Getting from the Now to the Next Economy
By Anna Crabb
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.
I’m now working in the business sector which holds sway over millions of workers, has trillions of dollars to invest and millions of square kilometres in land holdings in Australia alone. I’m “doing good” in this sector because there is great energy and enthusiasm to do so: 72 per cent 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 percent 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 following diagram 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.
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 so that share price and company value reflect the total cost and value of companies.
The community is no longer compelled or obligated to buy from or work for businesses that are destructive to the community 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 enable 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, over-estimation of risk and cost, fear and not knowing the first step to take.
The Certified B Corporation (B Corps) community is made up of people in business who are choosing to be leaders, with regulation and norms yet to catch up. B Corps have already shown their commitment to build the economy of tomorrow, today. We can learn from what these leaders have already been voluntarily doing, to make 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 all their 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 under-represented communities across the globe.
If we step up and make these changes, the culture and practice of people in business will change so that impact-driven business is the norm. Vastly greater numbers of businesses will improve their impact on workers, community and the environment. These 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: ESG stocks did best in COVID-19 slump. We’re seeing businesses driven by a higher purpose clearly out-performing 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 super-power you need to not just survive, but thrive.
So how can you get started? The following tables illustrates some of the ways different influencers can drive better business outcomes and help make the shift from the now to the next economy.
Anna Crabb is the Head of Partnerships & Strategy at B Lab Australia and New Zealand. This article was first published by Small Giants Academy.
