Scary Thoughts On Buisness and Social Change

The idea of sustainable development is Halloween stories for corporations. Asking about what it would take to transform a company into a genuinely sustainable operation raises all sorts of uncomfortable questions in any strategy discussions. Questions like: What sort of society do we want? What kind of world do we want our children to live in? How do we best meet people’s needs and drive social change? I have many informal discussions on this topic with senior executives and once those macroeconomic issues are touched, people get nervous because there are no simple solutions.

How could we compete in that social climate let alone dealing with the hyper-competition?  What will the shareholders and the institutional investors think?"  Will people see this skeptically (probably yes)? Can we measure progress?

Business decisions are mostly driven by short-termism. Companies are, for the most part, not seeing enough of the distant horizons and scenarios. I have not seen a single case that a director get kicked out of the board because they spend too much time focusing on immediate results, and not enough visualizing what role a company might play in a more sustainable future? I have not seen one case.  The discussion of sustainability strategies is inevitably about the long-term – about aspirations, corporate intent, not achievements.  It should be part of any company’s long term strategy. CEOs prefer to talk about achievements – what’s actually been done rather what should be done. Both are important.

We understand this is a double-edged sword. When BP unveiled its ‘Beyond Petroleum’ brand a few years back, it was making a clear statement of future intent (to its customers, staff, shareholders and investors) – not suggesting it was about to close down the pumps next week. For those who recognized this applauded the strategic vision and the courage of the board. But for its critics, the whole rebranding was simply a marketing exercise. Greenpeace was quick to seize it, countering with its own rebranding: "BP – Burning the Planet" – claiming that the oil giant spent more on the new brand than its entire annual budget for renewables (that is also true). A little unfair, perhaps, given the fact that campaigners had been challenging the oil majors for years to declare an intention to transform themselves into sustainable energy companies – but then communication is sadly all too often about impact, not accuracy and dialogue.

Peter Barnes (co-founder of social venture group Working Assets) wrote a book called Capitalism 3.0 calling for a fundamental change in the way our economy is structured. He believes that our current version of Capitalism 2.0 is failing to generate the environmental, social and economic returns that are vital to create a sustainable future. A new approach is needed to simultaneously protect our natural resources and reduce poverty. I would add that we need to create better efficiency in distribution of wealth. Without that, there will always be global conflicts that prevent us going forward.  Is this impractical? I don’t know. Think climate change, corporations are not dong enough to limit the emissions of carbon into the air because air is free, and the same can be said about water.

Let’s think about another idea of social change. Young people who weren’t not born to rich parents often struggle to pay for college or children that require special medical care cannot afford them, I throw those numbers out there you will find it scary. Why can’t we redefine our stock exchanges as part of the commons? In exchange for the right to issue publicly traded shares and the privilege of limited liability, larger organization would be required to deposit 0.5% of their shares in a fund every year for ten years? Why can’t the larger oil companies that made billions deposit 1% of their profits when they exceed certain return ratio to a fund that support alternative transports? What can’t the top them large software companies that are sitting on billions of cash pay a small dividend every year to a fund that provide affordable computers to the inner cities kids so they can learn and stay away from troubles?

I think every corporation (large or small) must have a social change component in their long term strategy. ‘Corporate social responsibility’ sounds nice, but in itself is virtually big meaningless bullshit. It is time to act. I believe this is a test that every global brand needs to pass. I hope it happens sooner. Please share your thoughts?

Happy Halloween!!

Comments

[Flavio Azevedo]

Sooner or later, long-term worries will become short term.

The more companies avoid thinking about long-term, the faster the long-term consequences will materialize.

We are seeing this everyday...and the environment is only one side of it.

For Kodak, thinking beyond film photography was long-term.

The future happens, no matter we like it or not.

We should should this to our clients everyday and present growing evidence.

A Brazilian economist, for instance, is conducting a study for the World Bank that proposes that the Gross Domestic Product should not be used as the main measure for the success of a country or region.

Why? Because it only shows the present. Not the future.

As far as GDP goes, nature and stocks are endless.

Why do we give so much importance (in GDP) to how many cars were produced last year?

The serious and strategic question is... how many car will we really be able to produce in the future?

We may not have plans for the Earth. But the Earth has plans for us.