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Fifty years ago, on Sept. 13, 1970, the late Milton Friedman, a Nobel laureate and economics professor at the University of Chicago, published a seminal op-ed in the New York Times. “There is one social responsibility of business,” Friedman wrote, “to use its resources and engage in activities designed to increase its profits [as long as it] engages in open and free competition without deception or fraud.”

Today, the concept of the social responsibility of business has expanded and shifted, and some executives and economists—even at Chicago Booth—challenge Friedman’s argument, said Randall S. Kroszner, Chicago Booth deputy dean of executive programs and Norman R. Bobins Professor of Economics, kicking off the virtual Corporate Social Responsibility Revisited conference on Sept. 10. Seven sessions hosted by Booth’s three campuses in Chicago, London, and Hong Kong explored areas of agreement and dissent at a time when COVID-19 and climate change are highlighting the importance and complexities of collective action.

Scroll to see recaps and full video recordings from all presentations throughout the day, or use the links below to jump to a particular session:

COVID-19 and Corporate Social Responsibilities of Emerging Market Companies

The conference kicked off in Hong Kong, as Henny Sender of the Financial Times explored the ethical responsibilities of institutions, in a conversation with Ahmed Saeed, MBA ’96, JD ’96, vice president of operations for the Asian Development Bank, and Jaime Augusto Zobel de Ayala, chairman and CEO of Ayala Corporation, one of the largest and most diversified business groups in the Philippines.

Ayala argued that private institutions should align themselves with the national good. His company has put this idea into practice during COVID-19, canceling tenant payments, assisting suppliers, and coordinating with other businesses to supply food to Manila’s day laborers. “I think the capitalist system as defined by Friedman is an extraordinary engine for innovation, growth, and job creation, but we all have a responsibility on our own to address the pain points created by it,” he said. Saeed agreed that businesses should have a broader sense of responsibility to promote the health of the overall system. He said that companies articulating a sense of purpose is an increasingly accepted practice by Wall Street.

How COVID Is Making the Case for Sustainability

The final panel in Hong Kong discussed how Asian companies are increasingly required to demonstrate awareness of corporate social responsibility. In India, businesses now have to invest 2 percent of their profits to address environmental, social, or governance (ESG) issues, said Seema Arora, deputy director general of the Confederation of Indian Industry. Katherine Ng, chief operating officer of the listing department of the Hong Kong Stock Exchange, said that as of July 1, all listed companies must have a conversation about ESG and sustainability at the board level. Businesses in Singapore have a similar mandated responsibility, said Swee Chen Goh, ’03 (AXP-2). Goh, the former chairman of Shell Companies, positioned ESG as a business opportunity, talking about the potential for job creation and the possibility of loans linked to meeting sustainability targets. The moderator, Calvin Chu Yee Ming, ’09 (AXP-8), explained that COVID-19 has revealed that business resilience and long-term sustainability go hand in hand.

Is Shareholder Value Maximization Evil?

Is shareholder value maximization evil? No, but sometimes it can sound that way, said Raghuram G. Rajan, Chicago Booth Katherine Dusak Miller Distinguished Service Professor of Finance. In a conversation with Andrew Hill, associate editor at the Financial Times, Rajan offered that Friedman’s division of responsibilities between business and government makes sense, but only in broad strokes. “The deepest problem with the Milton Friedman statement is that shareholder value maximization is totally turning a tin ear to politics,” he said. Rajan added that stakeholders such as employees have often made long-term investments in a business, creating implicit equity stakes that can be as important as the explicit stakes owned by shareholders.

Strength in Numbers: Using Data to Track Diversity and Inclusion

Recent protests against racism and police brutality, along with the #MeToo movement, have increased pressure on businesses to measure and improve their recruitment and promotion of women and people from underrepresented racial groups. Chicago Booth’s Marianne Bertrand, Chris P. Dialynas Distinguished Service Professor of Economics and Willard Graham Faculty Scholar, and Mekala Krishnan, a senior fellow at the McKinsey Global Institute, took a deep dive into how businesses use data to track diversity and inclusion.

Speaking with Caroline Grossman, ’03, executive director of the Rustandy Center for Social Sector Innovation, Bertrand pointed out that there is no clear research that convincingly shows that increasing diversity improves corporate outcomes. However, “if you are focusing all recruitment on one half of the population, because you’re only looking at men, there’s no way you are on the frontier in terms of the talent you can bring within your organization,” she said. Krishnan said cultural shifts within an organization can take five to seven years to show results, so there needs to be more research analyzing the effects of increasing inclusion over time.

Shareholders and Stakeholders: Conflict or Common Ground?

Kroszner spoke with Mark Carney, the UN Special Envoy for Climate and Finance and former governor of the Bank of England, about areas of common ground and conflict between shareholders and other stakeholders. “Pure shareholder value maximization actually can corrode some of the underpinnings of the system,” Carney said. “Done properly, a purpose-driven corporation empowers and enthuses the workers.” Out of crises such as COVID-19 or climate change, Carney said, can come improvements in measuring and valuing social factors that impact corporate performance.

What Should Be the Business of Business?

Madhav V. Rajan, Chicago Booth dean and George Pratt Shultz Professor of Accounting, introduced the final leg of the global conference in Chicago, where a panel moderated by Gillian Tett, chairman of the editorial board and editor-at-large, US, of the Financial Times, debated whether addressing stakeholder concerns can maximize shareholder value.

Chicago Booth’s Steve Kaplan, Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance and Kessenich E.P. Faculty Director at the Polsky Center for Entrepreneurship and Innovation, was perhaps the strongest defender of Friedman’s statement. “I think that Milton Friedman was right 50 years ago, and he is still right today,” Kaplan said. “Perhaps what has changed is the perception of customers and employees about what’s important to them. … If you have customers who care if you are doing things for the environment, you are going to be penalized if you don’t.”

Mary Bush, ’71, agreed with Kaplan, amending Friedman’s argument to say that when businesses help communities through efforts such as training workers, such investments can increase shareholder value. Margaret Blair, emerita professor of law at Vanderbilt University, dissented from Friedman’s position, arguing that the concept of maximizing shareholder value has fostered an inappropriate preoccupation with short-term stock prices, at the expense of understanding long-term business risks and obligations to stakeholders.

A Nobel Laureate’s Perspective on Corporate Social Responsibility

In the keynote address, Oliver Hart, a Nobel laureate and Lewis P. and Linda L. Geyser University Professor at Harvard, advocated for shareholders having a greater say in business decisions that affect society. “My view is that companies should find out what shareholders want and pursue that goal, and that is not always value maximization,” Hart said. For example, shareholders could vote on whether companies invest in environmentally friendly technologies that have an upfront cost but produce broader social benefits.

Kroszner described Hart’s viewpoint as a new approach to activist investing, where the focus is on improved shareholder decision-making rather than divestments or boycotts. “I’m not trying to rule out exit strategies,” Hart said. “But I think voice can be more powerful and can push things in the right direction.”

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