7 The dollar amount would be a combination of what businessmen traditionally classify as capital expenditures, and expense expenditures. For corvenience of reference, the totals could be expressed in SocioEconomic Management Dollars (SEM$). A SEM$ is a unit of measurement used to identify all expenditures made voluntarily of a socially beneficial nature. The full cost of a permanent installation of a pollution control device is included in the SEOS statement in the year the cost is incurred, as is the annual operating cost of a hardcore minority group training program. Here are some specific items which would be entered on a SEOS statement as positive, or meritorious action: 1. 2. 3. set-up. Training program for handicapped workers. Contribution to black college. Extra turnover costs because of minority hiring policy. 4. Cost of nursery school for children of employees, voluntarily 5. 6. 7. Cost of reclaiming and landscaping old dump on company property. Cost of installing pollution control devices on smokestacks. Cost of detoxifying waste from finishing process this year. 8. Salary of vice president while serving on government Product Safety Commission. 9. Cost of substituting lead-free paint for previously used poisonous lead paint. Here are some specific items which would be entered on a SEOS statement as negative or detrimental non-actions: 1. Postponed installing new safety devices on cutting machines (cost of the devices). 2. Cost that would have been incurred to relandscape strip mining 8 site used this year. 3. Estimated cost to have installed purification process to neutralize poisonous liquid being dumped into stream. 4. Safety device recommended by Safety Council but not added to product. These various positive and negative social actions and inactions are classified on the SEOS exhibit into three groups: Relations with People; Relations with Environment; and Relations with Product. By way of example, I have set forth below the kind of SocioEconomic Operating Statement I recommend be instituted using the foregoing specific items. 92-578 O 73 74 (2B) 10 I am convinced that SEOS statements, or their equivalent, whether they are called "social audits" or by some other term, will be required within the next twenty years for most business organizations. Important business leaders such as David Rockefeller are quite outspoken in expressing a similar view as to the approaching use of social audits by business. These SEOS exhibits, prepared by an internal interdisciplinary committee and audited by an external socio-economic audit committee, will be demanded by consumer groups, special institutional investors and an increasing number of regulatory governmental agencies. Public visibility of the Socio-Economic Operating Statement would unquestionably act as a strong motivator for business executives, and a healthful equalizer as well giving the socially responsible company - as well as the laggard its due. or deficit - This, To project a step further, on an annual basis for example, we might expect Fortune's "Annual Survey of Corporate Responsibility." along with Business Week and Wall Street Journal reports, would summarize a corporation's net social contribution and parade it in print for all to see. Nor is there any reason to suspect that other general publications would not follow suit. The press would also engage in the game of drawing corporate comparisons on a national, regional and industry basis. It does not take a great deal of imagination to project what kind of byproduct tables, charts, articles and reports might be generated as a result. Congress should enact legislation allowing companies a deduction against taxable income for net social expenditures shown on the SEOS for the year, which exceed a certain percentage of the taxpayer's net worth. I would recommend that such net socio-economic expenditures which exceed 1% of the net worth of a company be allowed as a full deduction from 11 taxable income. This would be in addition to all other expense and depreciation allowances already made for these same items. By such a tax consideration business would further be encouraged and stimulated to undertake large-scale activities to help correct the many abuses in our society and our environment. And, it would furnish progressive management with another argument against those of economist Milton Friedman's school who believe that business should be concerned only with dollar profits. It is my opinion that before the beginning of the 21st Century business will be expected to prepare Socio-Economic Operating Budgets to project what the company expects to do in the social area during the succeeding year. Some The SEOS statement is the first step in measuring qualitative social actions or inactions of a business in quantitative terms. Here anything above the minimal cost of doing a job required by law or contract which improves the working conditions, product safety, and/or environment is identified and reflected as a plus in the SEOS exhibit. Perhaps some critics will argue with the form or the classifications. Refinements and modifications to any new device are always welcome. may say that totalling the inputs in dollars of expenditures made voluntarily for social programs still ignores using a full qualitative accounting of the outputs. This is true, but we must begin somewhere. Social program measurements must be made now; churches, colleges, and special investment funds are demanding it -- not to mention the strong consumer groups -- and each is already doing it in his own way. - In this presentation I am dealing only with the private sector that is private industry's efforts in the social area and the question of measuring and giving visibility to such programs. There is much |