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performance in a business context, people typically understand you to be speaking
about some form of profit.
The definition of economic profit is the difference between revenue and the
[2]
opportunity cost of all resources used to produce the items sold. This definition
includes implicit returns as costs. For our purposes, it may be simplest to think of
economic profit as a form of accounting profit where profits are achieved when
revenues exceed the accounting cost the firm “pays” for those inputs. In other words,
your organization makes a profit when its revenues are more than its costs in a given
period of time, such as three months, six months, or a year.
Before moving on to social and environmental performance, it is important to
note that customers play a big role in economic profits. Profits accrue to firms
because customers are willing to pay a certain price for a product or service, as
opposed to a competitor’s product or service of a higher or lower price. If customers
are only willing to make purchases based on price, then a firm, at least in the face of
competition, will only be able to generate profit if it keeps its costs under control.
Social and Environmental Performance
You have learned a bit about economic performance and its determinants. For
most organizations, you saw that economic performance is associated with profits,
and profits depend a great deal on how much customers are willing to pay for a good
or service.
With regard to social and environmental performance, it is similarly useful to
think of them as forms of profit—social and environmental profit to be exact.
Increasingly, the topics of social and environmental performance have garnered their
own courses in school curricula; in the business world, they are collectively referred
to as corporate social responsibility (CSR)
CSR is a concept whereby organizations consider the interests of society by
taking responsibility for the impact of their activities on customers, suppliers,
employees, shareholders, communities, and the environment in all aspects of their
operations. This obligation is seen to extend beyond the statutory obligation to
comply with legislation and sees organizations voluntarily taking further steps to
improve the quality of life for employees and their families, as well as for the local
community and society at large.
Two companies that have long blazed a trail in CSR are Ben & Jerry’s and S.
C. Johnson. Their statements about why they do this, summarized in Table 1.1
"Examples of leading firms with strong CSR orientations", capture many of the facets
just described.

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