Opinion | How can businesses help the climate change fight? They can’t, so government must force them
- Promoting sustainability for businesses is misdirected effort
- Governments define the framework in which businesses operate, so they must exert their influence to get firms to act in ways that are otherwise unprofitable
When there is so much talk in business about transparency, compassion and environmental responsibility, the answer might not be what most people might expect. When it comes to climate change, there is not much businesses can do.
This is because businesses have no inherent interest in what is good for society, other than ensuring there are future customers. Business goals are defined by whatever generates the highest short-term financial return. That is not a value judgment. It is simply the reality of the current economic system.
Milton Friedman, the father of modern economics, said the only social responsibility of a business is to increase its profits as much as possible. It is a cast-iron rule, and well-intended ideas about sustainability or ethical governance don’t change that.
Despite all the talk about morality in business, companies will always choose the most profitable path because any company which fails to maximise profits loses market share. A rival that cuts costs by whatever means, even wrecking the planet, has a competitive advantage. In the long run, a less ethical company will beat a higher-minded competitor by growing faster and more profitably.
