‘Corporate social responsibility’ is a flawed concept. What we really need is ‘corporate accountability’

Jane Hoffman

In his widely read 1970 article about the role of business in society, economist Milton Friedman justified the old adage that “the business of business is business” so confidently that more than 50 years later, according to the New York Times (which <a href="https://www.nytimes.com/2020/09/13/business/dealbook/milton-friedman-essay-anniversary.html">published</a> the original piece), “his theories on the primacy of shareholders and the priority of profits still hold sway over large parts of the corporate world.”&nbsp;<div class="paywall-selector"></div><div class="paywall">



Friedman’s most famous line claims that in a free society, “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.”



In a country grappling with extreme weather events, post-pandemic fallout, rising income inequality, escalating social divisions, media flooded with misinformation, and untested applications of artificial intelligence, that definition isn’t good enough.



People know that complex issues intersect and that no single approach will do. While businesses have developed corporate social responsibility (CSR) programs—efforts to positively impact society—to conform to the expanding public interest in these issues, those programs often face warranted criticism. Approaches to CSR can be sidelined into irrelevance by the same conventions that bog down corporate culture in the first place.



We see greenwashing—flashy yet hollow sustainability efforts designed to make a company look good. We see graphics about carbon-neutral goals that spell out a different story in the fine print. We recognize how the good impact of a “green” product is cancelled out by the deep carbon footprint of its manufacturing process.



<h2 class="wp-block-heading">Revamping CSR</h2>



Such behaviors show that although the CSR movement has been evolving for decades, it is still an extracurricular activity. In fact, in some of our largest industries, CSR programs are far outpaced by the societal harms at the core of their businesses. That’s why we must revamp the CSR concept to emphasize the necessary scope of companies’ obligations. How can this be done?



One way is to change “responsibility” to “accountability.” This would call out the flaw in Friedman’s doctrine and position the business sector as a fundamental actor in society—like the rest of our institutions and individual citizens.



Corporate accountability signals that businesses have obligations to society to which they are obligated, liable, and answerable. Accountability means living up to a business’s fundamental role as a member of society instead of as a hovering outsider cut off from the source that makes its existence possible.



The outsider status embedded in Friedman’s ideology is a convenient justification for irresponsibility and unaccountability. It is not aligned with established development models in any other sector of human life but is instead stuck at a novice stage. Just as children eventually grow out of their focused self-interest and develop a “<a href="https://jyd.pitt.edu/ojs/jyd/article/view/171204FA001">pro-social</a> adult sensibility,” the corporate mindset needs to move beyond Friedman’s call to “increase profits” and ignore everything else. In short, corporate accountability means challenging corporate citizens to come of age.



Companies already embracing this more highly invested approach are leading the way to a new era of corporate accountability. Along with its political activism, Ben &amp; Jerry’s <a href="https://www.benjerry.com/values/issues-we-care-about">seeks to</a> “eliminate injustices in our communities by integrating these concerns into our day-to-day business activities.” In 2022, sportswear giant <a href="https://www.theguardian.com/us-news/2022/sep/14/patagonias-billionaire-owner-gives-away-company-to-fight-climate-crisis-yvon-chouinard">Patagonia</a> began transferring every dollar of its profit to a nonprofit the company’s founder, Yvon Chouinard, set up “to fight the environmental crisis, protect nature and biodiversity, and support thriving communities.”



These companies represent a paradigm shift from corporate responsibility to corporate accountability. A socially accountable corporate sector obligates itself to factor in all stakeholder groups, ecological concerns, and ethical considerations to its mission, which is what most of the population expects. Seventy percent of Americans believe it’s either “somewhat” or “very important” for companies to make the world a better place.



<h2 class="wp-block-heading">Foundational commitments, not fads</h2>



Rather than dreaming up ways to sound more sustainable than their operations actually are—or more equitable than the retainment trends of their employees of color attest—companies committed to corporate accountability will redefine their purpose to include improving society and the environment.



Measuring the impact of CSR remains tricky, and assessing the impact of corporate accountability requires another shift in our thinking. So far, companies find that investing in messaging about their CSR programs garners more consumer <a href="https://journals.sagepub.com/doi/abs/10.1177/2278533721992206?journalCode=bpra">respect</a> and trust and can lead to favorable ratings from investment firms. The investment world’s ranking system for a company’s environmental, social, and governance (ESG) profile became standard as CSR developed. The higher the ESG rating, the more attractive the company may be for socially conscious investors. But since the returns thus far haven’t been as stellar as hoped, ESG profiling is on the <a href="https://www.wsj.com/finance/investing/esg-branding-wall-street-0a487105">cutting block</a> at one investment firm after another. The concept of corporate responsibility is rooted in the profit-first-regardless-of-the-consequences model, and since the returns are winding down, the CSR fad is fading.



In this time of climate crisis and complex social challenges, businesses’ role in society requires foundational commitments, not fads.&nbsp; &nbsp;



These realities demand a new mindset about the role of business in society. Naming that mindset “corporate accountability” captures the required expanded nature of a company’s obligation to look at the bigger picture, ensuring every facet of its operations enriches the <a href="https://fortune.com/company/coach/" target="_blank">tapestry</a> of our society. This is a down-to-earth, roll-up-your-sleeves approach with the potential to influence business leaders and policy makers as powerfully as did the Friedman doctrine, but in another direction.



The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.



<a id="_msocom_1"></a></div>

Just as children outgrow their focused self-interest, corporate accountability means challenging companies to come of age.

Corporate social responsibility is flawed. We need corporate accountability

Did your workplace make our list of the World's Most Admired Companies?
<a href="https://fortune.com/ranking/worlds-most-admired-companies/?&itm_source=fortune&itm_medium=article_tout&itm_campaign=DecJanMag">Explore this year's list.</a>

F-Partnership

corporate social responsibility

Commentary

Corporate social responsibility is flawed. We need corporate accountability | Fortune

Steve H. Hanke

Caleb Hofmann

China's Premier Li Qiang prepares to speak at the National People's Congress in Beijing last week.

China has only one real way to hit its 2025 growth target

/2025/03/11/china-gdp-economy-stimulus/

Rosan Roeslani

Rosan Roeslani, Indonesia's minister of investment.

Indonesia’s new sovereign wealth fund—at nearly $1 trillion—heralds an economic powerhouse taking full control of its resources

/2025/03/11/indonesia-danantara-sovereign-wealth-fund/

/2025/03/10/corporate-social-responsibility-accountability/

Michelle Werner

My son’s rare disease diagnosis spurred me to ditch Big Pharma for a biotech startup

/2025/03/10/rare-disease-big-pharma-biotech-startup/

Josh Hoffman

Kevin Katari

The California crisis in homeowners insurance has only one real solution

/2025/03/10/california-homeowners-insurance-crisis/

Cully Cavness

AI innovation isn’t a climate threat, it’s our best hope

/2025/03/10/ai-climate-change-energy-tech/

Ani Freedman

This gastroenterologist says probiotics are 'a waste of money.' Here’s what you should be doing instead

https://fortune.com/well/article/probiotics-bloating-gut-health-fiber-diet/?itm_source=parsely-api

https://fortune.com/2025/03/10/california-homeowners-insurance-crisis/?itm_source=parsely-api

Phil Wahba

Here’s why the CEOs of major retailers like Walmart, Gap and Target are sounding so calm about Trump’s tariff standoff

https://fortune.com/2025/03/10/trump-tariffs-retail-ceos-react-soun-calm-walmart-gap-target-home-depot/?itm_source=parsely-api

Eleanor Pringle

Heiress Lynsi Snyder became President of In-N-Out aged 27. She's been betrayed by colleagues but refuses to have 'emotional distance' with her team 

https://fortune.com/2025/03/10/heiress-lynsi-snyder-in-n-out-burgers-leadership-staff-relationships/?itm_source=parsely-api

Sasha Rogelberg

Fired NIH workers fear bleak job prospects in the private sector because their research is too specific to be retrofitted: 'No VC is going to fund that'

https://fortune.com/2025/03/11/fired-nih-workers-bleak-jobs-private-sector/?itm_source=parsely-api

Beatrice Nolan

Elon Musk's DOGE is reportedly automating government tasks with an AI chatbot as it continues to slash the federal workforce

https://fortune.com/2025/03/10/elon-musk-doge-automating-government-tasks-ai-chatbot-slash-federal-workforce/?itm_source=parsely-api