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Should an altruistic company adopt a more ethical behavior than any other company? 23 octobre 2008

Par Thierry Klein dans : Altruistic Capital - in english, Posts in english.
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Keeping my line of thought on the altruistic capital topic I’ll work on clarifying its specifics in my next articles. I’ll pour over the legal, fiscal and selection and evaluation criteria aspects of such enterprises as well as moral issues.

Altruistic businesses are much like any other regular business, except for the fact that their capital (or a share of it) belongs to a humanitarian cause.

So should an altruistic company behave in a more ethical way? Have an ethical management?

I’d say no, or rather not necessarily. Altruist companies should be entirely into the economic game. It’s through the capital gains achieved by the company and the dividends paid to its shareholders that altruistic businesses are useful since their capital belongs to a cause. Any moral management restrains may result in a loss of performance that would cripple such companies in the market.

Altruistic businesses may – I haven’t said should – display a behavior as ruthless and blind as any other.

Let’s look at the example of Bill Gates Foundation (See CoeurdeRoy’s comment).

Let’s assume it had a choice between two investments: an ethical investment with a 2% return and another of non-ethical sort with a 5% return. Taking into account that its mission is to fight AIDS, picking the lower return investment would cripple its action. Over the long-term the foundation’s capital may even loose too much of its value leading to its demise? What should then the foundation’s directors do?

My answer to this is: whatever they want.

An altruistic company may of course decide to make ethical investment, however this is purely their own free will. It’s important for it not to be forced into it. The movement I wish to launch will not set any rules on companies behaviors. Structuring your capital to donate a share of it to a cause is the only thing it takes to become a part of it.

Going beyond this would hinder the altruistic action’s efficiency itself. And more important it would introduce a moral intent. It would be the beginning of a form of politically correct inquisition – anyway as the altruistic movement grows it won’t totally dodge this form of well-meaning inquisition (necessarily well-meaning). It won’t dodge abuse either – non-profits using donated capital to other goals than the ones initially set (more on this in my next article). One would better define each initiative’s framework right from the start to avoid as much as possible such downfalls.

Edit: Cedric suggested a simple modification of a company’s mission statement with a link to the excellent site The Corporation. But again the same concept applies.

An altruistic company may have an ethical mission statement but it shouldn’t be mandatory. Furthermore I feel it’s more important to focus on a company’s capital structure rather than its mission (no doubt one of my Marxist’s recollections).

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1. Gaetan - 24 octobre 2008

Hello

How this System could limit the shareholders, individuals or NGO, of forcing the companie to diverge from such ethical investments for short term rewarding investments (like any conventional capitalist company)? I mean, at the end, NGO needs money as well, and they might act at the end like any other capitalist shareholder.

And in case of divergence in company ruling, if the NGO leaves the capital, will it still be called “altruistic company?”

Thanks