Kaj Embren

Sustainable Capitalism?

I read a very interesting article in the International Herald Tribune, that discussed how the new model of corporate management and ownership was creating companies that had anonymous and absent owners and shareholders.

I am a firm believer that companies exist to make profit and, if we are to think about decent earned money, profit will also mean long term strategy, sustainability, transparency and corporate governance. I am talking here of real business, not ‘making money out of nothing, like what some venture capitalists have ‘invented”.

Companies need values and their CEOs should be the custodians that will lead the way. Sustainability is as important in the mission of a company as having good accounting. For a start, sustainability is the key element to secure long term profit and success.

About 12 years ago I met the late Ray Anderson Owner and the CEO of Interface, the biggest flooring company in the world. He was in Stockholm to give a lecture at the Natural Step Foundation conference. He was on of the first Green Industrialist coming out the US. He created a sustainability team in Interface to develop the strategy that integrated economy, ecology and social issues. These elements were the core of the continuous success of Interface.

Fortune has described Anderson as “America’s greenest CEO,” and the title fits, because there is no one else in the corporate world that has taken to heart the essential lessons of sustainability and then put them into practice, generating profits.

I can think of other companies that became desirable and popular brands thanks to their strong values and ethics. The Body Shop was bought by L’Oreal, Ben & Jerry’s ice cream was bought by Unilever and Pret a Manger by McDonalds. The new buyers have kept the mission and values intact, as they see that these are the sources of the brands’ success.

Another model of ownership with values is the Co-op model in which the owners believe in the values of self-help, self-responsibility, democracy, equality, equity and solidarity. Many of them are successful, such as the health co-ops in Japan, the worldwide credit unions with 184 million members and the employee co-op in the UK, John Lewis Partnership, with its 23 department stores, 112 Waitrose supermarkets, a turnover of GBP 2.8 billion and pre-tax profits GBP 150 million. John Lewis is known for its solid environmental and social strategy involving supply chain and customers.

More and more, the corporate world is realizing that sustainability means long-term success, lower operational costs and profitability, let alone good PR. John Elkington raised in an article last week and asked if 2012 should be the start of a decade of Sustainable capitalism.

And in public statement the CEO at Unilever, Paul Paul Polman, said he wants an equitable, sustainable capitalism. Iain Cheshire of Kingfisher is talking about a paradigm shift. Even the Harvard Business Review has called on CEOs to “fix the system”.

I am not convinced that the issue is so easy to give a proper answer on. But, its necessary to give the issue a place on the 2012 agenda.

Some companies still think they can ignore those issues, but bad publicity can harm a brand. Apple has been found both to ignore the inhumane conditions of workers making their products and to be involved in buying conflict minerals from Congo.

Unfortunately, Apple’s example is not an isolated case. The news of how corporations cause unnecessary human suffering and environmental destruction are rather common and frequent still. Lundins Oil is another business as usual “activist” in Africa that have been listed in connection to Human Rights issues.

In the shadow of what I would like to call political privatisation in the welfare state – The UK and Sweden examples are now on the agenda to discuss business ethics and values.

But there is hope. In a study by The UN Global Compact and Accenture, already in 2010, out of 766 chief executives interviewed, 93 percent believed that sustainability will be “important” or “very important” in the future success of their companies.

As Interface’s Ray Anderson put,

“From my experience, it’s a false choice between the economy and ecology. We can have both — and we have to have both.”

A part of a puzzle that will build Sustainable Capitalism?

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