Bad corporate behaviour is often explained as a failure of ethics. That explanation is comforting, because it suggests the problem is limited to bad actors. Remove the villains, replace them with better people, and the system will work.

That explanation is wrong.

The system produces bad behaviour even when no one involved intends to do harm. The reason is structural. The people who benefit from an action are often not the same people who pay its costs.

This separation is the core problem.

In the current system, a company can profit from an activity while pushing its negative consequences outward. Those consequences inevitably lands somewhere else, because they must land. On workers, on customers, on communities, on ecosystems, on future generations. As long as the cost does not return to the balance sheet, it does not exist in the company’s decision-making process.

This is what economists call an “externality,” but that word is too polite. What it really means is damage without accountability.

• A factory pollutes a river. The clean-up cost is paid by the public, not the company.

• A platform degrades mental health. The healthcare system absorbs the fallout.

• A business underpays workers. The state subsidizes survival through welfare.

• A corporation extracts resources unsustainably. Future generations inherit the loss.

From the company’s perspective, none of this is irrational. If the cost is external, then avoiding it is rewarded. A firm that internalizes costs while its competitors do not is, in many cases, choosing to lose.

This is why “doing the right thing” is so often framed as a sacrifice. The system is set up so that harm can be profitable, and responsibility can be optional. And because profit is measured quarterly, while damage unfolds over years or decades, the time horizon itself becomes an incentive to ignore consequences. Immediate gains are visible. Long-term harm is abstract. A spreadsheet does not feel regret.

The result is a world where companies can appear successful while actively eroding the conditions that make success possible in the long run.

This is not an accident. It is the logical outcome of separating reward from responsibility.

Once that separation exists, behaviour follows. Environmental destruction, labour exploitation, predatory products, planned obsolescence, data abuse. These are not aberrations. They are strategies that make sense inside the rules of the game.

And importantly, this is not fixed by better messaging, transparency reports, or corporate values statements. As long as the system allows profits to be privatized while costs are socialized, harmful behaviour will continue to emerge, regardless of intentions.

If you can externalize costs, you can look profitable while being destructive. And if the system rewards that, it will keep producing it. The question is not whether corporations should behave better. It is why the system makes it rational for them not to.