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Government Social Responsibility

Citizens and business leaders have increasingly come to accept that corporations should contribute to the public good, rather than focusing only on maximizing shareholder value. But as demand for more corporate social responsibility has grown, the supply of leadership from governments has shrunk.

NEW YORK – Nowadays, most companies go to great lengths to showcase their environmental, social, and governance (ESG) advocacy alongside their earnings. According to the 2019 Fortune 500 CEO Survey, 44% of business leaders believe that their “company should actively seek to solve major social problems as part of [its] core business strategy.” That is four points higher than the previous year, which suggests that a growing body of CEOs are rejecting the Nobel laureate economist Milton Friedman’s famous dictum that, “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.”

The public also sees a larger role for corporate leaders to play in serving the greater good. According to the 2019 Edelman Trust Barometer, a majority of those polled believe CEOs can effect positive change with respect to gender gaps, prejudice and discrimination, training for the future of work, the environment, data privacy, and other social issues.

Yet, despite the emerging consensus on corporate social responsibility (CSR), one can question how realistic it is to demand that businesses play a central role in addressing economic, social, and environmental challenges. After all, whether corporations’ CSR efforts prove effective will largely depend on governments’ management of the long-term headwinds currently buffeting the world economy.

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