{"id":36203,"date":"2019-08-19T10:53:58","date_gmt":"2019-08-19T14:53:58","guid":{"rendered":"https:\/\/www.riacanada.ca\/?p=36203"},"modified":"2019-09-30T10:01:36","modified_gmt":"2019-09-30T14:01:36","slug":"the-purpose-revolution","status":"publish","type":"post","link":"https:\/\/www.riacanada.ca\/wordpress\/magazine\/the-purpose-revolution\/","title":{"rendered":"The Purpose Revolution \u2013 The Friedman Doctrine Is Out; the Stakeholder Doctrine Is In"},"content":{"rendered":"<p>A revolution happened today \u2013 a revolution in how business leaders define their purpose.<\/p>\n<p>In 1970, the economist Milton Friedman <a href=\"http:\/\/umich.edu\/~thecore\/doc\/Friedman.pdf\" target=\"_blank\" rel=\"noopener\">wrote<\/a>: \u201cThere is one and only one social responsibility of business&#8211;to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.&#8221; Friedman went even further by calling social responsibility a \u201cfundamentally subversive doctrine.\u201d<\/p>\n<p>In short, the Friedman Doctrine stipulated that companies should focus solely on maximizing profits while obeying the law. For decades, this thinking has provided the theoretical foundations of how business gets done.<\/p>\n<p>Until now.<\/p>\n<p>Today, the US-based Business Roundtable of 181 CEOs <a href=\"https:\/\/www.businessroundtable.org\/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans\" target=\"_blank\" rel=\"noopener\">announced<\/a> that it has abandoned the Friedman Doctrine and replaced it with a new vision that focuses on a broader set of stakeholders including customers, workers, suppliers and communities in addition to shareholders.<\/p>\n<p>The powerful group \u2013 which includes the CEOs of Apple, Amazon , Goldman Sachs, Bank of America, and ExxonMobil among others \u2013 now says companies should \u201cprotect the environment\u201d and \u201cfoster diversity and inclusion, dignity and respect\u201d for employees while also delivering long-term profits for shareholders.<\/p>\n<p>The demise of the Friedman Doctrine marks a fundamental shift in how business leaders understand the purpose of a corporation. No longer is social responsibility a \u201csubversive doctrine\u201d \u2013 rather, it is part of the very purpose of a corporation, according to those who run 181 of the largest corporations in America.<\/p>\n<p>Responsible Investors have been incorporating environmental, social and governance (ESG) issues into their investment decisions for years because they recognize that well-governed companies with strong performance and social and environmental metrics are likely to be better long-term investments. The Business Roundtable has redefined the purpose of a corporation in line with this thinking.\u00a0This announcement provides leverage for responsible investors who engage with companies on ESG issues.<\/p>\n<p>The Friedman Doctrine is out, and the Stakeholder Doctrine is in. We would love to see a similar statement from the Business Council of Canada (BCC). We will be reaching out to the BCC to start a dialogue.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A revolution happened today \u2013 a revolution in how business leaders define their purpose. In 1970, the economist Milton Friedman wrote: \u201cThere is one and only one social responsibility of business&#8211;to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which [&hellip;]<\/p>\n","protected":false},"author":7472,"featured_media":36215,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Purpose Revolution \u2013 The Friedman Doctrine Is Out; the Stakeholder Doctrine Is In - Responsible Investment Association<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.riacanada.ca\/wordpress\/magazine\/the-purpose-revolution\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Purpose Revolution \u2013 The Friedman Doctrine Is Out; the Stakeholder Doctrine Is In - Responsible Investment Association\" \/>\n<meta property=\"og:description\" content=\"A revolution happened today \u2013 a revolution in how business leaders define their purpose. In 1970, the economist Milton Friedman wrote: \u201cThere is one and only one social responsibility of business&#8211;to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.riacanada.ca\/wordpress\/magazine\/the-purpose-revolution\/\" \/>\n<meta property=\"og:site_name\" content=\"Responsible Investment Association\" \/>\n<meta property=\"article:published_time\" content=\"2019-08-19T14:53:58+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-09-30T14:01:36+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.riacanada.ca\/wordpress\/content\/uploads\/2019\/08\/MF-Background-2.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1610\" \/>\n\t<meta property=\"og:image:height\" content=\"805\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Editor\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Editor\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.riacanada.ca\/wordpress\/magazine\/the-purpose-revolution\/\",\"url\":\"https:\/\/www.riacanada.ca\/wordpress\/magazine\/the-purpose-revolution\/\",\"name\":\"The Purpose Revolution \u2013 The Friedman Doctrine Is Out; the Stakeholder Doctrine Is In - Responsible Investment Association\",\"isPartOf\":{\"@id\":\"https:\/\/www.riacanada.ca\/wordpress\/#website\"},\"datePublished\":\"2019-08-19T14:53:58+00:00\",\"dateModified\":\"2019-09-30T14:01:36+00:00\",\"author\":{\"@id\":\"https:\/\/www.riacanada.ca\/wordpress\/#\/schema\/person\/f2be4012fcff4c43224b4fb6b60e81d4\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.riacanada.ca\/wordpress\/magazine\/the-purpose-revolution\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.riacanada.ca\/wordpress\/magazine\/the-purpose-revolution\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.riacanada.ca\/wordpress\/magazine\/the-purpose-revolution\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.riacanada.ca\/wordpress\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"The Purpose Revolution \u2013 The Friedman Doctrine Is Out; the Stakeholder Doctrine Is In\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.riacanada.ca\/wordpress\/#website\",\"url\":\"https:\/\/www.riacanada.ca\/wordpress\/\",\"name\":\"Responsible Investment Association\",\"description\":\"Canada&#039;s membership network for responsible investment\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.riacanada.ca\/wordpress\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.riacanada.ca\/wordpress\/#\/schema\/person\/f2be4012fcff4c43224b4fb6b60e81d4\",\"name\":\"Editor\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.riacanada.ca\/wordpress\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/3bf09c69911f589161408f2ea70f5b5e?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/3bf09c69911f589161408f2ea70f5b5e?s=96&d=mm&r=g\",\"caption\":\"Editor\"},\"url\":\"https:\/\/www.riacanada.ca\/wordpress\/magazine\/author\/ria-editor\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"The Purpose Revolution \u2013 The Friedman Doctrine Is Out; the Stakeholder Doctrine Is In - Responsible Investment Association","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.riacanada.ca\/wordpress\/magazine\/the-purpose-revolution\/","og_locale":"en_US","og_type":"article","og_title":"The Purpose Revolution \u2013 The Friedman Doctrine Is Out; the Stakeholder Doctrine Is In - Responsible Investment Association","og_description":"A revolution happened today \u2013 a revolution in how business leaders define their purpose. 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