Milton Friedman argued that a corporate executive’s responsibility is to maximize profits while conforming to the basic rules of society, as embodied in law and “ethical custom.” American corporations donated $21 billion to charity in 2019, but the growing “stakeholder capitalism” movement is using the ethical-custom concept to impose a progressive agenda on American businesses. It will have negative implications for investor returns.


If you bought stock in a company whose management embraced stakeholder capitalism, or invested in a fund that includes such companies, you also invested in their definition of what is good for society. That definition can be found in “environmental, social and governance” (ESG) investment criteria that place progressive agenda items on par with, if not above, a business’s obligation to maximize returns.

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