The second of three Company Snapshots, these research-based pieces by guest author Jessica Guo look at aspects of successful companies that can be examined for strategy and information of benefit to both active businesses and the academics that study them. See our first company snapshot examining culture and values at Costco.

Company Snapshots: “Don’t Buy Our Products” – Ethics at Patagonia
 

When asked what he thought made a good company, Yvon Chouinard replied with one word: responsibility.

Despite being the founder of a retail consumer brand company Patagonia, Chouinard is also a conservationist who advocates for anti-consumerism. He believes that Patagonia has “made a contract with our customers to make clothing as responsibly as possible.” To that end, Chouinard actively encourages his consumers to “think twice before you buy a product from us. Do you really need it or are you just bored and want to buy something?”

In 1970 Milton Friedman wrote a now famous essay in the NY Times Magazine declaring that the social responsibility of business is to increase its profits.  Since then, writers and researchers have been debating whether this accurately reflects the responsibilities of business in society.  In the decade since the Global Financial Crisis these debates have become particularly critical, with some participants questioning the basic principles of free market capitalism and whether they serve our current societal needs.

But what if the best way to do right by shareholders was to run a socially responsible business? 

New findings by JUST Capital are showing that this is often the case.  JUST Capital is a non-profit research organization whose mission is “to build a more just marketplace that better reflects the true priorities of the American people.”  Their distinctive research approach began with a survey of the U.S. public on what they believe makes a “JUST” company.   

A study in Nature shows that our planet has a lot to teach us about business ethics. While we know that ethics pays, what is also now clear is that the absence of ethics can kill.

Nicholas Ambraseys of the Department of Civil and Environmental Engineering, Imperial College London and Roger Bilham from the Cooperative Institute for Research in Environmental Sciences and the Department of Geological Sciences at the University of Colorado, Boulder compared deaths from earthquakes and found that “83% of all deaths from building collapse in earthquakes over the past 30 years occurred in countries that are anomalously corrupt.” This is all the more staggering when you consider that the researchers removed any contributing factors, such as poor building materials, from their analysis.

The construction industry is an industry both highly valued and highly susceptible to corruption. Governments, regulators, businesses and workers all have a vested interest in reducing and eliminating bribery and other practices that put people at risk. Without a systemic approach to reducing corruption and improving ethics, it won’t just be buildings that crumble; trust, stability and the long-term viability of a governmental body also risk imminent collapse.