The next big step within corporate responsibility is being a corporate activist, which means responsibility is brought to the core of a company’s business.
In its recent issue, Financial Times appealed for resetting capitalism as we know it. In the editorial that was published yesterday, the managing editor, Lionel Barber states, that during the decade after financial crisis the capitalist model that relies on the market economy is now feeling the societal pinch, because companies have been focusing on maximizing profit and shareholder value. According to Barber, these old business principles are not sufficient anymore.
The new agenda of financial times came in the wake of the manifest by US Business Roundtable, that widely represents the major companies in the United States. In the manifest signed by many, including Amazon’s Jeff Bezos and Apple’s Tim Cook, is declared that the purpose of a company is also to serve the interests of its employees, customers and the whole community. This was a significant breakaway from Milton Friedman’s old doctrine, according to which the only purpose of a company is to make profit for its shareholders.
The importance of Financial Times for the global economy is hard to overestimate. The aggregate circulation of the printed and digital newspapers is nearly a million, but even more essential is that the paper reaches the central corporate and financial decision makers worldwide. The paper has been the herald of liberal market economy and economic globalization for decades. The things Financial Times writes and declares truly matters.
Well what does this mean then?
Next step: corporate activism
Even though the declarations are only symbolic for now, those publicly proclaim and change what people expect from companies. According to the Edelman Trust Barometer published this year, 76 percent of people think that CEOs should be the drivers of the change, rather than solely wait for the alignments of politicians and governments.
Today, corporate responsibility is not only the statutory CSR report, announcing the past years paper consumption and gender distribution, but companies must be able to take charge regarding much wider matters.
The next step of responsibility might be corporate activism
Actually, time has already passed by the corporate responsibility. A more descriptive idea about what is expected from companies today is crystallized in the concept of corporate citizenship. A corporate citizen is a member of a community who has rights and responsibilities. Same time, the responsibilities of a company as well as the whole purpose of the company’s existence can’t be exclusively related to shareholders, just like the managers of major American companies have recently stated.
The term of corporate citizenship, however, is not particularly very new. It has been considered for decades. The next step of responsibility might be corporate activism, where responsibility creates the core for business. A corporate activist strives continuously to change, not only on his own actions but the actions of the whole industry and surrounding world to right direction. To be part of the solution, not the problem.
Sometimes you need a reform in order to preserve
The agenda of the ongoing democratic presidential primaries in United States has been set down by Bernie Sanders and Elizabeth Warren. They both show a very critical attitude towards major companies and have paid attention to the uneven development of company profits and wages. To be cynical, the alignments of American executives and Financial Times are only small concessions forced by the situation. Barber, the editorial manager of Financial Times adequately refers to a historian, politician and poet Thomas Babington Macaulay: ‘Reform, that you may preserve’.
In any case, it is clear that with climate change and other global challenges ahead, companies can not separate themselves from the rest of the world. Companies need to have continuous interaction with the society and secure that the core of their business and reason to exist serves broader crowd, instead solely their shareholders.
Companies can not separate themselves from the rest of the world
Otherwise there might be no business nor shareholders left.
At the same time there exists a huge opportunity for many companies: when acting as a corporate activist, a company is able to fulfill the wishes of consumers and simultaneously to build its future business, profitability and purpose of existence on a sustainable ground.