Corporate Virtue in Eye of Beholder


I’m making my way through former business school professor James O’Toole’s weighty tome “The Enlightened Capitalists,” and I keep seeing news stories that intersect with his arguments about ethical business practices. Last week I mentioned the book in the context of a recent panel discussion here in Washington, D.C. about corporate social responsibility and shareholder rights, and I thought about it again today, reading a Washington Post story about Salesforce’s decision not to offer software services to companies that sell certain types of firearms and accessories.  

The main impression I’ve gotten from much recent reporting on the ethical behavior and social responsibility of business is that its value depends greatly on one’s point of view. Some of the practices that O’Toole describes—like paying workers higher that the industry standard—are likely to be fairly uncontroversial. Shareholders might prefer that same money go to them as dividends instead, but no one is going to question that at least the workers themselves benefit from that change. Other forays into corporate do-gooding and virtue-signaling, however, are more ambiguous.

While paying workers more may set many heads nodding in agreement, the “I think we can all agree” consensus falls apart pretty quickly as companies branch out across the policy spectrum. Second Amendment advocates were not fans of the recent anti-gun Salesforce decision, nor of the decision by Dick’s Sporting Goods to stop selling firearms at 125 of its stores (or of Walmart’s decision not to sell guns or ammunition to anyone under 21). Many of those same conservatives, however, were likely enthusiastic supporters of the anti-contraception healthcare policy that led to the Supreme Court’s 2014 decision in Burwell v. Hobby Lobby, or of the Texas legislature’s recent “Save Chick-fil-A” bill, which would preempt local anti-discrimination ordinances on similar freedom of conscience grounds.

People of all political stripes will tell pollsters that corporations should “stand up for what’s right,” but just like in politics, the question of what’s “right” is up for debate. Many Ben & Jerry’s customers are happy to patronize a brand that has a famous reputation for corporate activism, but the company’s campaigns have had plenty of detractors as well. The Competitive Enterprise Institute’s own Sam Kazman took the company to task (and named them in a formal complaint to the Federal Trade Commission) in 1999 over the company’s PR scaremongering about dioxin. The company bragged that their packaging was free of the chemical commonly used to bleach paper products, but neglected to mention that their ice cream itself contained trace amounts.   

And that’s just one example. Ben and Jerry’s has also publicly campaigned against oil production in the Arctic National Wildlife Refuge (which large coalitions have supported for decades), milk and meat from cloned animals (the Food and Drug Administration was smart to approve them in 2008), and genetically modified foods in general (over 100 Nobel laureates strongly disagree). Clearly, not all corporate activism is equally good, and not every CEO who makes policy on the basis of heartfelt principle rather than profit potential is making a good decision.

No one involved in these debates wants corporate America to wade into divisive political fights just for the sake of civic engagement—they want CEOs who are going to support their own policy preferences to throw their firm’s weight behind the “correct” side of an issue. Which is fine—especially since the 2010 decision in Citizens United v. FEC, which affirmed that political spending by corporations is protected speech. But we should all stop pretending that we’re trying to hold companies to some ideal, independent standard of good conduct when we really just want them to agree with our own political goals.