By Alan Murray and David Meyer
June 29, 2018

Good morning.

“More than at any time in recent history, governments, businesses and individuals are examining how companies operate.” Those aren’t my words—they come from IBM CEO Ginni Rometty, in her annual Corporate Responsibility Report, which is out this morning. She’s right: the bar is being raised, by government, by the public, and most of all, by employees. And that’s a good thing.

Rometty cites three principles, in particular, that she says are guiding IBM’s work:

  • The purpose of AI is to augment human intelligence, not replace it – and the company must help train workers to make the most of new technologies.
  • Data and insights belong to their creator, and “IBM is dedicated to the protection of our clients’ data and to harnessing its power to expand prosperity and opportunity.” (Take that, Facebook and Google.)
  • And new technology, including AI, must be transparent and explainable, in order to earn society’s trust.

Those seem like a good place to start.

Meanwhile, since it’s Friday, some feedback: One CEO Daily reader, perhaps tiring of our coverage of the CEO Initiative, pointed me to James Mackintosh’s column in yesterday’s Wall Street Journal, which warns that investors who put their money in companies that seek to do good should expect to do badly.

Mackintosh’s argument, in a nutshell, is that even companies that do bad things—pollute, abuse employees, etc.—will be profitable investments at some price. “Coal miners have returned almost 20% in the past 12 months in dollar terms,” he says.

That may be true in the short term (although a number of studies, by Just Capital and others, suggest socially responsible companies outperform even in the short run). In the long, term, however, any conflicts between profit and purpose tend to disappear. If you want to invest in a company that is going to be alive and thriving 100 years from now, you’d better avoid those pursuing policies that risk environmental or social breakdown.

Mackintosh ends his column by quoting the man who runs the world’s largest pension fund—Hiro Mizuno, of Japan’s $1.5 trillion Government Pension Investment Fund, which takes a decidedly long-term view. Some people invest in socially responsible companies as a way of avoiding risk, Mizuno says. Others think it’s a means of outperforming the market. And others do it for policy reasons. “I really don’t care—we just need to avoid systemic failure of the capital markets.”

Amen to that. News below.

Alan Murray
@alansmurray
alan.murray@fortune.com

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