In 1970, Milton Friedman, the University of Chicago economist, wrote in The New York Times that “the social responsibility of business is to increase its profits.”
This may be changing. Earlier this month nearly 200 of America’s top chief executives issued a statement on “the purpose of a corporation,” arguing that instead of advancing only the interests of shareholders, companies must “invest in their employees, protect the environment and deal fairly and ethically with their suppliers.”
The statement said chief executives “share a fundamental commitment to all of our stakeholders” vowing to “protect the environment by embracing sustainable practices across our businesses” and “foster diversity and inclusion, dignity and respect.”
That could be welcome news for women, for whom inclusion, dignity and respect are crucial issues. How would corporate CEOs advance their company if they kept the needs of the most vulnerable employees at the forefront of their minds? To do so would improve parity and mobility within organizations, and more broadly in society.
Nancy Koehn, a historian at Harvard Business School, told the NYT, “They’re responding to something in the zeitgeist. They perceive that business as usual is no longer acceptable.”
But, she added, “It’s an open question whether any of these companies will change the way they do business.”
The roundtable of CEOs did not publish an action plan, or specific means of accomplishing these goals.
Anand Giridharadas, the author of “Winners Take All: The Elite Charade of Changing the World,” told the NYT, “If the Business Roundtable is serious, it should tomorrow throw its weight behind legislative proposals that would put the teeth of the law into these boardroom platitudes. Corporate magnanimity and voluntary virtue are not going to solve these problems.”
The #metoo movement is just one of many pressures companies have faced over the last few years. We hope that when assessing diversity and inclusion, executives begin to incorporate lessons learned from the #metoo movement on how to empower and support women at all levels of an organization.