Business Ethics and Social Responsibility

      A professor I know teaches corporate ethics and social responsibility at a local university. She asked me to provide a video for her class, knowing my presentation would be provocative and in sharp contrast with videos provided by other business leaders; I did not disappoint. Following is a lightly edited transcript of my video.

Question from professor:  You have done considerable service for the community; does this mean business leaders have a responsibility to give back to the community?

I did community service because I wanted, not due to some wrong-headed cliche. The responsibility of business is to earn profit; by doing so it serves the community. Apple makes a billion people more productive and enriched; they do more good going about their business than they ever could through community service. The term giving back implies something has been taken. People who should give back are those who have taken; that’s why criminals are assigned to perform community service.

Question from professor:  Should companies do nothing in way of community service?

Companies should act in their self interest. Their mission is to provide the best possible products and services to consumers and value to shareholders; by accomplishing this they enrich the community. If businesses choose to sponsor community projects, they should do it for the right reason – not because of some platitude from a can.

Question from professor:  Should companies have a written code of ethics?

Restaurant washrooms have signs “Employees are required to wash their hands.” Such signs are posted to make customers comfortable, not to remind employees. So it is for codes of ethics. A written code of ethics probably can’t cause harm but it is mainly for window dressing. Enron had a 64-page code of ethics distributed to all employees.

Question from professor:  What about sustainability and green initiatives?

I never met one businessman who was against the environment, social responsibility, sustainability or other similar catch phrases. Recognize however that such argot is virtue signalling and a dog whistle for political correctness. Greenwashing and green preening is ubiquitous and serves the same purpose as the restaurant washroom signs.

Question from professor:  Is there a role for socially responsible investing?

The people that P.T. Barnum said are born every minute believe in socially responsible investment. I fail to see the social value in throwing money away. Profits are the best metric of a corporation’s value to society. If it makes you feel virtuous, go ahead; you are helping people but just not in the way you believe; you are helping me and other value investors. What is socially responsible anyway? Is blacklisting defense stocks responsible; or, is it more virtuous to have a strong defense to maintain the peace?

Question from professor:  In closing, what is your advice to students?

Single-mindedly focus on truth; do not unquestioningly accept conventional wisdom or political correctness. Businesses must operate in the real world; perforce, focus laser-like on your customers’ needs and wants and the rest will take care of itself.