A fable written by the Greek author Aesop goes as follows. A Kid, or young goat, wandered away from his herd and the Dogs who protected it. A hungry Wolf saw the Kid, and decided to make a meal of him. The Kid told the Wolf, “I have not lived very long, and I would like to frolic and dance before I die. Will you sing for me while I do that?” The Wolf saw no harm in that, and sang while the Kid danced and frolicked around. The Dogs, however, heard the Wolf’s howls and ran to the scene immediately. The Wolf had to flee for his life and, as he ran away with his stomach still empty, he lamented, “My father taught me the trade of a butcher and, had I not mixed Trade with Song, I would have had an easy meal.”
The Wolf and the Kid, by Milo Winter (1919), public domain due to age
How does this apply to environmental, social, and governance (ESG) metrics? The Wolf had One Job, and that was to get a meal; he had no business singing before he had eaten. The same principle appears in the Bhagavad-Gita, which is part of the Hindu epic Mahabharata. “It is better to do one’s own dharma, even though imperfectly, than to do another’s dharma, even though perfectly.” Dharma means duty or the Right Way, and essentially a sacred trust or stewardship. If we’ve been entrusted with A, then A occupies all the top positions on our totem pole. B, C, D, and so on are at the bottom, if they are even on the pole at all.
A business enterprise similarly holds its resources in trust for its stakeholders or, as they are known in the ISO 9001:2015 standard for quality management systems, relevant interested parties. These include investors, employees, suppliers, and customers. It therefore also has One Job, and that is to maximize value for the stakeholders in question. Any resources that are spent on extraneous activities must, by necessity, result in (1) lower profits, (2) lower wages, (3) higher prices, (4) less compensation for suppliers, or a combination thereof. Henry Ford (1922) explained the matter as follows.
I believe that there is very little occasion for charity in this world–that is, charity in the sense of making gifts. Most certainly business and charity cannot be combined; the purpose of a factory is to produce, and it ill serves the community in general unless it does produce to the utmost of its capacity. Industry organized for service removes the need for philanthropy.
A Square Deal for All Stakeholders
This does not mean in any sense that Ford believed that a company’s owners should maximize profits at the expense of its stakeholders, upon whom it relies for its very existence. A company that overcharges its customers, or sells them poor quality, will soon lose them. A company that pays its workers as little as possible will get the least possible effort they can deliver in return, as pointed out by Frederick Winslow Taylor (1911).
…after a workman has had the price per piece of the work he is doing lowered two or three times as a result of his having worked harder and increased his output, he is likely entirely to lose sight of his employer’s side of the case and become imbued with a grim determination to have no more cuts if soldiering [marking time, like soldiers marching in place without going anywhere] can prevent it.
All of this, so far, points to what is intended to be this article’s vital takeaway; social responsibility consists solely of a square deal for all the supply chain’s participants including not only investors but also workers, customers, and suppliers, along with compliance with laws such as those related to taxes and regulations related to workplace safety (OSHA) and environmental protection (EPA). None of these include extraneous goals and objectives such as those that helped to ruin Silicon Valley Bank, as will be discussed below.
Ford’s primary goal was to remove all forms of waste, including wastes of time, material, and energy, from his supply chain so he could reduce prices, increase wages, and still make enormous profits. He added in My Life and Work, “It ought to be the employer’s ambition, as leader, to pay better wages than any similar line of business, and it ought to be the workman’s ambition to make this possible.” Social responsibility followed naturally because the workers spent some of their disposable income in their communities, which made conditions better for everybody involved. Workers and investors were also of course perfectly free to donate their own money to charitable causes.
We need to remember that the Ford Motor Company’s need to buy from a huge supplier network, and establish a clockwork logistics system that Norwood (1931) depicted as a continent-spanning conveyor belt, created enough economic activity to make the United States the wealthiest and most powerful country on earth. Anybody who reads My Life and Work (1922) will meanwhile recognize numerous aspects of the Toyota production system; Taiichi Ohno wrote openly that he got many of his ideas from Ford. Therefore, when Henry Ford talks, intelligent people listen.
Too Many Metrics Lead to Disaster
It is a common business principle that performance metrics should be Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) and also few in number; some sources say a maximum of five. This means there is no place for metrics that are not relevant to the organization’s One Job of maximizing value for its stakeholders. This principle is roughly two and a half centuries old because Frederick the Great, King of Prussia, stated, “Those generals who have had but little experience attempt to protect every point, while those who are better acquainted with their profession, having only the capital object in view, guard against a decisive blow, and acquiesce in small misfortunes to avoid greater.” That “capital object” is our One Job, and King Frederick’s short version of this is “He who defends everything, defends nothing.”
Silicon Valley Bank (SVB) is an outstanding example of this principle. They had a huge list of ESG metrics, few of which related to basics like minding the store. They emphasized social responsibility but, by going bankrupt, they (1) became a burden on the Federal Deposit Insurance Corporation, (2) made their employees burdens on the unemployment compensation system and forced them to seek new jobs, and (3) wiped out their investors. None of these outcomes were socially responsible.
Silicon Valley Bank’s Dysfunctional Metrics
One of the major contributors to SVB’s collapse was its purchase of 10-year Treasury securities. Their principal and interest are guaranteed by the Federal Government, but they cannot be redeemed if the owner needs cash quickly as SVB did. The owner is free to sell them at a profit if interest rates have fallen since purchase, but must do so at a loss if interest rates have risen and this is what happened. If we need liquidity, we must buy shorter-term obligations that come in 4 week to 13 week maturities, albeit at lower interest rates. This is basic economics but, for whatever reason, SVB overlooked these obvious facts.
Linda Ferrell, Globe Life Professor of Marketing at Auburn University’s Harbert College of Business, explained during an interview (Ares, 2023), “SVB’s overbalanced focus on social issues begs the question: where was the fiduciary responsibility to manage the company in best interests of its stakeholders?”
To put this in perspective, SVB (2022) still has a 66-page report Environmental, Social and Governance” report on its web site; the reference appears below. Among the goals is carbon neutrality, which does absolutely nothing to advance SVB’s One Job of maximizing value for its investors, depositors, borrowers, and employees. Nobody contends that carbon dioxide does not affect the world’s climate but there are serious questions as to whether efforts to forestall climate change are not similar to King Canute’s futile command that the tide not come in. The fact that many attendees at the United Nations’ annual climate conference use private jets, which emit far more carbon per passenger than commercial ones, shows meanwhile that the attendees themselves do not regard the problem as urgent. Three of the world’s biggest manufacturing economies—the United States, China, and India—do not regard the purported problem as urgent because none sent more than token representation to this year’s annual climate conference in Brazil (Debre and Savarese, 2025). New York Senator Kirsten Gillibrand (2009) meanwhile described how Goldman Sachs, J.P. Morgan Chase, and other entities stood to make a lot of money from cap and trade mandates. Cap and trade adds cost but no value to supply chains and, as stated by Henry Ford (1922), everybody and everything in a supply chain must either produce or get out. Finally, those who do regard carbon emissions as a problem are best advised to donate their own money to the US Forest Service, which makes no profit and will plant at least one tree for every dollar donated.
My position is that climate change is certainly important, especially due to its impact on supply chains and continuity of operations, but it is not urgent. However, actions that improve energy efficiency do reduce carbon emissions while they contribute to the organization’s One Job by reducing its costs. The ISO 50001 standard for energy management systems is a good resource for this. In any event, SVB is certainly carbon-neutral and Net Zero today, as defunct corporations generate no carbon emissions—or wages, tax payments, dividends, or other economic activities.
Another “achievement” from SVB’s report is, “Donated approximately $18 million to charitable causes in 2021, surpassing our annual Pledge 1% goal.” We have already seen Henry Ford’s position on corporate charity and, when something is as heavily leveraged as a bank, it is a bad idea to give money away. Pursuit of SVB’s ESG metrics meanwhile required substantial employee time, which costs money and might have been better used for the basics of minding the store.
On a final note, McGowan (2022) writes, “The ambiguity of ESG and lack of any clear legal definitions or regulatory standards in reporting, is more than just a problem for advocates. It places corporate directors and fund managers in the precarious position where the utilization of ESG and ESG investing is a breach of fiduciary duty, leaving them liable to civil action.”
Conclusion
A business enterprise has a limited amount of resources, and failure to devote these entirely to maximization of value for all its stakeholders will result, at best, in lower profits, lower wages, higher prices, and/or less compensation for suppliers. SVB, and other entities such as Bed, Bath & Beyond, that diverted attention and/or resources to ESG objectives show that far worse is possible. An entity that tries to do everything will succeed at nothing, so we must focus on our One Job and nothing else.
References:
Ares, Michael (interviewer). 2023. Silicon Valley Bank’s collapse is a lesson in failed ESG. Auburn Harbert Business, https://harbert.auburn.edu/news/experts-comment-svb-collapse-lesson-in-failed-esg.html
Bhagavad Gita, The Song of God. Chapter 18, Verse 47. Commentary by Swami Mukundananda https://www.holy-bhagavad-gita.org/chapter/18/verse/47/
Debre, Isabel, and Savarese, Mauricio. 2025. “World’s biggest polluters are no-shows at start of UN climate summit in Brazil.” Associated Press, https://www.pbs.org/newshour/world/worlds-biggest-polluters-are-no-shows-at-start-of-un-climate-summit-in-brazil
Ford, Henry, and Crowther, Samuel. 1922. My Life and Work. New York: Doubleday, Page & Company
Gillibrand, Kirsten. 2009. “Cap and Trade Could Be a Boon to New York,” Wall Street Journal, Oct. 21, 2009
McGowan, Jonathan A. 2022. “The Trouble with Tibble: Environmental, Social, and Governance (ESG) and Fiduciary Duty.” University of Chicago Law School, https://businesslawreview.uchicago.edu/online-archive/trouble-tibble-environmental-social-and-governance-esg-and-fiduciary-duty
Norwood, Edwin P. 1931. Ford: Men and Methods. Garden City, NY: Doubleday, Doran & Company Inc.
Silicon Valley Bank, 2022. Environmental, Social and Governance Report, 2022. https://www.svb.com/globalassets/library/uploadedfiles/svb-environmental-social-governance-report-2022.pdf
Taylor, Frederick Winslow. 1911. The Principles of Scientific Management. New York: Harper Brothers. 1998 republication by Dover Publications, Inc., Mineola, NY
Author Information
William Levinson, P.E., CM, is the principal of Levinson Productivity Systems, P.C. He is the author of Reshore Production Now: How to Rebuild Manufacturing and Restore High Wages, High Profits, and National Prosperity in the USA and other books on quality, productivity, and management.
Contact information: TheBoss@ct-yankee.com or wlevinson@verizon.net