I'm currently taking a class on compensation. One of our recent classes was on ESG, gender, and race. For the uninitiated, ESG stands for Environmental, Social, and Governance. It's a set of criteria used to evaluate a company's operations and performance in terms of sustainability and ethical impact. We started the class talking about Milton Friedman's essay from 1970, where he argued that the social responsibility of any business is to maximize profits, not to promote social good, have a diverse set of employees, etc. I think that all behavior, both conscious and unconscious, is rooted in wanting to be in alignment with how we understand reality. Many professions are chosen because of their promise in helping us to understand. Stem cell researchers get into their field to investigate the fundamental building blocks of life, seeking answers to questions about the essence of existence. Quantum physicists aim to understand the nature of reality by studying tiny particles and forces in the universe. Historians examine change, seeking to understand the essence of human existence and the forces that shape our world. So, in a business school class on compensation, we're not really debating the social responsibilities of a company. We're debating how we understand the world. The professor had us take anonymous surveys, and we found that the class was split on the topic of whether the social responsibilities of a company were solely profit or something else. It was actually a spectrum of responses but for the purpose of this essay, I'll collapse the argument that companies should focus only on profit as fiscally conservative and the argument that companies have responsibilities towards ESG, gender, and race, as fiscally liberal. A fiscally conservative classmate defended his position by saying that ethics is always going to be gray as there will always be a winner and a loser, so agents (companies) don't have any business trying to be ethical. That's why we have institutions like the government to give us laws to cooperate in our society. I disagree. It might be possible to set ethical norms within a family or amongst friends, but it's pretty much impossible with larger organizations. We've agreed on a social contract that the government will guide us through laws. But do we really plan on abiding by those laws? Isn't it the case that we try to pay the least amount of taxes possible? We have no incentive to be any more moral than the most moral criminal and the least moral citizen. We say we abide by the government's laws, but really we undermine them. So when the claim is made that one will abide by the ethical norms set by the government, what I'm hearing is that they're just offloading moral responsibility to another entity - an entity they plan on undermining. A fiscally liberal classmate defended her response with the example of "big sugar." If the sugar industry were driven purely by profit, their sole focus would be on how to market an addictive product to a vulnerable population, knowing they’re contributing to rising rates of obesity, diabetes, and other health issues. I also disagree. Yes, I don't like big sugar. Every day we inch towards the world of Wall-E. But companies like Pfizer and Moderna, as despicable as the pharmaceutical industry is, developed COVID-19 vaccines rapidly in response to the pandemic. Their prior pursuit of profit resulted in vaccines that saved millions of lives. Amazon has arguably the most efficient logistics and distribution systems in the world. By focusing on profit, they've created a world in which consumers have two-day access to goods, while creating jobs in the process. Is it not the case that the world we live in today is better than it used to be? Lifespans have increased dramatically and access to education has expanded to millions more people globally. These advancements are, in part, driven by profit-seeking enterprises that innovate and push the boundaries of what is possible. Companies have a responsibility to maximize profits. They are backed by shareholders who have taken the risk to invest their own wealth. But I would place profit maximization as a second priority. The first priority should be something like trying to be a good team player. And not just companies - we should all try to be better team players as individuals. That is much easier said than done. Sometimes, to achieve a greater good, morally ambiguous sacrifices must be made. That's why I feel empathy for both sides. Morality is hard to navigate, and at some point, you need to draw a line in the sand to move forward. Both sides are motivated by a desire to see a thriving society. Both sides hold healthy skepticism towards simplistic solutions. One doubts the feasibility of businesses enforcing their own ethical standards uniformly, while the other doubts that a profit-maximizing company can be an ethical agent. Who is more right? I don't know. But I do know that we should all try to be better people, however we define better.