It’s a common refrain that the grand challenges facing today’s world have largely been visited upon us by the actions of corporations. The reality of globalisation (for all its benefits) coupled with vested interests and corporate greed have left many of us deeply dissatisfied and cynical about how business operates to serve itself, while remaining blind to wider environmental and social issues. But while we’re deeply aware that corporations are a large part of the problem we must also be ready to embrace their role as a large part of the solution. This is, understandably, difficult for long-term ‘deep’ greens to accept. In their eyes corporations are, and always will be, entirely self-serving, corrupt, and morally redundant. But just as new gene therapies seek to edit out mutations responsible for genetic conditions held in our cells’ DNA, so we must encourage analogous work being done in the corporate sector.
In researching An Optimist’s Tour of the Future I made a house call on the legendary John Seely Brown, former director of the Palo Alto Research Centre (famous for the invention of laser printing and graphical user interfaces). Nowadays he works independently, helping organisations adopt and adapt to new technologies. He told me a story.
“I was recently asked to suggest the innovation in the last three hundred years that had generated more wealth for mankind than anything else. I knew why I’d been asked – they pre-supposed I was going to talk about the microprocessor and I disappointed them dramatically. I said, ‘the innovation that’s generated more wealth than anything is the limited liability corporation because that enabled you to accumulate, invest and leverage your wealth but with limited liability. That is what actually unleashed the power of the 19th and 20th Centuries, that one innovation.”
The limited liability corporation was an example of institutional innovation, a new structure for organising people and capital that has shaped our world just as fundamentally as the institutions of religion or government. But like many religious and governmental structures, corporate models of organisation appear to have fossilised in most cases – and as such have become desperately out of step with the needs of humanity and our home planet.
But slowly things are changing. Some corporations are getting it, and by ‘it’ I mean they’ve realised that, as a species, we’ve moved from being tenants on the planet to being the landlord, which means they have new responsibilities.
In May this year sportswear giant Puma, aided by the help of PricewaterhouseCoopers (PwC) and the environmental research group Trucost, became the world’s first major corporation to publish a set of ‘environmental profit and loss accounts’. It has now set itself the target of reducing carbon, waste, energy and water use by 25% by 2015. Executive Chairman Jochen Zeitz said, “To continue disregarding externalities is no longer effective to the health and long-term prospects of a business, nor to our planet. We no longer have a choice but to be accountable, ethical and responsible to our environment.”
This environmental accounting is just the sort of institutional innovation we need – and in November Gucci and Yves Saint Laurent announced they will be following Puma’s example. That said, let us not for a minute suggest that any of these brands have suddenly become whiter-than-white, cuddly guardians of the biosphere (Puma’s sponsorship of Formula 1 hardly sits comfortably in this picture). But in my work with business I’ve become convinced that when some corporations talk of taking their impact on the environment into account they’re serious. The cynic in us all says ‘yeah, right’, but you know what? I’m happy if just one in ten of them are genuine. Because this is only round one. Once one of them turns in the right direction it becomes easier to steer the others. By round two, it’s a game of one in nine, by round three, a game of one in eight – and by the time 30% of an industry has moved, the rest will follow. If we got depressed about the nine out of ten, instead of fighting for the one, we’d never start. In addition when corporations and professional services companies like PwC start to take this stuff seriously they bring a set of rigorous analytical skills to bare on the green agenda. Well run businesses understand how to manage their assets and what the depreciation of those assets means for the company, whether the asset in question is a piece of machinery or an environmental resource we all depend on. It’s often hard for deep greens to swallow, but when experienced entrepreneurial and business thinkers get their green epiphany they often approach the challenges presented with a damn sight more rigour and process than a particular brand of neighbourhood treehugger. Seeing the treehugger realise that is both an amusing and painful experience. Sometimes it’s almost impossible for them accept that the suits have something to offer.
And so, in my work with corporations I’ve had a renaissance. I’ve come to realise that not every activist chains themselves to the railings (although I fully applaud those that do). Some sit in boardrooms and are quietly steering their businesses in a planet-friendly direction. My newfound heroes you will never hear about. These are people who work in businesses changing them (sometimes painfully slowly) from inside, while suffering brickbats both from colleagues of the old-school, who resist change, and external critics, who damn them for working for ‘the man’. They are to corporations what gene therapy promises to be for genetically inherited diseases. They’re recoding business.
We know that corporations can change the world, because they have done it plenty of times before. Don’t think I’m letting governments off the hook here, they have a crucial role to play in passing and enforcing appropriate legislation, but for all their frustrations the corporate sector can move quicker. As one of my clients (one of the world’s largest manufacturers) said
“We understand that the world is Darwinian, even for corporations, and that those that do not adapt to changing realities will struggle. We believe that addressing climate change and matters of social justice isn’t a threat to the company, but an engine for growth. A company that does not take into account a wider world-view will stifle innovation as it fails to attract passionate employees, a company that becomes a market follower rather than leader. We’d rather lead.”
Bring on round two.
