Stripe, Alphabet, and others have committed to spend $925 million through 2030 on carbon capture technologies, to encourage the market to scale. Walmart’s Gigaton Project aims to reduce one billion metric tons of greenhouse gas emissions from its global value chain by 2030; in its first five years, the project has avoided or reduced 574 million metric tons. Voluntary corporate environmental pledges are increasingly popular, and, given the difficulties of enacting formal externality regulations, increasingly important.
But why would for-profit companies make what appear to be prosocial but unprofitable decisions? Shouldn’t these companies be focused on maximizing profits? This paper explores how such expectations for appropriate firm behavior could be self-fulfilling. Stakeholders who believe that firms cannot and should not care about society may be less apt to protest antisocial decisions or reward prosocial ones. As a result, firms would have less incentive to internalize externalities.
In two preregistered studies with nearly 1300 participants, Amazon Mechanical Turk workers taught an exclusive profit maximization norm were less likely to sign a real petition against Amazon than those taught that firms can and should care about society. Exclusive profit maximization led participants to believe it less appropriate and effective for employees to push for social change, and that fewer firms would care and fewer others would protest. Expecting corporate prosociality instead could plausibly make it easier for firms to do well by doing good.