“Who are businesses really responsible to? Their customers? Shareholders? Employees? We would argue that it’s none of the above. Fundamentally, businesses are responsible to their resource base. Without a healthy environment there are no shareholders, no employees, no customers and no business.” ~Patagonia founder, Yvon Chouinard
The conversation around corporate responsibility over the last few decades has been, almost entirely, from the mouths of two warring factions. Those who believe in maximizing shareholder wealth by any means necessary and those who believe in corporate citizenship, which until recent years has almost always been viewed in the context of people, with a smallish bit of lip service to the environment.
Then came Al Gore’s Inconvenient Truth, followed this year by The Big Spill.
Longtime readers of this blog know I don’t get political here (at least rarely). Not that I don’t have opinions, this just isn’t my outlet for them. But, I do talk about business, and our responsibilities, dreams and quests as creators, problem-solvers, leaders and builders of legacy.
As a securities attorney, first at the SEC, then at a private firm in NYC, I was duty-bound by the law. And, so were board’s, officers and decision-makers of every public corporation. All were under a fiduciary duty to maximize shareholder wealth. Without fail, the measure of shareholder wealth was stock price, profitability and dividend. In all but the rarest of circumstance, the notion of corporate citizenship was considered only as a “stunt” to create a perception that might engender a big enough bump in feel good vibes to generate more revenue than the stunt consumed.
I get the need to be profitable. You can’t have an impact without a voice. And, you can’t have a voice if you don’t have a viable means to sustain your efforts. Money matters.
But, I’m increasingly drawn to what Brian Clark might call the corporate responsibility third tribe.
A growing movement of C-suite executives who strive to build powerful, impactful organizations that profit and maximize shareholder wealth not as the result of the more traditional crush, dominate, slash and burn approach, but rather as a byproduct of a fierce sense of corporate citizenship. And, I am stunned at how profitable some have become.
Interface is an interesting example of this. After years in traditional carpet manufacturing, Interface founder, Ray Anderson refocused the company on sustainability, retooling nearly every process, shifting resources and vendors in the name of what he calls Mission Zero: “our promise to eliminate any negative impact our company may have on the environment by the year 2020.” And, in the process, the company created FLOR, a sustainable flooring product, lowered net greenhouse gas emissions by 82%, dropped fossil fuel usage 60% per unit of production, decreased water usage 75%…and decreased costs by $400 million, increased sales by 67% and doubled profits.
Similarly, Chouinard’s Patagonia continues to build on it’s legendary footprint as a leader in corporate citizenship with it’s “birth to birth” initiative:
“…we’ve teamed up with some Japanese companies to, basically by 2010, make all our clothing out of recycled and recyclable fibers. And we’re going to accept ownership of our products from birth to birth. So if you buy a jacket from us, or a shirt ,or a pair of pants, when you’re done with it, you can give it back to us and we’ll make more shirts and pants out of it.
Which is a different idea about consuming. Right now the world runs on consuming and discarding, and we’re saying that we’re taking responsibility for our products from birth to birth. Can you imagine if a computer company said, “When you’re done with your computer, we’ll buy it back from you and make more computers out of it.” Instead, they sell you computer and you can’t even get service from them!” From Chouinard’s book, Let My People Go Surfing.
It’s a different way of accepting responsibility.
So, as I look at what’s unfolding on our planet, when I look at the impact the “by any means necessary” approach to corporate growth has had on the world, when I meditate on my entirely selfish hopes and dreams for the world my daughter will inherit…these are the people and the companies I look to learn from. And, to emulate.
And, I wonder…
What might the world look like 20 years from now if a growing number of freshly-minted and not so minty-fresh entrepreneurs and corporate leaders did the same?
Just thinking…and hoping.
How about you?
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