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Prof. Aseem Prakash on The Regulatory Review, "Milton Friedman Versus Jeff Bezos on Climate Leadership"

Submitted by Stephen Dunne on December 31, 2020 - 9:50am

Prof. Aseem Prakash and colleagues, Nives Dolšak and Jennifer J. Griffin,

Should Milton Friedman's advice of maximizing profits for shareholders still be the number one concern for businesses?

"For Friedman, managers are agents who work on behalf of owners: their principals. Because all shareholders want to maximize their return on investments, the Friedman logic goes that managers have a duty to focus solely on profit maximization.

Should, then, managers support climate actions in response to stakeholders’ pressure?

Friedman would say 'yes' only if climate actions help in profit maximization. Otherwise, by donning the climate hat, managers violate their sole responsibility to shareholders...But what if shareholders want corporations to take action on climate change?"

How can these two ideas be reconciled?

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