'Social Responsibility -- Doing Good While Also Making Money and Protecting Owner Interests' -- Introduction and Questions (Without Answers)

Abstract

There are a huge number of issues surrounding corporate/entity social responsibility. Even understanding “social responsibility” is in this context leads to divergent opinions. For the purposes of this discussion, social responsibility can be described as “Doing Good While Also Making Money And Protecting Owner Interests.” This leads to the next two questions: Who defines the “good” part of “doing good” – the state, the Supreme Court, the business manager, or the business owners? And, who should define “good” in this context?

Clearly “good” includes compliance with the most important legal requirements: in the environmental world, one is to “comply with your waste disposal permits and don’t illegally dump.”

But does “doing good” go beyond strict legal compliance, even when it may have a negative impact on business profitability? Should an entity selling t-shirts or fashion clothes worry about the workers in Bangladesh who make the products in perhaps unsafe or unhealthy conditions?

The letter to its investee companies from Black Rock attempts to define social responsibility and "doing good" for the investee companies with an emphasis on environmental responsibility and diversity - is that appropriate for a non-management investor to require?

Should an entity selling coffee worry about how it is grown and harvested? Should an entity selling beef burritos worry about whether the cattle are slaughtered humanely (assuming that there is, in fact, a humane way to slaughter cattle)? Should the taxi cab company, Uber, or Lyft only authorize hybrid vehicles to carry its logo? Should the state impose business obligations such as minimum wage and mandatory benefits? Should the owner have a say in the business entity’s choices and obligations?

The legal landscape in which these questions must be considered has changed dramatically in the last five years. Consumer attitudes toward many of these issues have also changed. Some businesses are now extolling their social responsibility and their actions “doing good” (according to their definition), while other businesses continue to consider that to be a secondary consideration, at best.

This has been updated to include a lengthy discussion of the U.S. Supreme Court of the Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission case decided on June 4, 2018, and some of the more than 80 amici briefs filed addressing the issues presented.

Keywords: social responsibility, profit maximimization, marketing, corporate phlianthropy