Has my title intrigued you enough to continue reading?
So one of the topics that has become something of a reoccurring theme in the first couple of weeks of our class is the responsibilities of firms. We have been trying to answer questions such as what should be the top priority of companies? Are they only supposed to be focused on revenues and profits? Or do they owe something more? Do companies exist for something more than just the bottom line? I think that over the past decade or so, we have seen a strong trend which indicates that, in fact, there is something more. I was scanning over some of the recent articles from a Jordi Comas approved blog, The Business Ethics Blog, when I saw a post entitled, How Can Business ‘Give Back’ to Society?. Since this seemed to fit in with one of the themes for the class, I decided to check it out. The post linked to an article in the Vancouver Sun about the CEO of Canadian Pacific Railway (CP). Yes, I too was unfamiliar with the company, but after a quick search on Wolfram Alpha, I found that they had revenues of over $5 Billion and around 16,000 employees. In other words, this is no mom and pop shop. Getting back to the article, its main focus was on how Fred Green, the CEO of the railway, was on the hot seat. CP had seen its operating ratio increase by over 6% in the past year, which in case you don’t know, is not a good thing. Yet despite shareholders calling for his job, Green maintains that a company has more responsibilities than just generating profits. Green told the Sun, “[So] it is absolutely critical that in our drive to productivity, which is essential, that we keep ourselves in balance in regards to the social licence we earned and must earn and re-earn every day”.
I thought it was pretty commendable for a man who may soon lose his job to stick to his, and his companies, morals so steadfastly. Furthermore, his concept of a “social license” brings up a very interesting concept. It is one that Chris McDonald back on The Business Ethics Blog took some time on which to elaborate. His post mainly dealt with different ways for which a company can maintain its social license. He suggests things such as making charitable contributions or avoiding loopholes in the U.S. tax code.
My interest in the article and blog post mainly deals with the concept of a social license. I think it is truly interesting that a CEO would say something like this. It’s hard to imagine a similar situation occurring just 20 years ago. I also think that it is becoming increasingly more common. When looking back at the debate over what the responsibilities of a company are, it is clear that the general public is starting to require some sort of social license. Companies are beginning to not only tout their impressive financial statistics, but also the their societally conscious ones. Firms such as Apple inc. dedicate large portions of their websites to their respective initiatives, while for others such as TOMS Shoes, it is at the core of their mission. While it may be more costly for a company to do things the “right” way, or to put the extra effort that may not be legally required of it, I believe that only good can come out of this movement. As we all know, sometimes when firms focus on solely profits, it can lead to bad things.