The Weekender: A recent history of the "good company"
Image credit: AP Photo from The Conversation
"Should companies be doing more to make the world a better place?"
The Weekender features a longer form article from a reputable source. We select articles that discuss issues and opportunities we deem just off the radar for many business people, students, and faculty. Sit back and enjoy. Have a great weekend!
This article from The Conversation traces the recent history of the notion of the "good company" and is by Marina Whitman, Professor of Business Administration and Public Policy, University of Michigan.
"Earlier in my career, in the 1980s, when companies were putting shareholder value first and profits were tight, I was a senior executive at General Motors during a period of wrenching downsizing. I convinced my bosses that doing a little good, even amid plant closings and layoffs, could make a real difference for hard-hit communities, and so we donated to local charities to mitigate some of the pain."
"In 1993, journalist Robert Samuelson drove the point home by publishing an 'obituary' in Newsweek headlined 'R.I.P.: The Good Corporation,' concluding bleakly that, 'We thought all companies could marry efficiency and social responsibility. We were wrong.'"
"While environmental and other more traditional activists have had some impact, it’s the major institutional investors that are the more effective conduit to force corporate change since they manage nearly 70 percent of all publicly listed U.S. securities.
For example on climate change, financial firms that collectively own more than $26 trillion in assets have been pressuring the world’s biggest emitters to cut emissions and disclose more of the risks. Their pressure has worked, as oil companies such as Exxon Mobil and others have promised to do both."
"I would argue, however, that today the choice between satisfying shareholders and serving a public service should be an easier one for most companies. That’s because the biggest companies in the U.S. are sitting on a record pile of cash and making some of the biggest profits on record."