Patagonia is the new yardstick for ethical and social businesses (image from Fortune Magazine)
Of late, I hear a common clarion call amongst leading thinkers for companies to pursue a more humane, ethical and sustainable business strategy. These proclamations allude to the fact that the current system of profit and GDP growth at all costs is broken, and that a more holistic and considered approach is needed.
The first is renowned management guru Michael Porter, who urged companies to adopt shared values when crafting their business strategies. Porter cites that the capitalist system which much of the industrial age economy is built on has been the cause of much social, environmental and economic woes, with companies (and their leaders) prospering at the expense of the rest of humanity.
To address this, companies should focus on the principle of shared value. This philosophy recognises societal needs, environmental needs, and other external costs beyond a company's walls. Its main idea is that businesses should not be oblivious to the trade-offs that it makes which harm humanity, its employees (or supplier's employees), nature or the environment. Rather, it should consider these impacts when developing its plans of action.
Porter's ideas resonate with Yvon Chouinard, Jib Ellison, and Rick Ridgeway. Their concept of "The Sustainable Economy" (a huge topic these days) proposes that this utopian ideal isn't that unattainable with companies like Blue Skye and Patagonia blazing the trail. The authors claim that we're now able to measure ecosystem value in real dollars and cents, with answers to questions like these:
How much would it cost to manage the erosion control provided by mangrove forests?
What is the value of pollination by insects to agriculture?
What would we need to pay to sequester carbon and generate fresh water on our own if nature isn't doing the job?
By measuring these environmental opportunity costs and pricing mother nature's resources accordingly, companies can better manage the true costs of their business activities. Rather than just milk the environment for all its worth, companies can conscionably develop a sustainability scorecard to determine how they perform not just financially but socially and environmentally.
A related idea on ethical living is touted by Umair Haque, an upcoming thinker. Haque's thesis is embodied in what is called the "Betterness Manifesto". Espousing that a focus on GDP growth, profit and arms-length exchanges isn't enough to build a better world, he describes eight tenets (paraphrased) to build a more human balance sheet:
Invest: Put your money where your mouth is and support companies that are, yes, profitable, but that profit by doing meaningful stuff that matters the most.
Allocate: Move your money to a better bank, a local bank, a community bank, a bank that hasn't needed a bailout, or a totally new kind of bank, like BankSimple.
Cut: "Consume" less and learn to spend your hard-earned cash on smaller amounts of awesome stuff that's made with love, ethics, passion and minimal harm to our beautiful world.
Work: Stop giving your talent away to organizations that misallocate it, underutilize it, and possibly even abuse it. Instead do more meaninful work that adds value or better yet, start one.
Live: If you're living somewhere meaningless, move away from exurban sprawls and mega-highways (in America at least), and towards a Richard Florida style creative community which does not inject toxins into the environment.
Civilize: We need to get re-civilized and to join civil society, become volunteers, and get involved with non-profits that exert positive externalities with that benefits others more than it benefits us.
Support: Support what you think matters. Want haute couture? Stop buying fast fashion. Want green energy? Invest in going off-grid.
Reflect: The 20th century was built never to allow room for reflection, only work. Take time out, no matter what, hang out and reflect on what betterness means in your life, how you're making it happen and what you can do about it.
The challenge in these lofty ideals is how one can embrace enduring ethical behaviours at both corporate and personal levels that can result in profits, environmental sustainability, social wellness, and happiness. Can we afford to eat organic all the time, buy natural fibre clothing, and eschew cheaply manufactured products from third world sweatshops? On a business level, can companies which traditionally exploit low costs, efficiency, and best-sourcing principles also consider the ethical dimensions?
Can we subscribe to the three spheres of sustainability (courtesy of mygreeneducation.com)
Perhaps, for a start, we can see how we could live socially and environmentally responsible lives as Haque proposes. Those of us who are working can try to influence our organisation to adopt better business practices one step at a time. Ultimately, if everyone of us do our part, we may be able to enjoy the triple bottom-line of profits for the company, job satisfaction for the employee, and preservation for the environment.
Labels: and Rick Ridgeway, business strategy, environmental capital, HBR Ideacast, Jib Ellison, Michael Porter, social capital, sustainability, Umair Haque, Yvon Chouinard