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Taking the Next Steps to Ensure Business Has a Positive Impact
When I was choosing a career path, I thought “doing good” meant working in a charity or for the government. I’ve had a go at both. I’ve worked with incredible people creating positive impacts in their communities and on the environment. I’ve also seen the limits of what can be done in either sector.
Now I’m working in the business sector, which holds sway over millions of workers, has trillions of dollars to invest, and millions of square kilometers in land holdings in Australia alone. I’m “doing good” in this sector because there is great energy and enthusiasm to do so: 72% of the Australian public and 88% of business leaders agree that large companies should place equal importance on economic, environmental and social performance. These beliefs are not necessarily coming from a place of altruism: 91% of Australians believe that stakeholders, not shareholders, are most important to long-term company success.
Yet what I’m seeing is that these intentions and aspirations have not yet translated into business for good being the norm. Our economic system is still structured to drive people in business to sell products or services primarily for the benefit of owners and shareholders, rather than having a positive impact on the community and/or the environment. The diagram below shows the people and institutions that put explicit and implicit pressure on people in business to prioritise owners and shareholders. It shows that colleagues, customers, suppliers, investors, family and friends have a direct influence on people in business, and that these relationships are influenced indirectly by what is happening in industries, policy and governance practices, and the natural environment.
Opting for Positive Impact
My belief — and what is behind B Lab Australia and New Zealand’s new five-year strategy — is that there is another way. People and institutions can choose, or be encouraged, to play their role in the economic system to ensure business has a positive impact:
- Investors can choose to shift from focusing on short-term financial returns and instead “price in” the positive and negative impact of a business’ operations to the balance sheet to reflect the company’s total cost and value.
- The community is no longer compelled or obligated to buy from or work for businesses that are destructive to people and the environment.
- Industry groups, the media, and educators (including tertiary institutions, accelerators and incubators, and professional advisers) celebrate and teach people in business why and how to create positive impact through business.
- Finally, governments set the rules of the market in a way that enables business to have more positive impacts on the community and the environment (for example, through being designed to conserve natural resources, restore the natural environment, or increase employment of chronically underemployed populations).
What’s stopping all of us from taking on these new and necessary roles for the next economy? Based on many, many conversations with people in these roles, I believe that it’s a mix of habit, fear, overestimation of risk and cost, and not knowing the first step to take.
A Better ‘Business As Usual’
The Certified B Corporation (B Corp) community—in Australia and New Zealand, and around the world—is made up of people in business who are choosing to be leaders, with regulation and norms yet to catch up. B Corps have shown their commitment to build the economy of tomorrow, today. We can learn from what these leaders have been voluntarily doing to create a new “business as usual” as we rebuild for the future.
For example, Dr. Bronner’s organic soap and personal care products company is a B Corp that has long had an executive compensation cap so its owners and highest-paid executives do not make more than five times what the lowest-paid full-time employee makes. The company also builds a better life for the people in its supply chain and their communities through purchasing organic, fair trade raw materials, and donates approximately one-third of its profits to charitable and activist causes.
Another B Corp, Intrepid Travel, has become carbon positive with net-zero emissions. This is an impressive achievement in particular for a company built on customers flying around the globe. Intrepid put a stop to elephant riding on its trips in 2014, and is now advocating for the end of exploitative wildlife tourism. Through the B Corp certification process, the company started working more closely with women and suppliers from underrepresented communities around the globe.
If we step up and make these changes and others, the culture and practice of people in business will shift so that impact-driven business is the norm. Vastly greater numbers of businesses will improve their impact on workers, community and the environment. These collective improvements will enable us to meet imminent social and environmental challenges.
The idea that changing the way we do business is risky is increasingly being answered with results: shares of companies focused on climate change or environmental, social and governance (ESG) issues performed better in the COVID-19 slump. We’re seeing businesses driven by a higher purpose clearly outperforming those that simply exist to drive financial returns, and we’re seeing experts like McKinsey & Company telling business that a clear purpose, beyond profit, is the superpower you need to not just survive but thrive.
So how can you get started? Check the following table, which illustrates some of the ways different influencers can drive better business outcomes and help make the shift from the now to the next economy.
A version of this article was published by the Small Giants Academy, the first Certified B Corporation in Australia.
B the Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
How Each of Us Plays a Role in Getting from Now to the Next Economy was originally published in B The Change on Medium, where people are continuing the conversation by highlighting and responding to this story.