By any yardstick, 2008 will be remembered as a shocking year, and it may come to be seen as a turning point in world economic development. Ill-advised mortgage lending strategies in the U.S. housing market and elsewhere spiraled into the worst financial meltdown since the Great Depression of the 1930s.

The U.S. federal government bailout of mortgage giants Fannie Mae and Freddie Mac, the collapse of Lehman Brothers and the multibillion-dollar rescue package for AIG are all events that would have been unimaginable just months before. Around the world, banks have been effectively nationalized as governments stepped in to support them, but the gridlock in world credit markets has been slow to ease. German President Horst Köhler summed up the apocalyptic mood when he ominously warned, "The financial markets have turned into a monster which has to be contained."

SHORT TERM GAIN - LONG TERM RISK

A common thread running through many of these events has been the pursuit of short-term corporate and personal gain, with inadequate or inaccurate assessment of the longer-term risks. Corporate failures, government bailouts, excessive executive compensation schemes—as the markets have tumbled and investor confidence has all but vanished, consumers, taxpayers and communities are left holding the bag and angry at what they see as irresponsible behavior.

If that was not enough to mark 2008 as a year of dramatic change, news headlines have also been full of warnings about the impact of global warming, political upheaval and social unrest around the globe. In the USA, Barack Obama's election reflected a desire for change, a new sense of social responsibility, and recognition of the role the world's largest economy must play in addressing global environmental issues.

One outcome of all this is the realization, even in the heartland of corporate capitalism, that businesses have responsibilities extending beyond quarterly stock price improvement; that, in fact, corporations must embrace a sense of social responsibility to the individuals, communities and global markets they serve. Corporate Social Responsibility (CSR) is emerging as a beacon illuminating a path of much-needed change—and one that makes good business sense in these challenging times.

A Foundation of Trust

In his book on good corporate citizenship, The Business of Changing the World (McGraw-Hill, 2006), Marc Benioff, the chairman and CEO of Salesforce.com, showcases 20 business leaders who demonstrate how their organizations use their influence and resources to make a difference in the world. With the multimillion-dollar Salesforce.com Foundation, Benioff established his "1/1/1 Model," an integrated philanthropic approach in which Salesforce.com contributed 1 percent of employee time, 1 percent of profits (through donated or discounted product), and 1 percent of equity or company stock back to the communities it serves. The people featured in Benioff's book are all pragmatic, and the firms highly successful, showing that CSR doesn't just offer a feel-good factor, but can be the foundation for long-term business accomplishment.

In The State of Corporate Citizenship in the U.S.: A View from Inside, 2003–2004, published by the Center for Corporate Citizenship at Boston College and the U.S. Chamber of Commerce, 82 percent of companies questioned noted that good corporate citizenship helps the bottom line and 74 percent said the public has the right to expect good corporate citizenship.

However, if businesses can "do well by doing good," then the inverse is true too—they can do poorly by doing harm. Information is rapidly disseminated in today's global markets, so milk contamination in China immediately becomes breaking news around the world, and a reported breach of lead paint standards leads to major product recalls of millions of toys sold globally. It takes a lot of sustained hard work over a long period to recover from a major product recall or a health and safety incident.