Positive Impact Blog

Thought provoking insights for change makers


Reimagining capitalism – Three concrete options for business

Rebeccca Henderson is a University Professor at Harvard Business School in the area of sustainable business. In her passionate new book “Reimagining capitalism” she looks at a world on fire and develops a model of what sustainable business in a fundamentally transformed capitalism would require and look like.  She distinguishes three strategy levels for business, which I find very helpful and which I link to my experiences in Switzerland.

Massive environmental degradation, skyrocketing economic inequality, and institutional collapse (by looking at the USA and other nations turning increasingly autocratic, but also at multilateral organizations like the WHO or the WTO) grow more important by the day. She argues convincingly that this is something that cannot be left to governments and civil society alone, as classical economic thinking declares, while companies continue with business-as-usual. If we fail in transforming capitalism and putting its significant power and resources to better use, we will not be able to effectively address these problems. And business will put its own – but also our future at risk.

What can be done in such a situation? What are the available options for business?

Three different progressively more far reaching but also more demanding strategy levels can be found in the book, although in a somewhat different logic and argumentation as presented here.

Creating Shared Value

A first strategy level is based on the idea of creating shared value, a concept championed by Michael Porter and Mark Kramer. They define shared value creation as creating economic value in a way that also creates value for society by addressing its needs and challenges. “In today’s world, reimagining capitalism requires embracing the idea that while firms must be profitable if they are to thrive, their purpose must be not only to make money but also to build prosperity and freedom in the context of a livable planet and a healthy society.” (R. Henderson) However, as long as shared values are defined by business looking from the inside out, their perspective will focus on reducing the bads of their existing activities. They will reduce waste, resources, or risks and happily report on newly created shared values. This cannot be sufficient. Only when they start to look from the outside in, starting from the problems society is facing and finding economic solutions for them, will their contributions address problems of real social relevance. Only then, they may be approaching what Katrin Muff and I call “true business sustainability”. For this, they clearly will have to follow a larger purpose than simply maximizing their profits.

Cooperative Self-Regulation

A second strategy level is based on cooperative self-regulation. It engages firms with each other, with the third sector, and with government partners in the pursuit of solutions to common problems, which cannot be solved by any of the partners alone, often prototyping solutions that prove to be a model for subsequent practice. Famous examples are Nike trying to get child labor out of its supply chain by creating the Sustainable Apparel Coalition or WWF and Unilever which spearheaded the creation of the Round Table on Sustainable Palm Oil, both as a response to the massive critique by NGOs. A current example on a national level, where the author is personally engaged, is PRISMA, an inter-industry cooperation of major companies in the food production, retailing, and packaging sector engaged in bringing about a circular economy solution in Switzerland for consumer goods packaging. While the existing system of materially separated collection systems has been working well in the past, it has reached its limits of including new packaging materials and of demanding an increasingly difficult contribution from the consumers to separate and collect the different materials. The new model developed and promoted by the PRISMA-coalition is an innovative One-For-All collection and recycling system. It consists of a blueprint for a future collection system, prototypes of different elements of a practical solution, and a roadmap for developing and promoting an industry agreement.

Supporting Inclusive Political Action

Cooperative self-regulation is a powerful new way to mobilize the business community in support of promoting collective goods. The increased reach, however, comes at a price. It is hard to achieve and even harder to sustain over time. It needs to be carefully managed. To create more stability and to counter market deficiencies, we need to turn to the third strategy level which is supporting inclusive  political action. Environmental degradation, climate collapse, inequality, and public health are systemic problems that cannot be solved without government action. Free markets need democratic, transparent and effective governments, if they are to survive, as well as the other institutions of an open, inclusive society including the rule of law, shared respect for the truth, and a commitment to vigorous free media. Free markets need free and effective politics to continuously balance and rebalance the evolving rules of the market in light of changing conditions and challenges.

The challenges are huge

Energy demand is projected to double over the next 50 years. Stopping global warming will mean ensuring that every new plant that’s built is carbon-free. It also means shutting down or decarbonizing the world’s existing fossil fuel infrastructure. Inequality, poverty, and migration present a similarly tough set of intertwined systemic problems that can only be fully addressed through government action. Most of these challenges are beyond the reach of individual countries and need international political cooperation. A good example is the Montreal Protocol, an international agreement to phase out ozone-destroying chemicals which became effective 1989. It has been remarkably successful. It proved to be possible to find CFC substitutes relatively quickly, despite strong opposition from major business players, and the Antarctic ozone hole is expected to return to its 1980 status by 2030. It has also reduced global Green House Gas emissions by about 5,5%.

The systemic problems we are facing today confront us with the fact that we must build effective global institutions. Business must become an active partner in shoring up the institutions that we have and in building the new ones that we need. And to be clear, this is not about improving the framework conditions for one’s own business or industry. It is about supporting the foundations of our society and of its healthy development. It is about protecting and developing the institutions that have made business and all of us rich and free.

A current example from Switzerland is the public vote on a popular initiative holding Swiss corporations legally accountable for environmental and human rights violations outside Switzerland. While 50,7% of the people voted in favor of the initiative, the second condition for an acceptance – the majority of cantons – was not achieved. The strong lobby of multinational corporations, their business associations and political allies prevented a move that could have paved the way for a more responsible and accountable form of supply chain management in a developing world context. In this case, it was a missed chance to go beyond simply reporting good news and demonstrate real engagement in one of the current hot spots of global development, although public and political pressure in Switzerland and on an international level will not go away It demonstrates how challenging it is for business to find a new role in this profound process of social change and business transformation.

Different strategy levels – different reach – different competences

Creating shared value, cooperative self-regulation, and supporting inclusive political action – on a national or an international level, depending on the issue at case – must be seen as three crucial sustainability strategies for business. While the first strategy is located on an organizational level and allows companies to act by themselves, this is easier to do, but its reach is also limited. Cooperative self-regulations offer a wider reach, often including whole industries or multi-industry and stakeholder coalitions. But this is clearly more challenging and demands very different competences and resources in the collaborative field to practically succeed. And a strategy of supporting inclusive political action aims at the political level and needs again very different competences and resources to act effectively. Here it will need political coalitions with business being only one player among many. But this level may prove to be the most important in the years to come.


Stop making sense!

A special message to the 100 change makers of the Diploma of Sustainable Business of Business School Lausanne and the University of St Gallen IWÖ at the occasion of the first Alumni event in Zurich on April 28-29, 2018. #DASTeamRocks

By Katrin Muff, Co-Director of the Program

 

The early adapters are onboard and solid best practice examples are emerging. We have accomplished much in the past decade on bringing business and its leaders onboard to embrace the challenge to create a sustainable and just world, and to make it their business.

The Rio+20 Conference in July 2012 can be seen as a tipping point for the early adapters in business. More than 5’000 top executives gathered to envision how to scale their efforts towards sustainable development. Failing governments in the previous decade had led to shift the hope to business. With its innovation power and easy access to funding, business became the prime driver for a world “where 9 billion people live well on one planet”, as expressed by one of the business conveners, the World Business Council for Sustainable Development, founded 20 years earlier around the first Earth Summit in Rio in 1992.

What might be the tipping point so that the large crowd of followers will jump on the bandwagon? That is the one billion dollar question we have to address today. And for this, we – the convinced – need to change our attitude and our tone. Our voices were important to wake up, or shake up, the business community. And those who could hear us, did. But now, our voices need to reach those who weren’t buying into our arguments and who still remain skeptical or maybe also preoccupied by other significant other mega trends that shape the world.

The climate debate in the United States has clearly illustrated to what degree it is pointless to try and change somebody’s mind by providing seemingly convincing facts. The strong bi-partisan polarity experienced in the United States as a result of the election of the current President further confirms to what degree the only result of a well-considered argument is a counter-argument. We are challenged to let go of the polarity perspective of “I am right” and “you are wrong”. If anything, such attitudes – which both sides hold – simply amplify the gap to be bridged.

In some ways, we – the converted and convinced – need to acknowledge that we unintentionally do onto those we are trying to convert what we blame them to do to us. To ignore and reject a given point of view as invalid or worse ridiculous. Ever attempt we make to say “listen to this and you will finally understand” is an opportunity lost to create a true dialogue by first establishing a common ground. A common ground that includes both points of view, and doesn’t presume one is righter than the other. Only once we have established this common ground can we then engage in a dialogue where together both parties take the immense risk of exploring new grounds together. The risk is huge as it involves that we may end up in a place that is not the same from where we started, requiring us to enlarge our existing understanding and integrate further perspectives. Hence, broadening our worldview.

Integral theory call this neutral, higher or detached, space an “integrated state”. Such a state implies the ability to hold both one’s own and somebody else’s perspective with equal appreciation and respect. And this is no small challenge and not for the weak hearted. Try it at home or try it at work and you will see, how quickly you will step down from that “integrated state” back into the polarity of arguing that the way you see the world is right.

I challenge you, dear fellow converted change maker, to practice this new muscle in your mind and in your heart: adopt this higher neutral state more and more often, and every time a bit longer and with a bit more ease. It is the single best thing you can do if you want to create a positive impact in this world and contribute towards a better world. I know that you can do it, you have that capacity already built in, you simply need to remember it and train it again. I think that the deteriorating state of the world has thrown us into a polarity state where we could do no better than “knowing better” and preaching, pointing fingers, raising hands, highlighting, raising awareness and alerting others. They heard us, those we could reach we have reached. Now, we need to develop new pathways together with those preoccupied with other priorities on their radar to collaborate towards solutions that make greater sense to more people and institutions and that embrace more perspectives. By including opposing thoughts and ideas, better ideas and solutions will emerge. Collaborative processes have long demonstrated that – now let’s go the extra mind and embrace a new mindset, that of the integrator.

 

 

Picture credit: https://innovationleadershipforum.org/our-wisdom/mindset-shift/


Costa Rica is now running completely on renewable energy

Have you heard the news? Costa Rica has managed to shift to 100% renewable energy! And they are not alone – more and more countries are following suit, and I hope you are part of a community and a country that is also moving in this direction. Is there anything you can do to fasten the pace?

My friend Jan Arend, who I stayed with just recently, just took his family and home off the grid – he was so excited to share how much energy he is feeding into the grid and the many places he found he can save energy. Hats off!!

http://qz.com/367985/costa-rica-is-now-running-completely-on-renewable-energy/?utm_source=huffingtonpost.com&utm_medium=referral&utm_campaign=pubexchange


Switzerland has published its CSR Swiss Action Plan

On the 1st April, 2015, the Swiss government has produced their report and action plan for Corporate Social Responsibility, suggesting how business should embrace its societal responsibility. The action plan on Business and Human Rights and the Swiss response to Special Representative John Reggie’s framework principles on Business and Human rights is envisaged for summer 2015.  The Irish Government is already a few steps ahead, they are now working on the Business and HR plan. The question is: is the plan good enough? Will it get us to a world where 9 billion people can live well and within the limits of the planet? How will we know? What do you think?

https://www.news.admin.ch/message/index.html?lang=fr&msg-id=56760


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Is there really a business case for sustainability?

Thanks to a comprehensive, aggregate study completed by the Natural Capital folks, we have now a clear and solid answer: YES. If you need convincing or would like to see some evidence, click here to download their report for free. Happy reading!

 


San Francisco Becomes The First City to Ban Sale of Plastic Bottles | Global Flare

I am so pleased to read this! How soon will other cities follow? How we as citizens support this? What can you do in your local community? http://globalflare.com/san-francisco-becomes-the-first-city-to-ban-sale-of-plastic-bottles/

At BSL, we have made plastic bottles redundant by offering all students a BSL bottle.

BSL-Bottles-sm

 


Goodbye Global Greed

Some of you may have heard of an exciting thing happening in Europe – the Economy of the Common Goods movement which started in Austria and was spearheaded by Christian Felber (www.gemeinwohl-oekonomie.org – no worries there is English information). As the first university worldwide, Business School Lausanne has undertaken the company self-evaluation of the “matrix” and is currently in the official audit process. What an amanzing and eye-opening experience this was for us! It allowed not only to identify important blindspots, but also to speed up an internal transformational process towards fully embracing and integrating sustainability and responsibility in everything we do. Take a look now at a funny and provocative comic that was developed by Herbert Wegscheider, a contributing member of the Economy of the Common Goods movement (click on the image below to download the file):

Click here to see the Goodbye Global Greed comic

 


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An insightful review of 2012

I thought of sharing this blog article with you – it is the most important analysis of our current situation I’ve seen in 2013 so far and gives an insightful review of the 2012 year:

http://paulgilding.com/cockatoo-chronicles/victoryathand.html

 


Sustainability Progress/Retreat – by DOCSE

A recommended read about today’s sustainability progress/retreat of major companies around the globe.

http://sustainability10.wordpress.com/author/sustainability10/


People’s summit Rio+20 video report back