Are companies responsible for creating jobs?

From today's Wall Street Journal. Check it out on the web for a video and a lot of right wing comments. Maybe add some balanced comments?

For anyone stepping gingerly through the encampment of Occupy Wall Street in Manhattan, it might be easy to dismiss the protest as just a living diorama of a 1960s Happening. That is, were it not for its intriguing challenge to American business, and Milton Friedman.

Let's stipulate that the demonstrators have a fuzzy agenda. It's a smorgasbord of gripes ranging from income inequality to poor housing to executive pay—viewed as out of touch with executive value, which maybe we should stipulate too. The protest is diffuse, and young, and cohabitating under tarps. A passerby guiding his three children through the thicket of tents is overheard saying to his wife: "Let's get outta here before the kids see something they shouldn't."

But what about one of the group's chief beefs: that business is falling short of its social responsibility, including creating jobs at home? Some politicians have given a nod of legitimacy to the protests. A CNN poll found that 32% of Americans favor the demonstrations while many others are still making up their minds.

Milton Friedman, the Nobel laureate economist, blasted the very idea of corporate social responsibility four decades ago, calling it a "fundamentally subversive doctrine." Speaking for many capitalists then and now, he said, "there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game."

Companies shouldn't spend profits on unrelated job creation or social causes, he said. That money should go to shareholders—the owners of the companies. Pronouncements about corporate social responsibility, he added, are the indulgence of "pontificating executives" who are "incredibly shortsighted and muddleheaded in matters that are outside their businesses." And that indulgence can lead to inefficient markets.

What then to make of Howard Schultz, the chief executive of Starbucks, who in a letter earlier this month to fellow business leaders asked them to help "get Americans back to work and our economy growing again."

He described Starbucks's own growth and hiring plans—a net of several thousand new jobs—and announced a $5 million donation by the Starbucks Foundation to a group that helps finance local businesses. Starbucks will also encourage customers and employees to donate. He's calling the program "Create Jobs for USA." Occupy Wall Street would like this.

In a blog post last week, Mr. Schultz elbowed aside Mr. Friedman's triumph of profit: "Companies that hold on to the old-school, singular view of limiting their responsibilities to making a profit will not only discover it is a shallow goal but an unsustainable one," the post on the Harvard Business Review website read. "Values increasingly drive consumer and employee loyalties. Money and talent will follow those companies whose values are compatible."

Occupy Wall Street has challenged American companies to create jobs, not just profits, and that appeals to some CEOs. Is this just window dressing, a new spin on PR and marketing? A group of CEOs and executives from large companies, including Exxon, Cisco and McDonald's, echo Mr. Schultz's view, though perhaps with a tighter link between largess and corporate self interest.

The group, through their New York-based Committee Encouraging Corporate Philanthropy, highlights projects such as Wal-Mart's effort to reduce packaging in its supply chain (good for the environment, good for Wal-Mart's costs); IBM's "Service Corps," which sends young executives to help developing countries (good for the countries, good for scouting for future IBM business) and PepsiCo's program to train corn farmers in Mexico (good for the farmers, good for PepsiCo, which needed an improved supply of corn).

To do it right, the group says, companies should pick issues that "are integral to the achievement of larger business goals...issues that drive growth or reduce costs" and also help society. That's a higher bar than pure charity.

John Mackey, co-chief executive of Whole Foods, goes a bit farther. In a duel with Mr. Friedman in an issue of Reason magazine in 2005, he wrote: "From an investor's perspective, the purpose of the business is to maximize profits. But that's not the purpose for other stakeholders—for customers, employees, suppliers and the community. Each of those groups will define the purpose of the business in terms of its own needs and desires, and each perspective is valid and legitimate."

In that exchange, Mr. Friedman acknowledged the value of corporate goodwill in a community—and tending to it—and counseled business to stick to a tight definition of shareholder interest.

Mr. Friedman died the following year, but clearly his ideas on the subject didn't. Economic growth creates jobs, not the other way around, his adherents say. And it helps if government regulates less.

"Jobs are an input, not an output; they're a cost of doing business, not a goal of doing business," says William Frezza, a Boston-based venture capitalist and fellow at the Competitive Enterprise Institute.
"From the perspective of defending capitalism, if you accept the premise of your opponent that business has to give back to society, you've already lost," he says. "To put sack cloth and ashes on—you've delegitimized capitalism, which is the goal of the protesters. Businesses give back to society every day by pleasing their customers and employing their employees. There's nothing business owes other than selling the best product at the best price."

Down at the demonstration, they've broken out the incense and are starting the drum-athon again.

Over at Starbucks, Mr. Schultz is counseling his fellow CEOs that "business leaders have to step up and do our part."

And across America, the 14 million unemployed are waiting for someone to be right.

Write to John Bussey at john.bussey@wsj.com

Investors need more information on SRI: survey

A new survey reveals that only 10% of Canadian investors have made a socially responsible investment. Just 15% of those surveyed by Ipsos Reid for Standard Life said they knew a lot or a fair bit about SRI. Four in ten investors reported they had never heard of SRI and 43% said they were aware of SRI, but knew little about it.

"SRIs can become a much more important part of investing for both investors and advisors alike, but first investors must have more information and better accessibility to this type of investment,” says Standard Life’s Anna del Balso. “Advisors who take the time to understand their clients' environmental and social values and provide investment opportunities that align with those beliefs may achieve sales and reputational gains."

Despite the lack of awareness, investors are generally favourable to SRI, the survey suggests. One third said they were very or somewhat interested in SRI and 55% indicated that they would consider SRI if the return was "as good or better" than other investments.

For those already invested in SRI, satisfaction levels are high. Ninety-two per cent said they were satisfied with the performance of their responsible investments and 70% said they were equally satisfied with the performance of their SRIs compared to their other investments.

Eighty per cent of advisors said they were satisfied with the performance of SRIs under their management. The majority of Canadians (54%) who have discussed SRI with their advisor raised the topic themselves.

“Despite not raising the topic of SRIs more spontaneously with investors, once the subject has been raised, in only 15% of instances does it result in a negative commentary from the advisor, and 61% of cases result in both a positive commentary and a recommendation to purchase,” the survey notes.

Ipsos Reid surveyed 1,029 adults and 537 advisors in August and September of 2011.

Anothe female CEO

News that Virginia Rometty is slated to become the new CEO of IBM has made headlines.
'A new record has been set for female leadership: More women are slated to take the reins of Fortune 500 companies than ever before.' trumpets USA Today.
'In naming female CEO, IBM passes gender milestone' says the San Francisco Chronicle

The sad truth behind these claims is that with the addition of Rometty, a mere 17 Fortune 500 companies will be led by women.

According to a recent Catalyst report, in Canada things are no better. Twenty six of the Financial Post 500 companies are headed by women, but this includes government entities and private companies. And still, this is only 5.2%.

Last year, the Globe and Mail ran a series of articles on women and power, and concluded 'Canada is a laggard when it comes to promoting women as leaders of organizations. This should not be seen as a women’s issue, but as a matter of competitiveness and innovation. By shutting out more than half the population, Canadian companies, government agencies, businesses and institutions are robbing themselves of talent.'

You hear that, guys?

Watch these videos for advice from 10 Canadian women in power on how to get to the top.

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Canadian corporations addressing carbon challenge: report

Canada’s largest corporations are paying greater attention to carbon-related issues, such as climate change and greenhouse gas emissions, according to the Carbon Disclosure Project’s annual report on Canada.

The CDP sent its annual investor information request form to 200 of Canada’s largest corporations – 108 firms responded. Three-quarters of respondents reported having integrated climate change into their overall business strategy, “confirming a commitment to long-term, sustainable growth amidst regulatory uncertainty and the physical effects of a changing climate.”

In addition, over 85% of reporting companies are disclosing climate change and GHG emissions performance either via their annual reports or other communications. “These results indicate climate change is an important consideration in Canadian companies’ future strategic planning,” the report states.

Despite the increased disclosure, only one-third of companies have set active GHG reduction targets and only 30% report having dedicated budgets for energy efficiency or emissions reduction activities.

Ninety-one of the 108 companies reported a cumulative 425 emission reduction activities that were either underway or completed, demonstrating that companies are planning and implementing energy reduction initiatives to reduce this growing operating expense, the report said.

More than 85% of respondents reported that senior managers or board committees have responsibility for climate change, up from 75% in 2010 and indicating an increasing trend in senior management engagement in climate change governance.

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