As I look at the world, I see big problems with climate change, biodiversity loss and inequality. These are direct consequences of our economic system. If we going to apportion blame, we would need to include all the players in the system, but I find myself pondering the role of corporations. Why, in the face of pressing environmental concerns, do some continue to seek new fossil fuel sources? Why are they still digging up the earth’s surface, instead of recycling what is already above ground? Why are these organisations behaving differently to the way that I think that they should?
One of my colleagues, Roger Urwin, often cites the 4-3-2-1 pincode, an impact framework that assigns 10 units of power to influence systemic challenges to wealth and well-being such as climate, environment and social issues.
These are divided as:
- 4 units of influence to public policy
- 3 units to corporations
- 2 units to the investment community
- 1 unit to individuals, citizens, consumers, workers, voters, activists, etc.
Investment, with its 2 units, has the powerful potential to connect all of these entities. In order to influence, we need collaboration.
My hypothesis is that collaboration occurs between people, not between corporations. It is people that join investment coalitions, people that advocate for change to senior management and people that sign letters of advocacy on behalf of the corporations they are employed by.
The individuals that desire to support people and planet likely find this collaboration and advocacy hard work. It might feel as if they are actively battling against corporations with other agendas. They feel a degree of tension between ‘the self’ and ‘the corporate employee’. Particularly prevalent among younger employees who are trying to square commercial requirements with their knowledge and values.
And that is because people care. They may not care about macroeconomics or global warming in a faraway country, but they do care about pollution in their own communities, inequality within their workplaces, a liveable planet for their children and rising interest rates effecting their mortgage and those of their loved ones.
I know this is not the common narrative. The media constantly tells us that humans are intrinsically malicious, selfish, and untrustworthy, that it’s a cutthroat world. Think Lord of the Flies writ large.
The thing is, I don’t agree. And neither does Rutger Bregman, the author of Humankind. Recent scientific findings across a spectrum of disciplines suggest that humans are at their core “friendly, peaceful, and healthy”. Now while we are all made up of light and shadows1, if you look around at those close to you, you will find love and care.
Now, what does this have to do with an organisation? An organisation is made up of people, people who care. They have values, and they want to see those values reflected in their work. Yet the modern organisation seems to be constrained. Think fiduciary duty, an obligation to shareholders and the general culture of corporate life.
Milton Friedman’s famous 50-year-old piece about corporate social responsibility, claimed, “there is one and only one social responsibility of business- to use its resources and engage in activities designed to increase profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud”. This view has been highly influential, leading to a narrative of competition, shareholder value maximization, and profit above all else.
From here it was agreed, by the business community, that any corporate attempt to promote social goals is subversive to capitalism. Friedman was arguing for specialisation, that the corporation should focus on profits and other entities, better suited, could focus on social good.
This has allowed organisations to be incredibly productive and look super-efficient, but in reality, this has just led to an externalisation of cost. And it has resulted in the growth in corporate lobbying, rising carbon emissions, limited consideration of these externalities, widening social inequalities, the list goes on.
Friedman’s view has led to the creation of supposedly amoral organisations. Which if they were humans might be considered sociopaths. They lack a moral compass, manipulate others, and violate the rights of their wider stakeholders.
The endless pursuit of profit maximisation, for shareholders only, creates suffering, and this suffering perturbs customers and employees. Millennials are rejecting these values, and research by Global Tolerance found that 62% want to work for a company that makes a positive impact. Ignoring two-thirds of the young workforce should be done at an organisation’s peril.
Somewhere along the way we forgot that ‘the corporation’ is a made-up concept and much of what governs its operations in this day and age is based on the opinion of a single (dead) man2.
In my opinion, it’s time for leaders of corporations to embrace collaboration instead of competition, to recognise that amorality doesn’t exist, and rediscover a sense of duty to all stakeholders. Then we arguably have 3 units of power to use to influence systemic challenges. Not to mention another 2 units in the investment industry, which is of course made up of organisations, made up of people.
If we can transform organisations into entities that serve their employees and society, we will have a powerful force for good. There are those that would argue that this is unrealistic, especially in a reasonable timeframe. And to that I would answer with a quote-
Everything is theoretically impossible, until it is done.
Robert A. Heinlein
It’s time for leaders to remember their humanity and fulfil their responsibility to serve others.
[1] I highly recommend these two books on the way we interact with ourselves, each other, and society:
–The Myth of Normal: trauma, illness & healing in a toxic culture
–The body keeps the score: mind, brain and body transformation of trauma
[2] A Keynes quote seems appropriate here: “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.”