by Ace Stryker, MBA ‘16
On a trip to NYC SGE students heard from startups and Fortune 50 companies, from entrepreneurs and investment bankers, from real estate developers and ice cream makers, all of whom shared a passion for finding opportunity at the intersection of financial return and social/environmental impact.
Milton Friedman famously argued in his 1962 book, Capitalism and Freedom, that “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, which is to say, engages in open and free competition without deception or fraud.”
In other words, a business should not concern itself with curing a social or environmental ill unless its effort were part of a profit-generating play. It shouldn’t behave unethically, by which he meant it shouldn’t break the law, but it also shouldn’t aspire to broaden its ethics to include anything more than turning a dollar into more dollars. If a company were doing that, he argued, it was fulfilling its purpose as ethically as possible. Social and environmental problems were the province of the individual shareholder, who could decide how best to allocate the wealth returned to her as her holdings flourished.
In the 52 years since those words were committed to paper, the Friedman doctrine has become religion to the American manager. Commerce has boomed, an increasing number and diversity of investors have ridden the wave to prosperity, and Friedman accepted the Nobel Memorial Prize in Economic Sciences in 1976.
What’s unclear is whether the growth of industry has corresponded with a surge of solutions to social and environmental problems. GDP per capita has increased by more than 1,700 percent in the half-century since Capitalism and Freedom hit the stands, but by most measures we now face greater social and environmental problems than before. Income inequality is growing, social and economic mobility is diminishing, and climate change is not just on the doorstep but has, in fact, looted your fridge and is now on the living room couch making a drippy sandwich.
Enter a new class of company. Call it a social enterprise, a benefit corporation or a triple-bottom-line business. Whatever the name, it’s the foil of Friedman’s responsible enterprise: an entity that explicitly considers things other than shareholder profit. But make no mistake, these are not your grandma’s nonprofits, relying on the beneficence of others to fund projects to tackle the planet’s most intractable problems. These are businesses, and they exist to tap into market opportunities to generate profit while also making the world a better place.
It was these companies that students in the Sustainable Global Enterprise Immersion at the Samuel Curtis Johnson Graduate School of Management at Cornell University visited and talked with during their annual New York City trek in February. Over the course of three days, students heard from startups and Fortune 50 companies, from entrepreneurs and investment bankers, from real estate developers and ice cream makers, all of whom shared a passion for finding opportunity at the intersection of financial return and social/environmental impact.
Among the company reps were the following:
- Fig Food Founder and CEO Joel Henry (AB ’86), who talked about the growth of his company on the promise of yummy food, sustainably sourced
- Recyclebank CFO Kathy Butkevich, who talked about her company’s efforts to partner with cities to gamify recycling in a way that incentivizes good behavior with points than can be redeemed for fun deals and discounts on goods and services
- Dalberg Global Development Advisors Portfolio Manager Dan Zook (MBA ’07) and Senior Project Manager CJ Fonzi (MBA ’08), who discussed the work they’re doing applying top-flight management consulting skills to social challenges
- Greyston Bakery Director of Business Development Ariel Hauptman and Account Manager Sunitha Malieckal, who shared how their hire-anyone-who-walks-through-the-door policy has changed lives and supported a consistently high-quality product featured in Ben & Jerry’s ice cream flavors
- Radiator Labs Founder & CEO Marshall Cox (BS ’02, MENG ’04), who talked about how a relatively simple idea has created the opportunity for massive energy savings in steam-heated buildings in New York City
- MTA New York City Transit Chief of Innovation and Technology Thomas Lamb (ChemE ’75), who flew through a list of experimental projects with the zeal of a mad scientist. Many were covered by a non-disclosure agreement, but one 2013 project that has become public knowledge involved inducing early menopause in subway rats (I know, but really, it happened) to reduce population