In a New York Times article from September 13, 1970, Milton Friedman wrote: "There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."
Friedman's message has always intrigued me and I'd say in principle there should be clear distinctions between the duties and responsibilities of states, governments, companies and individuals. In an ideal world, states would set the rules of the game, citizens would influence the rule setting politically and companies would have a clear playing field in which to do their business.
In reality things are far less clear cut. In today's globalised world, governments, businesses and employees compete against each other. Governments may seek to maximize their short-term voters' franchise; voters may focus on local issues and job security (and neglect economic externalities such as climate change and biodiversity loss); and companies may seek to take advantage of differing country regulations (eg labour arbitrage). In this situation it is not clear to me who is actually setting the "rules of the game", let alone any common rules on a global basis.
There is may be one exception to this: Human rights. Human rights are recognized by international law and more recently have also been translated into responsibilities for corporates (in 2011, UN Special Representative Professor John Ruggie published the Guiding Principles which were unanimously adopted by the UN Human Rights Council in June 2011).
As part of the CRO Forum sustainability working group, we tried to build an understanding of why the insurance industry has to bring respect for human rights into its risk management framework and how it can address human rights issues in its business relationships with other corporations. The paper "Human rights and corporate insurance" is intended to be a basis for discussion between insurance companies and their stakeholders. It aims to help the insurance industry address evolving expectations around its role in respecting human rights and promoting best practice.
This gives me hope that one day Milton Friedman's clear view of an efficient and fair economic system may become reality.
Location: Zurich, Switzerland