In a December 2019 feature in the Financial Times by Robert Armstrong, Buffett in his role as Chair of Berkshire Hathaway’s Board, explained that the company’s motive to turn Iowa into “the wind capital of the world, the Saudi Arabia of wind” was not motivated by moral reasons of “doing good” in society by turning away from fossil fuels. They invested in wind because the government paid them to do so in the form of an attractive tax credit that made it a strong investment proposition.
Responding to this, Armstrong wrote: Another kind of capitalist would go on to say that moving from fossil fuel to renewable energy reflected the responsibility of his companies to society, a matter of “doing well by doing good”. Such is the current corporate consensus, expressed– sincerely or not–in annual reports and advertisements by companies across the globe.
Some people might be tempted to argue that Buffett’s view echoes that of Milton Friedman who stated that the only social responsibility of a company is to make profits. I wouldn’t be too hasty. My view is that Buffett is a person of the highest integrity who is honest enough to state that business can’t be moral arbiters.
“What makes them think they know better?” he asked. Knowing better smacks of arrogance. Applying an ethical mindset in the best interests of the company, however, results in the best decisions, and that is precisely the case with BHE.
BHE did do well by doing good in Iowa but the main focus was on establishing a strong, profitable company that created wealth for Berkshire Hathaway and its shareholders; not instantly, but in the long-term. Buffett characteristically takes the long-term view and investors who have stayed with him in the long-term have been handsomely rewarded. If you invested in Berkshire Hathaway in 1965 and kept your money there, in per share market value you would have made a staggering gain of 2,744,062% up to the period 2019. Compare to the S&P 500 over the same period you would have made 19,784% with dividends included.
Buffett also happily contributes to tax in the US, and says he hopes and intends to pay more tax. He explained this in the February 2020 Shareholder Report: In 2019, Berkshire sent $3.6 billion to the U.S. Treasury to pay its current income tax. The U.S. government collected $243billion from corporate income tax payments during the same period. From these statistics, you can take pride that your company delivered 1.5% of the federal income taxes paid by all of corporate America. Fifty-five years ago, when Berkshire entered its current incarnation, the company paid nothing in federal income tax. (For good reason, too: Over the previous decade, the struggling business had recorded a net loss.) Since then, as Berkshire retained nearly all of its earnings, the beneficiaries of that policy became not only the company’s shareholders but also the federal government. In most future years, we both hope and expect to send far larger sums to the Treasury.
Continue reading your story on the app
Continue reading your story in the magazine
The last time I felt so much power in my hands was when I was driving the Maserati Quattroporte. A beast on the road with the sound to boot. The CLS however is plain sexy, aggressive and not too loud. Put simply it’s the executives dream car. This demon on wheels has a 210kW six-cylinder diesel engine which makes the sedan sprint from zero to 100km/h in a swift 5.7 seconds. Though I didn’t quite get to those stats I must say I have no doubts about that aspect.
Is artificial intelligence reinventing insurance? This was the question posed by Bill Hoggarth, national sales manager, Digital Business Solutions at high performing and secure ICT solutions provider, Datacentrix. He was speaking at the recent Robotics, Drones and AI in Insurance Conference, held in Rosebank, Johannesburg. In answer to the question, Hoggarth clarified that no, he did not believe artificial intelligence (AI) was changing the nature of insurance–at least, not on its own. “My view is that AI is not reinventing insurance, but that it is part of the mix of technologies that is causing a shift in insurance today,” he said.
A conversation with In2IT Technologies
A brief glance of our services
Attractive Production Tax Credits
“We wouldn’t do it without the production tax credit we get.” That’s what Warren Buffett said about his holding company Berkshire Hathaway’s US$30 billion investment in wind turbines and infrastructure in the State of Iowa through one of its companies, Berkshire Hathaway Energy (BHE)
Leading The Future
Leading the modern world requires fast thinking and an impulsive ability to adopt and adapt to the technologically driven era. The way we conduct business today has drastically changed from the way business was conducted ten years ago, failing to integrate innovation and technology could prove fatal to any business.
Entrepreneurs Hit Hard By Coronavirus
The big challenge
Bright Minds, Bright Future
For the economy to grow, businesses need graduates whose skills match their needs. Producing these graduates is the core focus of Stefan Ferreira, CEO of the Richfield Graduate Institute of Technology.
Use The Covid-19 Lockdown To Think Differently
Crowdfunding, delivery of food, hygiene and learning packs, and psychosocial support could #changethestory
The Evolution Of The IT Operation
Consistency in delivery is key
Safety In Business
Securing the future is essential