But this dichotomy between “wokeness” and capitalism is both simplistic and increasingly out of step with corporate reality. Many companies are embedding social, environmental and ethical considerations into their business strategies – not in spite of profit, but because it contributes to long-term value creation.

Understanding this shift – and the backlash to it – is fundamental to grasping modern corporate responsibility.

For decades, shareholder primacy prevailed in global business. This principle was famously reinforced in court decisions such as the 1919 Dodge v Ford case in the United States. Henry Ford was found to have a duty to operate his company in the interests of shareholders. It was later popularised by Milton Friedman, who declared that “the social responsibility of business is to increase its profits”.

A stark example of this tension came with the ousting of Emmanuel Faber, chief executive of food giant Danone in 2021. Faber was accused by some shareholders of failing to “strike the right balance between shareholder value creation and sustainability”. His critics felt he focused too much on people, the planet and social responsibility and not enough on profits.

Yet corporate law has begun to evolve. In the United Kingdom, section 172 of the Companies Act 2006 still requires directors to promote the success of the company “for the benefit of its members”. But the legislation also requires directors to consider employees, suppliers, communities and environmental outcomes.

The post ‘Go woke, go broke’ is no longer true. Socially aware capitalism is the future of corporate responsibility first appeared on ESG Foundation.

The post ‘Go woke, go broke’ is no longer true. Socially aware capitalism is the future of corporate responsibility appeared first on ESG Foundation.