Towards sustainable business

An editorial in yesterday’s Wall Street Journal, The Case against Corporate Social Responsibility, by Professor Aneel Karnani of the University of Michigan’s School of Business, joins a number of other recent well-meaning but uninformed essays critical of corporate responsibility. In July, Chrystia Freeland lit up the blogosphere with her article in the Washington Post suggesting the CR practitioner community is to blame for the Gulf of Mexico oil spill. While legitimate criticism of corporate responsibility is healthy and welcome, suggesting it will destroy the free enterprise system is nothing more than hyperbole.

Karnani’s essay recycles the old Milton Friedman theory that the social responsibilities of a business in a free enterprise system are to make as much as money as possible unencumbered by outside interference from government bureaucracy or a meddlesome civil society. Karnani suggests companies must choose one of two conflicting paths: pursuit of the bottom line or pursuit of social welfare: “Can companies do well by doing good?” asks Karnani. “Yes — sometimes. But the idea that companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed.”

The idea that companies seek to generate profits at the expense of the public interest is the real flawed argument.
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