For the sake of full disclosure, I must confess that prior to this semester, the notions of “sustainable business” and “social responsibility”, despite their growing importance in today’s crowded and increasingly interconnected world, were concepts that, regrettably, had not yet warranted much rumination in my mind. Throughout my undergraduate career at Carolina, I have relished the curriculum and taken pride in developing a breadth of knowledge concerning business’s most timeless tenets—concepts of increasing efficiency in operations, expanding market share, and minimizing exposure to risk, to only name a few. Admittedly, however, due to a lack of any substantial experience in a business managerial role, I naively thought this was all there was to understand about the business world. I believed as long as a business operated within the legal and political structures set up by society, they were justified in pursuing the objectives of raising profits and increasing shareholder value, paying little mind to the larger ramifications of the firm’s operations on the world outside the board room. It had never occurred to me to ask what a business’s social responsibilities might entail, or if such altruism was even practical in the highly competitive landscape of modern business practice.
In an article published in the New York Times, entitled “The Social Responsibility of Business is to Increase its Profits,” Milton Friedman analyzes corporate “social responsibility” and all—if anything—that it entails. Taking the hard-line, Friedman argues that, unlike a person—who as an undeniable member of society is naturally endowed with a social responsibility—a business can only achieve “social good” at the shareholder’s expense. In short, profits and social responsibility are inherently at odds with each other. He goes on further to explain how this supposed “social responsibility” of businesses involves a “political, not market machinery” to power it and, therefore, constitutes socialism.
In my own reflection of Mr. Friedman’s hypothesis, I could not avoid asking myself the most obvious question: why then should a business be burdened with a responsibility that runs contrary to the original “good” it is obligated to pursue. If they do indeed have this responsibility, who enforces it? Unable to answer this question conclusively, I tried to re-posit the dilemma. Aiming to avoid the trapping of an overly idealistic utopia, I aimed instead to consider the possible benefits that corporate benevolence good engender within the “bottom-line-oriented” world of business I hitherto knew so well. There are plenty of issues facing the world today: famine, poverty, disease and the overall state of our planet just to name of a few. In a perfect world, businesses—out of an everlasting reserve of goodwill—would voluntarily find ways to alter their practices to help face these issues and better the plight of mankind. Nevertheless, as long as “money talks” this scenario will never meet fruition but that does not necessary debunk its merit. The truth is, businesses can help face these issues, and as many of the most innovative entrepreneurs, and even a few behemoth conglomerates, have learned, its often in their best interest to be one step ahead of the regulatory curve. They have the abilities, the technology and the resources needed to bring about a change that governments and other public sectors cannot achieve.
This isn’t because it’s the “right thing to do.” Freidman and many other critics of the social sustainability movement point to the “analytical looseness” and “lack of rigor” that the idea implies. There is some validity to this criticism, but it relies on the assumption that equates social responsibility with charity. That idea is far too simple when looking at the innovative businesses that have realized significant profits while simultaneously achieving social progress. It chooses to ignore the fact that profits can accelerate a corporation’s efforts at sustainability, not curb them.
There are so many problems facing society today. Fortunately, no matter how dire some cases may seem, the hope for solutions—ones that with responsible planning and implementation can mean great rewards for corporations—persists. Ultimately, these mindful business techniques can bolster and increase in social as well as private value. To speak in terms my other business professors have taught me, the surplus of societal problems flooding the market today has created a high demand for new ways of conducting business.
The world is full of these businesses that are united and bonded by an ideal, a mission that motivates them. Without this, a company’s efforts at sustainability are ill-founded and ultimately doomed. It’s not easy to cultivate these arbitrary ideas on sustainability into functioning, profitable businesses. It requires stepping outside the traditional boundaries and challenging old ideas. Cliché as it is—perhaps because it’s true—fortune favors the bold.