[Issue 098] Unpopular Opinion: I don't care about the "purpose" of companies
Hello beautiful people!
I am officially back from my summer break from ABL, and I'm feeling rejuvenated.
One of my favorite things about stepping away from writing this newsletter for weeks at a time is the opportunity to dramatically reduce my news consumption. Staying informed slowly starts to wear my spirit down, so it's freeing to step away for a bit and focus on other things that give me joy.
It also means that when I'm ready to come back, I'm READY to come back.
And that I am.
Over the past few weeks I've felt particularly excited about jumping back into writing the newsletter for two reasons:
There has been another round of media attention about the "purpose" of companies in society.
I had the opportunity to share my thoughts on the current state of responsible business with a group of executives and discuss their struggles establishing a meaningful corporate responsibility strategy. It was a reminder of why I do what I do and that I'm on the right path.
So let's go ahead and jump into that discussion about the purpose of companies...
Last month the Business Roundtable (BRT), an influential pro-business lobbying group, released a new statement that deprioritizes shareholders in order to include customers, employees, communities, and suppliers.
It may seem minor, but it's a pretty big decision given that the BRT played a significant role—along with our dear Milton Friedman, for my fellow business nerds—in establishing the now dominant doctrine that shareholders always come first. This is often referred to as shareholder primacy. (This podcast episode is an engaging overview if you want to learn more.)
Of course we could—and should—argue about whether this will truly impact how businesses operate, which many folks already have. Ultimately I side with the people who want companies to prove it through their actions.
And in that vain, I took a step back to reflect and realized that we have been having the wrong conversation all along.
We keep debating the "purpose" of companies, which is cute and all but doesn't really get to the heart of the matter: the RESPONSIBILITY of companies.
At their core, the purpose of every company is simply to provide a product or service that people value in exchange for money. There's absolutely nothing wrong with that in theory.
The problem is the exploitation of people and the environment in order to provide that product or service and earn a profit.
The problem is the development and financial support of business models that are dependent on unethical and sometimes even illegal practices.
That's the conversation I want us to be having... one in which we debate what the responsibilities of a corporation are to all of its stakeholders.
What do you think? I'm still sitting with my reflections, and I want to hear from you.
Will the BRT's new statement change anything? If not, what will it take for businesses to recognize their responsibility to society?
Hit reply to share!
Monopoly released its latest version, Ms. Monopoly, calling it "the first game where women make more than men." 🙌🏾
According to USA Today:
The debate over equal pay starts before shuffling the cards, choosing a token and rolling the dice.
The banker doles out $1,900 in Monopoly Money to each female player and $1,500 to each male. The gap continues every time a player passes go with women collecting $240 and men $200.
Earth To CEO: Your Company Is Already At Risk From Climate Change. This article is a call to action for business leaders, as they can "no longer ignore the physical effects of climate change" like the deterioration of global infrastructure, supply chains, land, asset prices, and food systems due to a climate that is rapidly shifting. The author gives steps for business leaders to follow, like assessing and planning all the potential risks to your company because of physical climate change, and to reference climate modeling, and to then protect your assets accordingly. // FORTUNE
Has The Business Roundtable Really Seen The Light. This article, written by Phil Mattera examines the Statement on the Purpose of a Corporation and the claim that is is a major breakthrough that big business is "claiming to do more than maximize returns for shareholders" as asks the question if these statements have real meaning behind them, and if they result in responsible business practices or if they simply let executives pretend to be moral. // INEQUALITY.ORG
British Airways Grounds Nearly All Flights As Pilots Strike. British Airways canceled almost all their flights over a 48 hour period due to a strike by pilots over their pay. British Airways has offered pilots an 11.5% pay rise over three years, but given previous agreements during economic downturns the union wants a bigger share of the company's massive profits. // AP NEWS
California's AB5 Could Transform the Gig Economy In Favor Of Workers. The Assembly Bill 5 (AB5), a bill in California which would mandate that gig workers who meet certain standards be classified as regular employees with benefits, is gaining traction despite intense lobbying from Lyft, Uber, and Doordash, and it is likely that is will pass and be signed into law by Governor Gavin Newsom. The bill would go into effect January 2020 and give gig workers basic labor protections, like a guaranteed minimum wage. // TRIPLE PUNDIT
Apple Accused Of Worker Violations In Chinese Factories By Labor Rights Group. A nonprofit advocacy group, China Labor Watch, has accused Apple and Foxconn of withholding bonus payments, not providing proper safety training, and employing more temporary workers than allowed, along with many other labor violations. China Labor Watch based this information off of observations and documents discovered by undercover investigators working at the iPhone factory in Zhengzhou, China. // THE WASHINGTON POST
People Actually Quit SoulCycle. Since August 8th, when it was reported that one of the owners of SoulCycle, Stephen Ross, hosted a fundraiser to support Donald Trump, there has been a call to boycott the cycling company as well as Equinox, a gym also owned by Ross's company. The boycott has lead to an average decline in sign-ups of 12.8%. Dig into the article to find out why and how this boycott is working. // THE ATLANTIC
He Ran An Empire Of Soap And Mayonnaise. Now He Wants To Reinvent Capitalism.This is an interview with Paul Polman, the retired CEO of Unilever, known for his ambitious plans to cut the company's negative effects on the environment in half while also doubling Unilever's revenue. He has since started Imagine, a business consulting firm with a focus on the environment and social responsibility. // NY TIMES
Pinterest Is Escalating Its Fight Against Anti-Vaxxers As Measles Surge In The U.S.Pinterest, which last year took the step to prevent misinformation about vaccines on its platform by putting a total block on anti-vaccination searches has altered its policy. Now instead of a total block, the searcher lands on a page with pins and information on the importance and safety of vaccines and encourages the user to talk to their doctor if they are looking for medical advice. Pinterest accomplished this by partnering with the World Health Organization. // FAST COMPANY
This week's headlines were curated by ABL's intern, Lora.
And a quick WTF in marketing moment, perfectly captured:
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