A Kairos Moment for Just Business in Society

Commentary
By JoAnn Flett 9-01-2017

This present social climate presents a kairos moment for businesses pursuing social justice. In a recent New York Times interview, Apple CEO Tim Cook pointed out, “I think [business leaders] have a moral responsibility to help grow the economy, to help grow jobs, to contribute to this country and to contribute to the other countries that we do business in.” I wholeheartedly agree.

The recent dismantling of the presidential advisory councils — the Manufacturing Council and the Strategy and Policy Forum — may elicit different opinions from the political right and left. Yet the sentiment expressed by Tim Cook is indicative of the fact that the CEOs of our nation’s leading corporations have been afforded an unprecedented opportunity to act in morally justifiable ways regarding their stakeholders. Indeed, the moral responsibility of business has never been more pronounced than now. Business leaders can be the change agents that provide important leadership in this karios moment.

Do CEOs Have a Moral Responsibility?

According to Tim Cook, business leaders do have moral responsibilities. Of course, this may not always be the mainstream sentiment of our leading economic actors, who prefer to maximize shareholder value as their ultimate goal in business. Shareholder value is maximized when profits are maximized. Attaining profits is a worthwhile goal of business, but it is substantively different from the goal of profit maximization.

That goal became accepted wisdom in 1970 when Milton Friedman argued that business leaders had only one social responsibility: to increase profits. A firm’s economic externalities (as long they were legally permissible) like unemployment, under-employment, and pollution were to be of little consequence to business leaders. In this way these social issues representative of market failures caused firms to externalize costs unto society. The pursuit of profit maximization became the norm, and such thinking diminished the need for business leaders to take their moral obligations to society seriously.

It is important to note that business is a social institution — and social institutions have moral obligations. In his book Faith and Fortune , Marc Gunther reminded us that while profits are essential, they represent no more than the fuel to sustain a business. Gunther reported that in 1924, James C. Penney wrote to congratulate a store manager and to praise him and his team in Eureka, Ore., because they had “made the most money that has even been made [in Eureka].” But even as profits mattered to Penney, what mattered to him with equal importance were his Christian values. Significantly, J. C. Penney’s suggestion to the manager and his team was “[that] somewhere in the operations of the Eureka business there is a profit we owe to the public.” Such a reminder is apropos for businesses in society today.

Is There a Profit that Businesses Owe to the Public?

Indeed in one sense the “profit owed to the public” represents the same obligations of economic growth and job creation mentioned by Tim Cook. Yet what is needed is a market reform mechanism that sets higher standards for corporations’ social and environmental performance and transparency. Importantly a group of businesses known as Certified B-Corporations are developing those higher standards for business. Their avowed goal is “to use business as a force for good.”

Setting a higher standard for business is not an easy task but the B-Corporation community is attempting to create pathways that accomplish that goal. B-Lab, the non-profit organization that certifies B-Corporations, wrote an open letter to business leaders over a year ago, long before the election results were conclusive or the presidential advisory councils were formed, or disbanded. The letter issued a clarion call to business leaders that invited them to simultaneously pursue economic and social goals. B-Lab suggested that businesses could take two courses of actions. First, stand up and speak out together and unequivocally when they see injustice, hate, or violence. Second, take concrete actions in their own businesses to create an inclusive economy. By building an inclusive economy businesses can create a society with reduced inequality, lower levels of poverty, a healthier environment, stronger communities, and more high-quality jobs.

All businesses have the ability to touch millions of lives because their decisions can affect employees, suppliers, customers, local communities, and local government. Business leaders are critical change agents for creating a more just economy that embodies social justice as a key element of business’ moral responsibility.

Therefore in response to the demise of the president’s advisory councils, CEOs would do well to convene their own participatory councils working collaboratively with other CEOs, nonprofits like B-Lab, and social justice institutions, like Sojourners, to envision a better future. Collaborative work of this nature would help to build a more inclusive economy. I often pray for our country’s leadership to be reminded that a great country is a country without poverty, rising inequality, under-performing schools, discrimination, and deep-seated racism — indeed, one where all belong to an inescapable network of mutuality because of our shared humanity.

JoAnn Flett is director of Eastern University's MBA in Economic Development.

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