Note on Individuals, Corporations and Society

The importance of responsible value creation is indisputable for society. How could we argue that the well-being of future generations is not important? The disagreement is with the role of corporations in this process. This technical note offers two sides of the argument of whether corporations should be involved in addressing societal issues. The purely economic argument says that a responsible corporation is one which fulfills its fiduciary duty to shareholders to maximize profits. The ethical argument is that corporations are morally obliged to "give back" to the societies in which they exist. Using a sustainability argument, this note shows that there does not have to be a trade-off between economics and ethics. There exists a compelling business case for corporations to operate in the overlapping area of our model where activities are both financially profitable and socially and environmentally responsible. Not only does this "middle ground" exist, but the activities in this area are likely to generate long-term stable profits and result in a higher level of employee, shareholder and corporate well-being.