Hope 100: The movement towards better business
Scores of corporations are now committing to balancing profit with positive impact. Is it all ‘purpose wash’ or a genuine turning point for business in society?
This piece is part of our Hope 100 series, telling the stories of the people and organisations creating hope for 2020 and beyond
‘Our planet is staring down the barrel of twin climate and ecological crises. At fault is a system that rewards the ‘single-minded pursuit of profits’. Shareholder primacy is a busted flush. Companies must account for all stakeholders. And they can start by taking meaningful climate action immediately.’
It might sound like an environmental campaigning group’s manifesto. But believe it or not, it is a collective statement from an alliance of more than 3,000 companies: the B Corps. Their mission is to re-write corporate capitalism before it drives us and our planet to a point of no return.
B Corp, which was founded in 2006 by three Stanford University graduates, may not be the first venture to urge companies to prioritise their social and environmental impact alongside profit. But with members that include consumer giants like Danone and subsidiaries of Coca-Cola and Unilever, its reach into big, commercially ambitious brands is inspiring change where it is most needed.
Other signs abound that business as we know it is changing. In August, a lobby group of 181 US-based chief executives from the likes of General Motors and Walmart, collectively known as Business Roundtable, announced it would no longer prioritise shareholder interests over everything else.
Instead, these leaders pledged to run their firms for the benefit of all stakeholders: “Customers, employees, suppliers, communities and shareholders”. The Financial Times, and prominent voices within its community, cautiously welcomed the move. At an event for the FT City Network, Andreas Utermann, outgoing boss of asset management firm Allianz Global Investors, said that today’s capitalism is “borrowing from the future while destroying the environment” and is evidently “not sustainable”.
"If the planet doesn’t survive, capitalism doesn’t do too well either"
Meanwhile in November, the British Academy published a report proposing a bold new remit for corporations: to profitably solve problems of people and planet, and not profit from causing problems.
“This is not about a fundamental redesign of our system away from capitalism,” argued the University of Oxford’s Prof Colin Mayer in the document. “On the contrary, it’s a way of making capitalism function more effectively. If the planet doesn’t survive, capitalism doesn’t do too well either.”
Bates Wells, a London-based law firm, went even further by drafting an amendment to the Companies Act that would compel firms to act purposefully. If passed (a huge if), the legislation would displace shareholder primacy for UK firms, or as Bates Wells puts it, “upgrade the capitalist operating system, so that the system is responsive to a world of increasingly limited resources”.
Businesses already signed up to the B Corp movement are well placed for this brave new world. Becoming a certified B Corp requires firms to demonstrate a commitment to people and planet as well as profits.
Those that have done so are starting to show the positive effects that arise when business is “reprogrammed”, says James Perry, director of UK frozen food company Cook and a member of B Corp’s European advisory board. They show “how business can be an interdependent force for good, rather than a force for extraction and exploitation”.
The certification requires companies to be assessed to check they make the grade. Applicants must show credible performance on issues such as community investment, worker rights, environmental practices and customer relations. A stand-out feature is that prospective members have to re-write (if necessary) their articles of association to balance purpose and profit – bringing legal accountability to their commitment.