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Corporations' responsibilities go beyond their shareholders

You don’t think of Mickey Mouse as being a hostile figure, but Disney didn’t pull its punches in firing its CEO the other day. Earnings and revenue were disappointing, and among the factors that the corporate board apparently blamed for that fact was Disney’s feud with Florida Governor Ron DeSantis – a fight that began when DeSantis pushed through legislation to block classroom conversation about sexual orientation and gender identity, and Disney, which has a lot of LGBTQ employees, pushed back.

That’s just one example of the way that our friends on the right are combatting what they’re calling “woke capitalism.” The folks in MAGAWorld – the supporters of Donald Trump and his progeny -- seem annoyed that a lot of companies over the past few years have begun to pay attention to not only their profit, but also to their impact on society. Lately a lot of corporations are making a point of reporting to investors and consumers about their actions reflecting social responsibility, and they’re luring investors interested in so-called ESG issues — environmental, social and governance matters. This has gotten big: The people who decide how to invest huge pension funds and all sorts of other classes of assets are taking note of the companies that are doing something about climate change or racial and gender equality or economic justice -- and those investors are rewarding those forward-thinking companies with trillions of dollars of investments.

This may strike many Americans as good news, but that’s not how a lot of conservative politicians see it. Climate change, racial and gender equality and economic justice are not high on their agenda, so a pretty strong backlash has developed in some places. Companies that are admired by ESG investors, and employers that have taken stands against state laws limiting their workers’ freedoms, have turned into targets of the right.

West Virginia’s state treasurer, a Republican, is threatening to withdraw the state’s money from any banks that don’t keep their investments in coal. The Utah state treasurer calls ESG investing “corporate cancel culture,” and former Vice President Mike Pence says it’s “left-wing” for businesses to pay attention to those issues and that Republican officials must fight it. And then there’s that Disney versus DeSantis matter.

Maybe the politicians are just doing what they’re told: The Republican uber-donor, Peter Thiel, calls ESG investing “a hate factory for naming enemies.” This is curious: If the phenomenon of a warming globe that imperils the homes, livelihoods and lives of tens of millions of people isn’t an enemy that we ought to name and fight, what is? Combatting climate changes seems not at all like hate; it’s more like loving the only planet we have, isn’t it?

You’d think that it only makes sense for businesses to pay attention to such ESG issues as climate change. And, in fact, that seems to be the emerging view of the federal Securities and Exchange Commission: It is considering a rule that would require businesses to reveal the risks they face from a warming planet. A smart investor surely would demand that sort of information.

And, in fact, smart bosses agree. Three years ago, the Business Roundtable, the organization of major corporate CEOs, declared that corporations exist not just to serve shareholders, but also to benefit stakeholders — including consumers, employees, suppliers and the communities where they operate. It’s not that those CEOs think they’re running charities; they want to make a lot of money, but they recognize that their businesses will thrive only when all of America does. And they know that corporations now have extraordinary power over what goes on in our society.

A lot of hard-right billionaires and politicians like DeSantis, though, remain stuck on the economic philosophy articulated in the 1970s by Milton Friedman, who argued that the only thing corporations ought to do is maximize shareholder value. And that notion has been embraced in corporate boardrooms since the presidency of Ronald Reagan.

Is it coincidence that during these ensuing years, wealth has concentrated at the top of American society, our middle class has shrunk, the chance to save the globe from climate change has shriveled and our political relations have so polarized as to put our democracy itself at risk? Maybe what’s needed now, rather than the legislative assault on corporate social responsibility that Pence and DeSantis and their ilk are suggesting, is an embrace of that very idea by citizens.

It’s not as though a commitment to social responsibility by businesses won’t leave plenty of money for folks who are already wealthy, or for those who aspire to be rich. It’s just honoring the simple notion that we each do better when we all do better.

Rex Smith, the co-host of The Media Project on WAMC, is the former editor of the Times Union of Albany and The Record in Troy. His weekly digital report, The Upstate American, is published by Substack."

The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.

Rex Smith, the co-host of The Media Project on WAMC, is the former editor of the Times Union of Albany and The Record in Troy. His weekly digital report, The Upstate American, is published by Substack."
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