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The Only ethical obligations of companies is to maximize shareholder wealth
One of the most topical and controversial areas of accounting and business in the 21st century is the fathering of corporate social responsibility (CSR). ... However the shareholders of companies like Earth Sanctuaries Limited who have lost their money due to lack of profit focus by company directors, may align with Friedman’s comments. ... The poor performance of the company can arguably be attributed to the company focusing too much on trying to meet obligations external to maximising shareholders wealth and not focusing enough on profit creation. The company had an ethical obligation to provide their investors with a return on their money, this obligation should have ranked ahead of any other objectives.
It can be argued that companies do not have to focus on the environmental and social effects of their activities, because if the free market is left to operate without hindrance, it will produce the outcomes that society desires. ... Examples of methods society can use in changing companies behaviour include boycotts of products, refusing to buy shares and refusing to supply goods or services to companies that are believed to be violating what society sees as acceptable practice. Companies have to take notice of the actions taken by society, as failure to do so can impact negatively on their bottom line (profit). ...
Companies also have to consider the requirement now by some investors who only want to be investing in Socially Responsible Investments (SRI). ... A good example of socially responsible investment is Erika Ford and her North Ethical Shareholders group. ... The mine was put on hold for 10 years largely due to the efforts of Erika Ford and her North Ethical Shareholders group.
In conclusion it can be seen that companies do have an ethical obligation to maximize shareholder wealth.
Approximate Word count = 1461
Approximate Pages = 5.8
(250 words per page double spaced)
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