Michael Posner on the ethical challenges facing social networks and businesses

• Ethics professor Michael Posner says there is an obligation for social networking sites like Facebook to do more to prevent the dissemination of political disinformation.

• Posner says that when companies actively address ethical issues it not only benefits their brand image, but also makes them more efficient, more productive, and makes more people want to work for their company.

• Posner says the biggest challenge is short-termism. He has a lot of good CEOs from big companies that want to do the right thing but are under pressure every three months to deliver numbers and no one ever asks on the quarterly earnings call how they are doing on human rights.

Business Insider's Sara Silverstein recently spoke with Michael Posner at the World Economic Forum in Davos, Switzerland. Posner is the director of the Center for Business and Human Rights at NYU Stern and a professor of ethics and finance. Previously, Posner served in the Obama Administration as Assistant Secretary of State for the Bureau of Democracy, Human Rights and Labor. Following is a transcript of the video.

Sara Silverstein: So you just got out of Trump's speech. What did you think about what he had to say?

Michael Posner: Well, it was nothing unusual. It was really almost an advertisement for doing business in the United States. He, as he does always, talks about the strength of the US economy, which is fine. I would have liked him to talk a little bit about the world. And the US role in the world, but that was for another day I guess.

Silverstein: And we talked to Scott Galloway a lot, and he has mentioned that he thinks the Facebook has a responsibility to look for fake news and identify it and that they are more of a media company and not just distribution. What do you think about that?

Posner: Yeah, I think the discussion is evolving. We did a report several months ago called harmful content. And we focused on Isis and the Russians, in particular. Where there's political disinformation being pushed in one case, by a terrorist group, in another, by a government that's overwhelming our system. It's a kind of Jiu-Jitsu. They're using our technology against us and really undermining our democracy.

Posner: So I think the obligation of the companies is to do more. We've laid out a range of ways. And then there's a place for government as well. Although I'm very nervous about governments controlling content.

Silverstein: And why do you call it political disinformation instead of fake news?

Posner: I think fake news has become a kind of cliche phrase. Everybody uses it to mean something different.

I think we ought to be very precise. There are entities out there that are trying to undermine our political system - our democratic system. And it's a very different thing when a state does it or an organized terrorist group with a deliberate intention really to to undermine and hurt our democracy.

Silverstein: For political outcome.

Posner: For political outcome.

Silverstein: Instead of just - just for extra views?

Posner: Yeah, I mean they're people, you know - two kids in Macedonia trying to make a buck producing things. That's one kind of problem. It's a very different problem when a sovereign government's doing it.

Silverstein: And we've heard a lot lately about - George Soros was just talking about it last night - about the addictive nature of some of these social networks. Is that an ethical problem? Is that something you're concerned about?

Posner: Yeah, you know, the fact is that the new media that social media is very powerful. It's ubiquitous. That's a fact of life the - sun came up this morning; it's going to go down in the evening. I don't think we can do much about that. What we can do is figure out how to govern it. And that to me - we're in a new world here. And the the speed and the strength of the media means we've got to be particularly attentive when somebody's deliberately misusing it.

Silverstein: And what do you think is the biggest ethical challenge we have today?

Posner: I think there's a challenge on the business side figuring out how to both be profitable. I'm pro company; I want companies to make a profit. But how to then operate in a globalized environment - globalized world - where we have very weak governments and very powerful companies. And so the idea that government alone is going to protect people from all the things that can go wrong - inequality, mistreatment of workers, etc. - it's not realistic. A lot of governments are unwilling or unable to do it. So it puts now companies in a position where they've got to figure out how to navigate.

Silverstein: And what's the best way? I mean, I know there's a lot of business leaders already feel that way - that they want to do good in the world. What's the best way to incentivize that and and to make that a real part of their goals?

Posner: Well, I think three things - one businesses have to acknowledge that they have an affirmative obligation. Let's say on the issue of human rights or global supply chains, they've got to say clearly, explicitly, within their firms, "we're going to do this." Then we have to figure out how they work together - how industry partners or industry competitors work together, because one company can't do it alone. And then you have to develop standards, metrics, ways of accountability.

Silverstein: And you do that with governing with laws and rules? Or you do that by making the consumer care and, you know, coming from that angle?

Posner: I think it all - every industry has its own dynamic and they're all in different place. I worked for years - and I'm now the chair of a thing called The Fair Labor Association, which works with apparel companies. We've got a bunch of big companies there - Nike Adidas, Puma, etc. - and we've got standards.

We've been in existence 20 years. There's metrics. They meet and evaluate. And they're there with NGOs, with universities. So there's a dynamic process where companies don't run the table. But there is a sense of 'these are the expectations; you're going to be evaluated every three years, and there's going to be expectations of what you do.' I think that model has to apply across a range of industries.

Silverstein: And is that a voluntary thing that shareholders and consumers like and is that why they do it?

Posner: Yeah, well they do it originally because there was a big sweatshop crisis in the '90s and it was the Clinton Administration that got it going. But now I think a number of the better companies have realized this is actually in their interest. Both for brand reputation and also because they recognize that when they do better on these things, they wind up with more efficiency, greater productivity, people want to work for their company. So there's an affirmative case and there's also the protection of brand.

Silverstein: And for consumers and investors, how much value is there in not investing in companies because of the behaviors or not buying products? Because that's what I feel like a lot of people think is that their way to have a voice.

Posner: Yeah, so let's take those two things separately. The investment community, I think, increasingly recognizes that the new generation of investors - women and millennials - have very different sensibilities about what they're investing in. In the next few years, women are going to control more assets than men and in the next 20 years, millennials are going to control $30 trillion.

So I think even the biggest investment firms are saying, "oh my god, we better pay attention to what they're doing." Having said that, they have ESG ratings - environment, social, governance - but it's around the edges. It's really not what they do in most cases. So part of the challenge here is to come up with, again, metrics - easy ways to evaluate. So that those big investors can make smart choices. We're not there yet, but we're, I would say, we're at the beginning of a serious, a serious conversation. And I think we're going to get there. With consumers, again, we need better information that's easier. I want people to be able to go into a store with their phone and have some way of evaluating "this brand's better than that brand." So one of the things we're starting to do - we evaluated the ESG measures - about a dozen of them. We found out they're pretty inadequate. And so we're going to take the garment industry, again, which we know well - apparel - we're going to spend the next year-and-a-half looking at the 25 biggest brands; and we're going to make some evaluation of performance. Not just promises, but performance - who's actually getting a better result. And then we're going to try to put that out there and start to do that in other Industries.

Posner: Consumers need better, easier information. When they get it, I'm convinced a portion of the consuming public is going to make the right choice.

Silverstein: And will that have a bigger impact than disinvesting or do both of those have - both of those very impactful?

Posner: Yeah, I'm not such a big fan of disinvestment. I would rather that people invest in the good companies. And so I've had lots of debates with people in the college community who say, "oh, we have to divest." I want the best companies to be rewarded for doing the right thing. But, again, we've got to have measures that differentiate and evaluate. This is what it means to be best in manufacturing, in extractives, in agriculture, etc

Silverstein: When you look at companies and the general ideas that most companies are - the responsibility of the leaders is to maximize shareholder profits - and is that something that's changing or is there a reason for that to change?

Posner: Well, I think it is changing. It's not changing as fast as I would like. The comments that Larry Fink from BlackRock made a couple weeks ago. He said "profitability, you know, return on investment in the quarter's important. But we also have to look at the common good." Again, that's a very important thing coming from a business leader and investment leader. That has to trickle down to the people in the his firm and others who are making daily trades. We're not there yet. But I think people are recognizing, "this a new vista; we haven't figured out how to do it, but this is the way the world's going."

Silverstein: And how much of that is due to like the short-term reporting that we have in America for companies?

Posner: Yeah, my biggest challenge in what I'm doing at the Center for Business and Human Rights is short-termism.

You know, if - and I have a lot of good CEOs of big companies here and elsewhere say, "I want to do the right thing; I am constantly under pressure every three months; I've got to deliver the number." And nobody at the quarterly call ever says, "how are you doing on human rights?" It just never happens. So the investors need to pressure the company's, the company's then need to do the right thing with their global business partners, and consumers need to reinforce them.