President Biden is agreeing with UN Secretary General, Antonio Guterres, when he said that Guterres had “rightly called code red for humanity” at the UN General Assembly on September 21, 2021. The extreme weather events seen worldwide confirm the predictions of the Intergovernmental Panel on Climate Change (IPCC). In August, at the publication of the latest IPCC report, Guterres had said that “the alarm bells are deafening, and the evidence is irrefutable: greenhouse gas emissions from fossil-fuel burning and deforestation are choking our planet and putting billions of people at immediate risk. Global heating is affecting every region on Earth, with many of the changes becoming irreversible.”

The scientific evidence of the impact that human activity has on the earth’s climate has been irrefutable for a long time, but this understanding has only become the mainstream view more recently. Another related swing in understanding is underway at present: the role that companies play; and in particular, the broader understanding of what their purpose must be. This trend paralleling the climate crisis has the potential to take human understanding and intervention in another direction.

Ask the average executive or board member today, “what is the purpose of companies?” and they may most likely answer: “profit!”

The problem with that answer is not only that it can lead to lower profits even in the short and medium term, but that it is likely to make the climate, biodiversity loss, pollution, social inequity, and other current crises worse instead of contributing to much-needed solutions.

Assumptions don’t hold

A little more than 50 years ago, Milton Friedman published an essay in the New York Times magazine entitled, "The social responsibility of business is to increase its profits." He asserted that owners had profit motives that ought to be fulfilled, that business did not have a comparative advantage concerning solving social issues, and that it is wrong in principle to solve the social problems by means other than the democratic system and regulation.

The problem with this view is that experience and research have demonstrated that the assumptions on which the Friedman Doctrine rests are demonstrably inconsistent with reality and therefore speak mostly against his original arguments.

One of the assumptions of the Friedman Doctrine is that governments are functioning well enough to reflect the democratic will of the citizens. As such, he argues that it would be wrong in principle to go against the democratic will of the people, as expressed by governments through "the rules of the game" that they create, even if these irk executives. What if governments are not functioning well, which we all know is a common occurrence? What if governments are not reflecting the will of the people? Friedman offers us no help here. Indeed, it can be argued that there is opportunity for private organizations to have purpose that advances the public good, and that by exercising that deeper insight, private organizations can se