I recently listened in on a panel discussion that was organized by the World Economic Forum. It was a discussion on a set of 21 metrics that had been developed by a group of leading accounting firms in conjunction with the International Business Council. These metrics are intended to better measure business progress on Sustainable Development goals. And ultimately contribute to a growing chorus of voices pushing for a shift back to stakeholder capitalism.
This push is driven by a recognition that the current path the world is on (shareholder capitalism) has not served society all that well. Sure it has created wealth and innovation, things that benefit society, but it has also concentrated that wealth with a group of people that has been shrinking in size for the last 40 years, resulting in a growing divide between rich and poor that is ultimately not sustainable and contributes to unrest in the world. The 2020 pandemic has exacerbated that divide laying bear the vulnerability of people in long term care, front line workers, gig workers etc. And perhaps providing an opportunity to have a meaningful look at the alternatives. Which brings me to the main message here.
I believe that capitalism has been demonstrated to be a powerful tool for innovation and wealth creation and I believe that the reason for that is the power of free market, competition, and the ability of creative minds, effectively motivated, to solve problems. So I am always interested in ideas that I think might contribute to that motivation and unleash that creativity organically. Because that is the most efficient. So I don’t think tossing out capitalism is the answer and I don’t see capitalism as the enemy. I think we need to figure out how to tweak it so that it is not only profit that gets valued. I have seen that kind of shift in thinking over the past 35 years with regard to environment for example. The oil industry that I grew up in had to come to terms with its environmental impact in order to maintain a licence to operate. That was driven by a society that was not willing to tolerate us leaving a mess behind and eventually made environmental considerations equal in importance to profit. I see the same potential paradigm shift possible with regard to social benefit.
I have been advocating for Social Procurement initiatives for the past couple of years and that has gotten me connected to a number of different initiatives. The thing that I find is that the people at these tables are predominantly from the social sector, people connected to the need and advocating for change. And some of the social procurement solutions I see being advanced are appeals to government and large institutions to prioritize social enterprise. My concern with that is that it has the potential to create an adversarial dynamic between the social sector and the private sector. And also an additional administrative requirement for business to demonstrate that they are meeting the requirements that are imposed on them if government regulation ends up being the answer. It seems to me that the right way forward is to provide incentive for them to work together with the social sector to deliver social benefit in the most efficient way possible, for the good of all.
Business would be well served to recognize the growing demand of society to consider societal impacts and shift more focus on Corporate Social Responsibility (CSR). Get ahead of regulation and embrace the growing realization that company’s who have already moved in that direction are actually seeing that it improves their bottom line because of things like employee satisfaction and goodwill. I imagine a forward thinking company that creates a position called social benefit/social procurement champion whose job it is to identify ways for the company’s operation to create social benefit, either directly as a result of it’s operation or in partnership with social enterprise. And identify ways in which that could be accomplished using activity that is already happening or money that is already being spent.
Appreciate the thoughts of others on this.