The Long-Term Business Case for Corporate Purpose

Business leaders don’t have to choose between their values and creating value

Photo by Yosef Futsum on Unsplash

It is a phenomenon known as the “war on woke”: the political backlash against investments in companies with a corporate purpose beyond profit maximization. Some U.S. lawmakers have argued that environmental, social, and governance (ESG) investing undermines financial returns. However, a new paper by Wharton management professor Witold Henisz sets out the long-term business case for managers to pursue a wider purpose that contributes to societal goals, even as they face pushback from some in Washington.

“There’s been a big debate about whether firms should maximize shareholder value or focus on a broader purpose, but those two aims are not necessarily in conflict,” says Henisz, the vice dean and faculty director of Wharton’s ESG Initiative. “Managers don’t have to choose between value and values.”

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Exceptional

"It is a phenomenon known as the “war on woke”: the political backlash against investments in companies with a corporate purpose beyond profit maximization."

I struggle to fathom the level of dishonesty it takes to write an essay where you use the very first sentence to describe the opposition to your thesis in this way.

Yes, all those silly Americans who, bless their hearts, just can't appreciate a company that violates its fiduciary duty in order to advance radical, society-reshaping politics everywhere, all of the time, contrary to the values and interests of its shareholders and the public at large.

Also, this article, like ESG, has nothing to do with quality. America still suffers from a "You burn the toast; I'll scrape it" approach to quality, inasmuch as we still make anything at all here. So much waste occurs because engineers and managers alike struggle to understand the difference between process statistics and traditional enumerative methods, which is square one of being honest with data to gain insight. They struggle because universities do not teach Shewhart, and if universities touch on process behavior charts at all, they will invariably use a textbook written by an academic statistician who didn't understand Shewhart either (You will see Dr. Donald J. Wheeler's "Myths About Process Behavior Charts," inventoried in his September 2011 Quality Digest article, ignorantly propagated almost universally in the textbooks used by top-50 engineering departments in the United States).

Long-winded here, but I believe this is germane to the topic: widespread ignorance of process statistics is a crisis in education, a crisis in management, and a crisis in quality. I find it deeply troubling that those at top table are preoccupied with so much else, and that the "so much else" is finding excuses not to maximize shareholder value; a company's fiduciary duty to its shareholders is one of the few mechanisms of accountability that the public has to rein in corporate excesses. A lot of the most shady things a bad actor can do through a corporation are things that are against its fiduciary duty; ESG is a smokescreen to make powerful people less accountable to the public. Not good for quality.