Insights July 2010

Capitalism 4.0: Re-Designing Business Value: A Roadmap for Sustainable Consumption.

There is a surprising consensus among CEOs that business must prove its positive contribution to society, not merely its returns for shareholders -- Performance with Purpose, a sustainable business model that recognizes the reality of a stakeholder society.

. . . at (the) last WEF meeting in Davos, a working group of 14 CEOs of large companies from a variety of industries signed off on a report that was developed over the last 12 months, Re-Designing Business Value: A Roadmap for Sustainable Consumption. Here are important findings from the two events:

Role of the CEO on social issues—At the CECP conference, a poll of CEOs indicated that 62% wanted to take a leadership role in addressing these issues and 0% said they were worried if they focused too much on these issues, they would be out of a job. The most activist companies have a board director designated as the “go to” on social issues.

Social impact versus Business benefit—CEOs polled at the CECP meeting divided almost evenly (55% versus 45%) on whether social impact (long term positive impact on communities) or business benefits (tangible and intangible contribution to morale, reputation, recruitment) was more valuable to the company.

Reporting—The Natural Resources Defense Council’s Peter Lehner said that 2/3 of American companies are now reporting their carbon footprint. HP’s Tony Prophet said that HP has made public its list of suppliers, as well its expectations of suppliers on employee health and environment.

Relationship with NGOs—There is general acceptance of the desirability of partnership with NGOs on important issues. Prophet of HP said that he uses meetings with NGOs as opportunities to learn and listen. According to the NRDC’s Lehner, the NGO movement has evolved its strategy from litigation as a first step to litigation as a last resort, preferring to shape legislation that incentivizes behavior change or to consult with companies on supply chain modification. Even Greenpeace has changed, working alongside Kimberly Clark to end the clear-cutting of forests.

Ambivalence about role of Government—There was a strong sense at the CECP session that the proper role of Government is referee, not investor or director. Melody Barnes, director of domestic policy for President Obama, noted that “the best ideas do not come from Washington DC. We need companies to be risk takers, to tell us what is working in new partnership models that address issues such as shortage of teachers in math and science.” In fact, both Travelers and UBS are investing in local schools, enabling smaller class sizes and reinstituting the music classes.

These developments are an acknowledgement of Capitalism 4.0 The new expectation of business is as a social actor, doing well while doing good. There is a continuum for business executives, from sole reliance on philanthropy to a more complex change of business process to incorporate sustainability into operations.

Here is the full blog. Corporate strategists, line managers, communicator should read this.


Material abstracted by Anton Hart from a blog written by Richard Edelman


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