalMart has given to employees as educational tools. Another speaker pointed out that over 500,000 WalMart employees are now participating in the PSP.

Yet another speaker, whjose own corporate foundation giving is expected to decline this year, noted enviously that WalMart has just announced that its annual corporate giving will rise from around $300m to $400m. So much for the recession.

Finally, the closing keynote speaker, Jeffrey Hollender, boss of eco-friendly household products firm, Seventh Generation, said that, after three years of conversations with the company and especially chief executive Scott, he had decided to reverse his ban on letting Seventh Generation products be sold at WalMart. The firm still has a massive negative footprint, but it is “now moving on the right trajectory”, said Hollender. Ultimately, he forsees deep tensions between WalMart’s newfound environmentalism and its commitment to “every day low prices”. But, for now, it is getting better fast. Moreover, he says, WalMart is the only big retailer he knows that would let him criticise them in public without getting upset. He has even offered to go on the WalMart board to help it work through its remaining eco-challenges – an offer politely turned down by Scott. Still, now Scott has announced his departure, his firm’s culture well on its way to being transformed, perhaps the new boss will welcome a veteran green activist in the boardroom? Or, less happily, will a change at the top bring this culture change to an abrupt halt? Let’s hope not.

Georgia thinks we should have given more attention to the question: “Is the “new” philanthropy really even “new”?”  She thinks this is an important issue because, in her opinion, we underplay the past achievements of foundations. We have never argued that we are at some kind of ‘year zero’ in philanthropy.  Indeed, by looking at the history of modern philanthropy, going back to the Renaissance, we have been keen to empasise the innovations of the past, including the achievements of American foundations like Rockefeller and Ford in the 20th century.  But there is still a reluctance among today’s established foundations to acknowledge the effectiveness problem, which is eloquently spelled out in Joel Fleishman’s outstanding book The Foundation: a great American secret (we make no apologies for plugging this again).  By saying that traditional foundations need to raise their game and that a bit of competition can’t hurt, we seem to have upset the philanthocracy establishment.

Georgia makes the excellent point towards the end of her article that “there are things that foundations do that would be very interesting to businesses—taking a long-term approach, taking a more holistic approach, attacking problems from multiple angles, learning about qualitative measurement.”  This absolutely right and, as we discuss in the chapter on ‘The Good Company’, this is what smart companies are starting to do, moving away from PR-driven corporate philanthropy to really seeing CSR as a strategic part of business success. For us, that is a key part of philanthrocapitalism.

As we note in the book, in our chapter on “The Good Company”, Nike now has 75 full-time employees inspecting factories and working with its suppliers to ensure they meet agreed labour standards. The firm conducts unannounced factory audits in partnership with the Fair Labour Association, a non-profit, and a typical garment factory in Nike’s supply chain can expect around 25 visits a year from inspectors.

Whether Nike’s brand is completely free of its old taint, despite all these efforts, is debatable – which goes to show how companies ignore social issues at their peril, especially when they have a consumer brand. A reputation once lost can be fiendishly hard to restore. But today many consumers certainly regard Nike as a cool brand, including in many developing countries.

Which brings us to the example of how companies can make a difference. A few years ago, government campaigns to fight the spread of HIV/Aids by promoting safer sex were failing badly in South Africa because young men regarded it as uncool and unmanly to use a condom. So the government approached Nike and asked if it could try to leverage its brand to spread the message – Nike apparently being taken far more seriously by the target audience than the government.

The result was a marketing campaign that was a win-win-win for the government, the firm and society. No, the slogan was not, “Don’t Just Do It – Put On a Condom First!”, but “Our Greatest Opponent is One We Cannot See” – and as you can see here, the ads are extremely powerful. They have certainly helped to change behaviour: a good example of effective philanthrocapitalism that would not have been possible in a world without corporate brands.