Good morning.
What is the social responsibility of business? The late Milton Friedman had a simple answer to that question: abide by the law and make a profit. But most big company CEOs have moved beyond that narrow framework. Our Fortune 500 CEO poll, which is still in the field, shows only about 5% of today’s CEOs adhere to Friedman’s view, expressed this way:
I believe my company should mainly focus on making profits, and not be distracted by social goals.
Roughly half of the CEOs aligned themselves with this answer:
I believe my company has a responsibility to address social problems through charitable activities, but not as part of our core business strategy.
And a solid 44%—up 4 points from last year—chose this answer:
I believe my company should actively seek to solve major social problems as part of our core business strategy.
Fortune celebrates members of that last group with its annual Change the World list, compiled in partnership with Michael Porter and Mark Kramer of the Shared Value Initiative. I spent yesterday at the Initiative’s annual meeting in Boston, where I interviewed one CEO who is passionate about social purpose: the Gap’s Art Peck. Peck talked about programs his company supports to provide job skills to the disadvantaged, to provide life skills for struggling employees, and to recycle cotton in clothing.
His key point was this: all three programs are not just good for society, but boost the company’s bottom line by increasing employee loyalty, reducing turnover, and cutting supply costs. I asked: If the practices are so clearly profitable, why don’t more companies adopt them? “Resistance to change,” he replied. Inertia is what stands in the way of creating companies that better serve the needs of society.
Fortune’s CEO Initiative is dedicated to fighting that inertia. We’ll be holding our annual meeting in New York on June 10 and 11. Among those attending: IBM CEO Ginni Rometty, Salesforce CEO Marc Benioff, Citigroup CEO Michael Corbat. If you are a CEO interested in joining, apply here.
Final results from the CEO poll will be published in the June edition of Fortune magazine. More news below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
China Talks
The markets are not pretty right now—Hang Seng down 2.4%, Shanghai Composite down 1.5%, Stoxx Europe 600 down 0.6%, and U.S. futures looking roughly in line with Europe. That's because President Trump maintains China "broke the deal" in trade talks, and intends to amplify tariffs against the country's exports from tomorrow. It seems China took seriously recent reports that suggested the U.S. was willing to compromise to get a deal, but was wrong. Either way, China itself maintains it won't back down on anything. Wall Street Journal
Nuclear Deal
The EU has not responded favorably to Iran's threat to pull out of nuclear-deal commitments unless Europe protects it from U.S. sanctions. "We reject any ultimatums," said EU, French, German and British officials, who essentially said their approach would focus on inspections rather than responding to Iran's threat. In other words, don't expect any action from the EU until inspectors report that Iran really is breaching commitments around uranium enrichment. CNBC
Boeing Safety
Shareholder value before safety? That's the impression conveyed in a Bloomberg piece linking Boeing's efficiency push, which has accelerated under CEO Dennis Muilenburg, to the recent crashes of two 737 Max aircraft. "Somehow a company renowned for its meticulous engineering installed software that drove the aircraft into the ground while the pilots searched desperately for answers," the piece states. "The crisis…is best understood as part of a larger drama that’s played out as Boeing has reshaped its workforce in an all-consuming focus on shareholder value." Bloomberg
Ghosn Evidence
The evidence in the Japanese case against former Nissan chief Carlos Ghosn came from a laptop in Lebanon that had been used by one of his aides. The Financial Times' sources said the laptop showed how Nissan cash was diverted to Ghosn family companies. Ghosn denies all the financial misconduct charges against him, which also include accusations of misrepresenting his compensation. FT
Around the Water Cooler
Indian Data
India's official economic data is seen as so deficient that economists and investors are either turning to other sources of data—ones that aren't significantly based on companies that are misclassified or non-existent—or creating their own benchmarks. Reuters
Opioid Epidemic
Democratic presidential hopeful Elizabeth Warren has a plan to tackle the opioid epidemic, and it's largely based on taxing the super-rich more in order to fund treatment and research. Warren: "Too many folks in Washington care more about protecting the wealthy from paying their fair share than they do about solving these kinds of urgent national problems." Fortune
Denver Shrooms
Denver seems set to become the first city in the U.S. to decriminalize "magic mushrooms," following a narrow victory for a city initiative. Critics say it's bad enough that Colorado has legal weed, but psilocybin is a trip too far. Per the ballot, Denver cops will essentially have to look the other way if an adult is dabbling with psychedelic fungi. Denver Post
Banknote Typo
Australia's new 50-dollar notes contain a tiny typo—in minute text displayed behind the image of Edith Cowan, the country's first female lawmaker, the word "responsibility" is misspelled as "responsibilty." The Reserve Bank of Australia will fix the issue in future print runs, but there are already 46 million of the notes out there. BBC
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
