Price Gouging

Many of the increasingly clamorous inflation hawks are convinced that the main culprits behind the recent rise in prices are Congressional Democrats and the Biden Administration. Other observers point to supply chain problems or escalating wage demands. Yet there has been surprisingly little focus on the parties responsible for actually setting most of the prices: large corporations.

That’s why it was refreshing to see a front-page article in the Wall Street Journal the other day that provided a more honest account of what is happening. Its headline was: “Inflation Helps Boost Profit Margins: Companies Seize Rare Opportunity to Increase Prices and Outrun their Own Rising Costs.”

The second part of that is the most significant: corporations are raising prices not only to cover their rising costs but well beyond. In other words, they are exploiting a crisis situation to fatten their bottom lines. There is a term for this: price gouging.

Companies such as high-end mattress producer Sleep Number and heating/cooling equipment manufacturer Carrier Corp., the Journal noted, have each pushed through three major price increases this year. As a result, corporate profits are booming. The Journal article cited figures showing that many large companies are reporting margins at least 50 percent above 2019 levels.

It was appropriate for the Biden Administration to call on the Federal Trade Commission to investigate whether illegal conduct by petroleum companies is responsible for the spike in gasoline prices. Other sectors should also be scrutinized.

Given the high level of concentration in many industries, it is likely that anti-competitive practices may be at play. Sometimes this can verge into explicitly criminal behavior. Earlier this year, for example, poultry processor Pilgrim’s Pride pleaded guilty and was sentenced to pay $107 million in criminal fines for its participation in a conspiracy to fix prices and rig bids for broiler chicken products.

Around the same time, Argos USA had to pay $20 million to resolve criminal allegations that it participated in a conspiracy to fix prices, rig bids, and allocate markets for sales of ready-mix concrete in the Southern District of Georgia and elsewhere.

Those who have studied economics will probably recall this comment by Adam Smith in The Wealth of Nations: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices.” These days, the contrivance probably occurs in emails or Zoom calls, but the result is the same.

A key component of the effort to bring inflation under control is to prevent corporations from exploiting the country’s transition from the pandemic in a way that harms the rest of us.

Biden’s DOJ Announces Crackdown on Corporate Recidivists

For years, rogue corporations have in effect gotten away with murder through a system that allows them to avoid prosecution for serious offenses by promising to change their ways and paying affordable financial penalties.

These arrangements, widely used by the Justice Department, are known as deferred prosecution and non-prosecution agreements but they are really nothing more than leniency practices. Their supporters claim that the threat of actual prosecution in the future is sufficient to get companies to clean up their act. They also point out that the agreements have provisions requiring such changes.

Unfortunately, there are numerous examples of companies that have violated the terms of their deferred or non-prosecution agreements with apparent impunity. The Biden Justice Department is vowing to change that. Last month, Deputy Attorney General Lisa Monaco gave a speech in which she said DOJ is tightening its procedures on leniency agreements, especially for companies with “a documented history of repeated corporate wrongdoing.” She indicated that DOJ will look not only at the offense related to the agreement but the full range of misconduct.

To assist DOJ in its efforts, Public Citizen has just published a report highlighting 20 large companies with deferred prosecution and non-prosecution agreements that have histories of wrongdoing documented in Violation Tracker.

Some of these rap sheets have continued after the company entered into its leniency agreement. For example, after signing an agreement in 2020, Wells Fargo was fined $250 million by the Office of the Comptroller of the Currency for unsound banking practices.  After signing an agreement in 2019, Merrill Lynch (owned by Bank of America) was fined several times by the Congressionally authorized industry regulator FINRA, including an $11.65 million penalty this year for overcharging customers.

After signing an agreement in 2019, Walmart has been involved in numerous violations, including a case in which it paid $20 million to the EEOC to resolve allegations of gender discrimination.

The list could go on. There are abundant examples proving that deferred prosecution and non-prosecution agreement have done little to deter corporate misconduct and that recidivism has continued to run rampant.

It is encouraging to hear the Biden Justice Department talk tough about corporate crime after years in which large corporations have enjoyed exceedingly light-handed treatment from federal prosecutors. It is especially heartening to learn that DOJ will look at the entire track record of corporations in making prosecutorial decisions. I hope that Violation Tracker will help them in their deliberations.

Culpable 26

COP26, the United Nations Climate Change Conference now taking place in Glasgow, is primarily a gathering of governments. The idea is that political leaders from around the world can come together to make commitments that will address one of the most pressing problems confronting the human race.

The ability of nations to make substantial progress is, however, increasingly in question. European countries are reported to be worried that measures resulting in higher energy prices could prompt a populist backlash like the Yellow Vest movement in France. The ability of the U.S. Congress to enact significant climate legislation remains uncertain.

Moreover, the parties which are most responsible for the climate crisis are not governments or the people they represent, but rather the giant corporations whose operations and products account for a large portion of greenhouse gas emissions. Perhaps we should spend more time talking about the Culpable 26, or whatever number of major polluters we deem to be most worthy of castigation.

Identifying the worst climate culprits is complicated by the fact that many of them are claiming to be part of the solution rather than the problem. They tout their efforts to reduce emissions and many even claim to be moving toward net-zero.

There are several problems with these claims. The first is the “net” part. Many companies will end up focusing more on carbon offsets than reducing their emissions substantially.

The second is that the target dates they are setting are well into the future. The Net Zero Tracker lists about 575 large publicly traded corporations as having commitments to net zero or related goals. Of those, more than half set their target date at 2050 or later. They are giving themselves three decades to respond substantively to what amounts to a global emergency.

The third problem is that progress toward these goals will likely be measured by the corporations themselves. Self-reporting is pervasive in the world of corporate social responsibility and ESG, putting into question the entire enterprise.

After all, many of the companies vowing to meet climate goals have abysmal track records when it comes to regulatory compliance. Take the example of Royal Dutch Shell, the largest industrial company with a net zero commitment (by 2050).

As shown in Violation Tracker, Shell has racked up more than $875 million in environmental penalties from federal, state and local regulators in the United States alone. That shows the extent to which the company and its subsidiaries have run roughshod over pollution regulations.

Shell’s Violation Tracker page also shows hundreds of millions of dollars in penalties for other offenses such as accounting fraud (overstating its petroleum reserves) and false claims (underpaying royalties on oil produced under federal leases). In other words, Shell has a history not only of environmental misconduct but also of deceiving shareholders and the federal government.

Shell is far from unique in this regard. Many companies have a track record of deception. Self-reporting is not a reliable basis to determine whether big business is really reducing its damage to the climate.

Violation Tracker UK has Arrived

The United Kingdom, which holds the presidency of this year’s United Nations climate conference, made the wise decision to bar fossil fuel companies from being corporate sponsors of the event. This is not to say, however, that the UK is generally tough on industries that harm the environment.

That’s one of the findings from the data collected in Violation Tracker UK, a database of business misconduct my colleagues and I at the Corporate Research Project of Good Jobs First have just launched. We assembled 63,000 cases dating back to 2010 from more than 40 regulatory agencies. Among those are the Environment Agency, Natural Resources Wales, the Scottish Environment Protection Agency, and the Northern Ireland Environment Agency.

Altogether, we identified nearly 6,000 cases in which a company was found to have committed an environmental offense. Yet in more than half of these, the culprits were not required to pay any sort of monetary penalty and instead were let off with a caution.

Among those environmental cases with a fine or settlement, the aggregate penalties were just £312 million. The penalties exceeded £1 million in just a dozen cases; in only 135 instances were they above £100,000. Many of the larger environmental penalties involved privatized water companies, which should be fined even more heavily, given the frequency with which they break the rules.

These numbers stand in stark contrast to the totals for competition-related offenses and financial offenses. There are fewer cases in those categories—a total of about 2,200—but the penalties have been substantially higher, totaling £5.2 billion for competition cases and £2.8 billion for financial ones. In those categories combined there have been 285 penalties of £1 million or more, and 716 above £100,000.

The UK’s use of monetary penalties also lags when it comes to safety-related offenses, including workplace safety as well as product, healthcare and transportation safety. This category accounts for just £413 million in penalties. The aggregate fines and settlements for environmental and safety offenses combined is only one-tenth that of competition and financial offenses. The other categories covered by Violation Tracker UK—employment-related offenses and consumer protection cases—fall in between.

Like the U.S. Violation Tracker on which it is modeled, Violation Tracker UK identifies which of the entities named in the individual cases are linked to larger parent companies. The UK parent universe numbers more than 650, both publicly traded and privately held. The parents are headquartered in more than 30 countries. After the UK, parents based in the United States account for the largest number of cases and the highest penalty total.

As in the United States, the list of companies with the highest penalty totals in Violation Tracker UK contains numerous big banks, both domestic and foreign. Three of those banks are the only corporations to appear among the ten most penalized companies on both trackers: JPMorgan Chase, Deutsche Bank and UBS. Other types of large, publicly traded corporations also feature prominently in the UK rankings. Companies in the FTSE 100 account for more than one-quarter of the Violation Tracker UK monetary penalty total.

Big business does not behave any better in Britain than it does in the United States.

Fronting for Rogue Corporations

Only days before the world gathers in Glasgow to discuss the climate crisis, Greenpeace has leaked a trove of documents suggesting that some countries are coming to that gathering with sinister motives. According to the environmental group, several leading coal, oil, beef and animal feed-producing nations are trying to water down the International Panel on Climate Change’s findings to protect their domestic industries.

Among the countries said to be involved are Saudi Arabia, Australia and Brazil. It seems clear these efforts reflect not only the inclinations of their political leaders but also the interests of major corporations headquartered in those nations.

Saudi Arabia is, of course, the home to the Saudi Aramco—one of the world’s largest oil and gas producers and thus one of the biggest contributors to greenhouse gas emissions. Australia is the home to mining companies such as BHP Group, the world’s largest producer of coal. Brazil is the headquarters of meat-producing giant JBS.

Along with their outsized role in CO2 emissions, these companies damage the environment in other ways and have run afoul of regulatory requirements. Take the case of Saudi Aramco. As documented in Violation Tracker, its U.S. subsidiary Motiva Enterprises has racked up more than $170 million in penalties over the past two decades for violations of the Clean Air Act and other environmental laws. In addition to cases brought by the EPA, Motiva has been the target of lawsuits and enforcement actions by attorneys general and environmental regulatory agencies in states such as Texas and Louisiana.

In its U.S. operations, BHP has been cited for violations both by the EPA and by the Bureau of Safety and Environmental Enforcement, the federal agency that oversees offshore oil and gas drilling. It has also paid fines to environmental agencies in Louisiana and Arkansas.

JBS, which has taken over several major beef and poultry producers in the United States, has been cited 59 times for environmental violations, paying a total of $5.6 million in penalties. Earlier this year, its Pilgrim’s Pride poultry subsidiary pleaded guilty and was been sentenced to pay approximately $107 million in criminal fines for its participation in a conspiracy to fix prices and rig bids for broiler chicken products.

JBS will also show up in Violation Tracker UK, which will be launched next week. Its Moy Park Limited subsidiary has been fined over £1.2 million since 2010, most of which came from workplace safety violations but also included £82,000 in nine environmental cases.

These examples suggest that the behind-the-scenes efforts of Saudi Arabia, Australia and Brazil are not just a matter of differences in climate policy. By resisting stronger controls on greenhouse gas emissions, these countries are serving the interests of corporations that repeatedly violate environmental regulations and other laws that serve the public good.

Note: Violation Tracker UK will go public on October 26. It will contain information on more than 60,000 cases brought by over 40 UK regulators such as the Environment Agency and the Health and Safety Executive. The database aggregates cases linked to more than 650 parent corporations based in the UK and over 30 other countries.

Trans-Atlantic Corporate Misconduct

It seems likely there is more corporate crime and misconduct in the United States than in any other country on earth. After all, Violation Tracker now documents 496,000 cases over the past two decades with total penalties of more than $724 billion. That’s a tough amount to beat, especially if you put aside kleptocracies such as Russia and look only at larger market economies with functional regulatory systems.

We will soon be able to make better comparisons between the U.S. and one of those economies—that of the United Kingdom. On October 26 the Corporate Research Project of Good Jobs First will release Violation Tracker UK. Like its U.S. namesake, VT UK will provide easy access to regulatory records covering a wide range of issues, including employment practices, environmental compliance, consumer protection, financial conduct and much more.

My colleagues and I are still finalizing the data, so I will not provide any actual penalty totals here. Yet there is one finding I can confidently share now: many of the same large corporations that feature prominently in the U.S. Violation Tracker will do so in the UK data as well. More than half of the 100 most penalized UK parents have also paid fines and settlements in the U.S.

The overlap between the penalty “leaders” in the two countries is concentrated in the financial services sector. I’ve noted numerous times that large UK banks such as NatWest (formerly Royal Bank of Scotland), HSBC and Barclays have behaved badly in the U.S. and have paid out billions of dollars in penalties for offenses such as interest-rate manipulation and violations of international economic sanctions.

It will come as no surprise that these same banks have been cited for some of the same sins at home. In fact, some of the U.S. cases resulted from investigations carried out in cooperation with UK regulators such as the Financial Conduct Authority and the Serious Fraud Office.

At the same time, giant U.S. banks have gotten into trouble in the United Kingdom. The VT UK list of most penalized corporations will include the likes of JPMorgan Chase, Citigroup and Goldman Sachs.

Banks headquartered in countries such as Switzerland and Germany also show up with large penalty totals in the UK as well as the U.S. Among these are UBS and Deutsche Bank.

Other portions of the financial services sector also engage in misconduct on both sides of the Atlantic. These include the accounting and auditing giants such as KPMG and Deloitte, which have gotten into trouble not only with the SEC and the Justice Department but also with Britain’s Financial Reporting Council.

Not all of the culprits that will appear in VT UK are multinational players. The database will include many homegrown offenders with little or no overseas presence. You will be able to check out the track records of offenders large and small when VT UK launches on October 26.

Corruption Galore

For those convinced of the depravity of large corporations and the super-wealthy, recent days have provided an abundance of vindication. Thanks to the whistleblower at Facebook and an anonymous leaker of a vast collection of confidential financial documents dubbed the Pandora Papers, we have amazing new evidence of corruption and anti-social behavior.

Frances Haugen’s release of internal research paints a picture of Facebook as prioritizing profits ahead of taking steps to address evidence that its algorithms promote social animosity and that its products such as Instagram exacerbate mental health problems among teenage users.

The financial documents revealed in the Pandora Papers depict numerous billionaires and government leaders around the world as brazen tax cheats who are accumulating immense amounts of illegal assets in the form of high-end real estate, yachts and secret bank accounts.

Of course, none of this comes as a surprise. In fact, this is not the first large-scale leak of private financial records showing misappropriation, money laundering and tax evasion among the global elite. We already knew that Facebook is basically unconcerned about the damage caused by its services.

As is always the case after major revelations like these, the main question is whether policymakers will do anything to address the problems. The odds that the Pandora Papers will prompt Congress to act are reduced somewhat by the fact that the disclosures do not include much about members of the U.S. elite. Major controversies have erupted in countries such as Jordan, Kenya and the Czech Republic, whose leaders are among those implicated in the documents. U.S. individuals consist mainly of lesser-known billionaires and art dealers.

Perhaps the most salient U.S. angle in the Pandora Papers is the increasingly important role played by states such as South Dakota as tax havens for elites seeking to shield illicit assets. To some extent this is an issue for state legislatures, though a bill has been introduced in Congress that would require trust companies and others to screen foreign clients seeking to move assets through the U.S. financial system.

There may be more policy momentum when it comes to Facebook. It and the other tech giants have been receiving criticism, for varying reasons, from members of Congress across the political spectrum. Along with the issues raised by the whistleblower, there are increasing concerns about the concentration of ownership within the tech sector. Among other things, Facebook is the subject of a new antitrust complaint by the Federal Trade Commission.

An article in the Washington Post quotes lawmakers suggesting that this may be tech’s “Big Tobacco moment,” a reference to the time in the late 1990s when the major cigarette manufacturers lost their stranglehold over public policy and ended up having to accept stronger federal regulation and paying out tens of billions of dollars in class action settlements.

It is good to hear that legislators are thinking in those terms, but they will have to turn up the heat much higher on Facebook, which so far is not admitting any culpability and whose CEO is too young to remember much about the 1990s.

Targeting Polluters in the Courts

When it comes to dealing with egregious corporate polluters, we tend to think first about what the EPA and the Justice Department are doing to address the problem. Yet there is another way in which environmental miscreants can be called to account: private litigation.

For the past half century, a series of major lawsuits have served as the means by which large corporations have been compelled to change many of their worst environmental practices and compensate victims of those abuses.

Some of these cases have become legendary and have inspired Hollywood movies. The 2000 film Erin Brockovich told the story of a legal clerk who was central to a successful lawsuit against the utility Pacific Gas & Electric for contaminating the water supply of a California town with the carcinogen hexavalent chromium. The 2019 movie Dark Waters dramatized the efforts of attorney Robert Bilott to get DuPont to take responsibility for exposing residents of a West Virginia community to highly toxic chemicals called PFOAs.

The latest expansion of Violation Tracker includes entries on the PG&E and DuPont cases as well as 100 other lawsuits resolved over the past two decades. As a result of these actions, dozens of major corporations have paid out a total of more than $15 billion in settlements around the country.

These are all group actions in which multiple plaintiffs sued the companies for widespread harm. Initially, major environmental lawsuits were brought as class actions. In the 1990s the U.S. Supreme Court put significant restrictions on such lawsuits, but trial lawyers have been able to achieve substantial settlements through the system of multi-district litigation in which cases from various jurisdictions are transferred to a single federal court with the aim of reaching a global settlement. MDLs are even more common in product liability cases (which Violation Tracker will tackle next).

Among the 104 environmental cases just added to the database, there are class actions and MDLs as well as suits brought by environmental organizations on behalf of communities.

Topping the list of settlement amounts are the cases brought in connection with the 2010 Deepwater Horizon catastrophe in the Gulf of Mexico. BP agreed to a $7 billion in 2012 settlement, which was separate from the more than $20 billion it later paid out to federal and state governments. Halliburton, also implicated in the disaster, paid a $1 billion private settlement. The other giant case was the $1.6 billion settlement Volkswagen reached with its dealerships affected by the automaker’s emissions cheating scandal. Like BP, VW also paid billions more in government settlements.

The company with the next highest total is Exxon Mobil, which has paid out more than $590 million in six different private environmental actions. Most of this amount came from a long-running lawsuit stemming from the 1989 Exxon Valdez oil spill off the coast of Alaska. The company was originally hit with a $5 billion punitive damages award, but it appealed all the way to the Supreme Court, which in 2008 slashed the amount to $507 million.

Four of Exxon’s other cases involved the gasoline additive MTBE. Communities and governments in various parts of the country have sued numerous oil companies to hold them responsible for MTBE contamination of water supplies from leaking underground oil tanks.

Another issue involving multiple companies is that of the PFOAs mentioned above in connection with DuPont. A variety of corporations have been sued for contaminating water supplies with these hazardous substances, also known as PFAs or forever chemicals because they do not break down in the body or the environment. DuPont and its spinoffs Chemours and Corteva have paid out hundreds of millions of dollars in these cases, while firms such as 3M and Georgia-Pacific have paid smaller amounts. Other suits are pending.

The dozens of other environmental cases have involved a wide range of toxic substances such as PCBs, dioxin, arsenic, TCE and vinyl chloride. The average of the 104 settlements is $150 million. Sixteen corporations have settlement totals above $100 million.

Missing from the list are major cases involving the role of corporations in exacerbating the climate crisis. Various suits have been brought, often by state and local governments and framed as shareholder actions, but so far none have resulted in significant monetary settlements. That is likely to change as the crisis grows worse and corporations are held culpable. When that happens, Violation Tracker will document the results.

Note: I would like to thank Suzanne Katzenstein and a group of her students at the Duke University Sanford School of Public Policy, who helped identify some of the environmental lawsuits discussed above.

States vs. Big Business

Twenty twenty-one is turning out to be a banner year for state government prosecution of corporate crime and misconduct. The biggest events are, of course, the settlements with pharmaceutical companies Purdue Pharma and Johnson & Johnson along with the three big drug distributors—Cardinal Health, AmerisourceBergen and McKesson—for their role in creating and prolonging the opioid epidemic.

While some argue that the amounts are not sufficient, those cases will result in billions of dollars in payments to state governments from the corporations and the family, the Sacklers, who controlled the now bankrupt Purdue and grew enormously wealthy from its operations.

In all, the states will rack up more than $30 billion in 2021, which would be the largest amount since 2008, when the states received about $53 billion in payments, largely as the result of a series of billion-dollar-plus settlements with the likes of Merrill Lynch, Morgan Stanley and Goldman Sachs to resolve allegations that the Wall Street banks misled investors in the marketing of auction-rate securities.

This year’s total is not entirely the result of the opioid litigation. There have also been numerous other cases resolved by state attorneys general that may not involve billions but are still quite significant. Here are some examples.

In July, the New York AG announced that TIAA-CREF, a subsidiary of retirement-services giant TIAA, had agreed to pay $97 million to resolve allegations that it fraudulently misled tens of thousands of customers into moving their retirement investments into higher-fee accounts offered by the company.

Also in July, the Oregon AG announced that L Brands, the owner of Victoria’s Secret and other retail chains, had agreed to commit $90 million of company funds to protect employees from sexual harassment and discrimination and require accountability from executives when misconduct occurs. The settlement came in the wake of allegations by the Oregon Public Employees Retirement Fund and other shareholders that the company’s board of directors failed to investigate former CEO and Chairman Emeritus Leslie Wexner’s close personal ties with convicted sex offender Jeffrey Epstein, and ignored a widespread and pervasive culture of sexual harassment at the company.

In June, the Ohio AG announced that Centene Corp. agreed to pay $88 million to resolve allegations of overcharging Medicaid by charging more than the capped industry-standard prices for drugs while acting as a pharmacy benefit manager. Centene paid $55 million to settle a similar case with the state of Mississippi, while Bristol Myers Squibb paid $75 million in an overcharging settlement with a group of states.

Also in June, the North Carolina AG announced that JUUL Labs would pay $40 million and change its practices to resolve allegations that it was responsible for misleading teenagers into becoming addicted to nicotine-based vaping products.  

Last month, the Pennsylvania AG announced that Glenn O. Hawbaker, Inc. would pay more than $20 million to resolve criminal charges that it misdirected retirement contributions meant specifically for employees working on prevailing-wage projects into a company-wide plan that covered executives and owners of the firm.

Also in August, the Georgia AG announced that Turtle Creek Assets, Ltd would pay more than $19 million to resolve allegations that the company committed multiple violations of the federal Fair Debt Collection Practices Act and the Georgia Fair Business Practices Act.

What this sampling of cases shows is that amid all the controversy over their policies on issues such as voting rights and abortion, many states of varying ideological orientation continue to carry out their responsibility to protect citizens from irresponsible corporate behavior.

Note: These cases will appear in an update of Violation Tracker that will be posted later this month.

Is Big Business an Agent of Social Change?

In the wake of the killing of George Floyd by Minneapolis police in May 2020, Corporate America pledged to spend billions of dollars to address systemic racism. A new analysis by the Washington Post raises questions both about those commitments and the entire idea of relying on big business to address social problems.

Surveying the 50 U.S. largest companies (based on stock market valuation), the Post found that 44 of them pledged a total of $4.2 billion in donations and committed another $45.2 billion in loans, investments and other initiatives. More than one year later, the companies reported disbursing only $1.7 billion.

The slow movement of the funds should not be taken as an indication that the commitments were a burden on the firms. As the Post points out, the $4 billion cash portion represented less than one percent of the aggregate annual profits of the 50 companies.

Much of the $45 billion in other commitments, 90 percent of which came from Bank of America and JPMorgan Chase, represented loans and investments on which the companies would make a profit. Moreover, providing home mortgages and other financial services in Black and Latino neighborhoods is something the banks were already supposed to be doing under federal laws such as the Community Reinvestment Act.

All this goes to show that the companies were not sacrificing very much in their racial justice commitments. Yet many of them have still dawdled in writing the checks. For example, the Post notes that Chuck Robbins, the CEO of Cisco Systems, tweeted in June 2020 that his company would be contributing $5 million to a handful of groups such as Black Lives Matter. The newspaper found that Black Lives Matter has not yet received any money.

It remains unclear whether Cisco and the other companies ever intend to make good on their pledges, even though they have already reaped the public relations benefits from the commitments.

Apart from the matter of reliability is the question of whether it makes sense to call on large corporations to help deal with matters such as systemic racism. Typically, this is framed as a debate between those who see big business as a potential force for positive change and those who argue that corporations should focus solely on creating value for shareholders.

There are problems with both those positions. The notion that the business of business is solely to generate profits, long popularized by the rightwing economist Milton Friedman, is not only amoral but simplistic. Corporations may find it beneficial to spend money on things such as charitable contributions or lobbying even if the immediate effect is to reduce profits a bit. Those expenses may very well lead to higher profits in the longer term by generating good will or changing public policy.

Some corporations, in fact, may seek to project an image of social or environmental responsibility as part of their brand—think Ben & Jerry’s, Patagonia, etc. When they make contributions to progressive causes, they are really engaged in nothing more than marketing.

Yet perhaps the biggest misconception in most discussions of the role of corporations is the assumption that big business is somehow part of the antidote to social and environmental ills. The truth is often that companies are a cause of those ills.

For example, when it comes to systemic racism, large corporations are hardly innocent bystanders. Many of them have decades-long track records of racial discrimination in the treatment of both employees and customers.

Many of these cases are documented in Violation Tracker. The database contains more than 3,000 entries on employment discrimination (of all kinds) with total penalties of more than $4 billion. These include actions by agencies such as the Equal Employment Opportunity Commission as well as class action lawsuits. Among the latter are multi-million-dollar settlements paid by major companies such as Coca-Cola, Federal Express, and Eastman Kodak.

Violation Tracker also has more than 200 cases in which companies were accused of bias in their dealings with customers—such as charging African-American borrowers higher interest rates than their white counterparts. These cases have resulted in more than $1 billion in fines and settlements. Among the companies involved in these matters have been MetLife, JPMorgan Chase, and Toyota.

All of this is to say that many corporations have much work to do to eliminate systemic racism under their own roof before being called on to help address the problem at a national level. When it comes to social change, big business often remains part of the problem rather than the solution.