Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

The Case against Socially Responsible Business

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

The Case against Socially Responsible Business

Article excerpt

Recently, a constellation of corporate heavyweights and other worthies came out to launch the B Team, a coalition devoted to changing how companies do business. In the team's new "Plan B," people and the planet receive equal primacy with profits.

That sort of triple-bottom-line thinking might work for some companies, but to abandon the pure for-profit model altogether would be a huge mistake.

Plan A, where companies have been driven by the profit motive alone, is just no longer acceptable, the B Team's introductory video declares. Putting aside the question of "acceptable to whom?" -- plenty of shareholders seem happy with the profit motive -- the idea here is that most companies are operating in an unsustainable way that dooms society to ruin. If true, most chief executives must be fatalistic good-time Charlies who will get up and leave as soon as the party is over.

As believable as that image may be, the notion that the private sector seeks only short-term profits is naive. When resources are scarce, prices go up and companies are forced to change. Those that can't are replaced by new companies with different business models.

Some chief executives undoubtedly perceive this existential risk in the long term, and they plan their strategies accordingly. For those who don't, the B Team offers another maxim: "In the long run, what's better for the planet and its people is also better for business."

This is often true. Yet instead of invalidating the profit motive, this maxim actually reinforces its importance.

As Jonathan Berman and I have written in the past, for-profit companies that take a long time horizon in their decision-making are likely to make more social and environmental investments. Things like training workers, bolstering communities and protecting ecosystems can take a long time to pay off for private companies. When they do, the return -- including a stronger labor pool, a wealthier consumer base, fewer working days lost to strikes and protests, and greater employee loyalty -- can be comparable to other for-profit investments. …

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