Crucial institutions in education, government, healthcare, and media, to name a few, have lost their foundational standards that provided them with purpose and direction. This deformation now shapes our social and political order for the worse. Institutions in these sectors stumble forward, grasping for reasons to explain who they are and what they should do. Businesses are not exempt from this fate. The for-profit corporation has become wary of explicitly proclaiming that it exists to make good on shareholder capital by turning a profit. In answer to the basic question—“What should corporations do?”—they highlight how their efforts match a gauzily defined social justice standard that gives their work meaning. At the very least, they pay lip service—and frequently much more—to the ideologies of climate change; Diversity, Equity, and Inclusion (DEI); and other millenarian notions masquerading as forms of basic justice. 

The 2019 Business Roundtable Statement offers prevenient justification for the business corporation operating in the “sustainability” mode and in its ability to “foster diversity and inclusion, dignity and respect.” “Sustainability” is somehow a circle of life demanding that our environmental debts be cleared by actions that return the earth to its undisturbed, original green state. And this must be done even at the cost of lowering our standard of living, to say nothing of becoming China’s carbon offset as they take leadership of the industry sectors penalized by sustainability pressures. 

The Roundtable’s appeal to “fostering diversity and inclusion” dehumanizes people by classifying us according to race and gender alongside the imperative demand that all be made equal in outcome. But at an even deeper level, DEI advocates mean to cast the business corporation as the original, endless sinner whose misbegotten gains must not only be paid out to the perpetually sinned against, but ultimately be placed at their service, directed by the state.

The social justice movement has staged a revolution against profit-making ventures, hoping instead to impose a new model of “stakeholder capitalism” on our economy. They want to put for-profit corporations out of business. Our corporate titans fail to comprehend the scale of this revolution, instead falling for one bad idea after another. Struggling to believe in the essential goodness of a life spent providing useful goods and services to people, business leaders cast about for other creedal statements to adopt as an explanation for their work.

Who might speak the principles of sound business and moral realism to a dislocated American business community, adrift from its moorings in profit-making, risk-taking, building, and providing the goods and services that their customers require? That voice is now coming from an unlikely source, the Christian public interest law firm, Alliance Defending Freedom (ADF). The firm is obviously known for an impressive state and federal courts win rate on religious liberty, free speech, human life, and family issues, but ADF recently turned its focus—as many of us did—to what’s ailing American corporations. 

The intelligent result emerges in ADF’s “Greenbrier Statement of Principles on the Purpose of a Corporation,” which was recently presented to a private audience that your author participated in. The Greenbrier Principles’ spare and exact language articulates four principles: 

1. We affirm that the proper purpose of business is to advance human flourishing by creating economic value through excellence in the provision of goods and services.
2. We affirm that the boards of directors and managers of traditional, for-profit business corporations, whether publicly traded or privately held, are principally accountable to their owners (i.e., shareholders) whose goals they pursue and whose resources they steward.
3. We reject the politicization of business and the efforts by various campaigns and constituencies to compel corporations to the forefront of political controversies. This politicization, which places the advocacy of certain ideological programs above the generation of economic value and profit through excellence in the provision of goods and services, frequently reflects a failure of accountability to shareholders. Such politicization only drives division, imperils civil liberties, and detracts from the ability of businesses to fulfill their proper purpose. Neither business nor society is well served by such politicization.
4. We embrace a positive role for business to advance truth, justice, civil liberties, and public welfare by conducting its business well—i.e., by fulfilling its proper purpose—and not by politicizing its business.

The Principles express a positive moral vision of what business should do to fulfill its nature and purpose as a profit-making enterprise. Some may criticize the Principles as a form of conservative ESG, an attempt to force conservative ideas onto corporations. It is true that a few conservative thought leaders have called for such a strategy. But this imprudent course, however appealing to political donors, short-term political instincts, and electoral needs, finds no home in the Principles. Instead, it follows a classical liberal approach: business, religion, family, and government composing one nation, with their separate operations guided by the essence of each society and conducted in the spirit of pluralism.

Each principle affirms the inherent rightness of providing goods and services to customers; shareholder capitalism as a trust relationship that meets the requirements of justice; the patent injustice of forcing directors, officers, and employees of the corporation to adopt political agendas and courses of action they disagree with as a matter of conscience, alongside the economic injustice of diverting resources to such ideological pursuits rather than ensuring the shareholders receive the highest return on their investment; and concluding with the principle that a corporation pursues “truth, justice, civil liberties, and public welfare” by “conducting its business well” and avoiding the “politicization” of its work.

The Principles are further explained in brief paragraphs. The first principle calls for greatness in the work of a corporation, pursuing “excellence in the provision of goods and services,” with “Profit” being “essential for businesses to operate effectively.” The freedom to produce, work, sell, and trade is a tremendous gift and responsibility. One should engage in enterprise with maximum effort. A paragraph accompanying the first principle quotes Peter Drucker’s observation that “profitability is not the purpose of but a limiting factor on business enterprise and business activity. Profit is not the explanation, cause, or rationale of business behavior and business decisions, but the test of their validity.” Drucker’s statement pronounces that commerce is ultimately an opportunity for the person to serve and contract with others, creating new value in the process, while recognizing that those business relationships must be profitable. Within commercial activity itself is the opportunity humans possess to bring creative order to the world and to raise the pathways to human flourishing.

The Principles clearly eschew stakeholder capitalism but do so because shareholder capitalism is both just and a clear organizing test for human freedom and responsibility in private enterprise. The third principle invokes the alternative route to shareholder responsibility in “the politicization of business” which inherently dilutes the authority of shareholders “while shifting the power to make society-wide decisions on consequential political and public-policy issues away from politically accountable individuals and institutions to highly unaccountable bureaucracies.” At the same time, turning companies into politicized entities, “drives division” and “drives out talented directors and employees unwilling to surrender their conscience, faith, or speech to divisive ESG/DEI mandates.” Of course, it will not be lost on those who have worked in large organizations that these same people are frequently the last the company can afford to lose. The short-term rewards that might accrue to businesses taking political stances frequently lead to all manner of long-term losses.

A note accompanying the third principle invokes Milton Friedman’s much-discussed 1970 New York Times essay that foreshadowed what is now occurring in the current ESG-driven attempts to redirect corporations. Friedman notes that such attempts essentially change the function of the corporation turning executives into agents of social responsibility who spend shareholder capital, i.e., someone else’s money, on behalf of various social justice causes in pursuit of the company’s business. These are essentially government functions being grafted onto the work of the corporation, Friedman observes, and the result is to destroy the public-private distinction between them. Friedman concludes that “social responsibility” taken seriously would extend the scope of the political mechanism to every human activity. Accordingly, “It does not differ in philosophy from the most explicitly collectivist doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means.” Social responsibility in this sense becomes “a fundamentally subversive doctrine.”

The fourth principle states that corporations are capable of tremendous works, of lifting people’s lives through career and economic opportunity, and that of society itself, when they act “within the sphere of the proper purpose of business and their competence.” Accompanying points include the revolutionary notion that business must protect “the foundational roles of property, contract, and voluntary exchange.” The Principles end where they began. Business is not government, and blending the two for any reason, or one using the other to exploit its own purposes, corrupts both and the wider society.

The Greenbrier Principles underscore that a life of freedom and virtue can be pursued in business and that our free enterprise system depends upon it. There is no need for those in the marketplace to justify their work with the words and deeds of hoary social justice activism. That is the road to collectivism, to perdition itself.