Thirty-five years ago, Milton Friedman wrote a famous article for The New York Times Magazine whose title aptly summed up its main point: "The Social Responsibility of Business Is to Increase Its Profits." Never mind that most companies don't pay the full price for the pollution they create, or the health and environmental impacts that ensue. For years, Friedman's theories held young business students in thrall across the country, but last week at Harvard Business School, I saw a totally different ethos.
I listened in as Harvard Business School professor Bob Eccles presented a new case study called KKR: Leveraging Sustainability (co written with Prof. George Serafeim and Tiffany Clay). The case centered on Kohlberg Kravis Roberts' Green Portfolio Program, which improves environmental performance across the firm's private equity portfolio of companies, and asked students to consider whether and how to expand it.
The discussion was eye-opening. The debate focused not on whether to expand the program, but on how to make it more meaningful and why KKR hadn't moved sooner. Since its inception in 2008, companies participating in the Green Portfolio Program achieved more than $365 million in financial benefits and avoided 810,000 metric tons of GHG emissions, 2.2 million tons of waste, and 300 million liters of water. Faced with these kinds of savings, one student commented that it was like the companies had been walking around with eye patches on (preventing them from seeing opportunities at hand) and had finally taken them off.
Environmental Defense Fund worked with KKR to design the Green Portfolio Program, and we've seen way too many people there and elsewhere wearing metaphorical eye patches. Our partnerships challenge corporate executives to look at their products, operations and supply chains a different way in order to unlock environmental opportunities and business value. And because we don't take payment or donations from the companies we work with, we're able to spread those innovations broadly.
Whether I'm visiting business schools across the country or talking with the bright young students would join our EDF Climate Corps, I'm heartened to see a new way of thinking about the role of the corporation in society - one that values people and natural systems along with profit.