Capitalism came into fruition when the world was full of seemingly inexhaustible resources. But as we know, this is no longer the case. The industrial revolution is over, our eyes are now open to the effects of our ways of doing business, and business as usual threatens our survival.
With only 100 companies responsible for 71% of global emissions and many more bringing up the tail end of pollution, things are prime for the changing. Luckily, some people see this as the threat it is, and they are using their businesses to fight back.
Consumers in today’s markets are increasingly aware of corporate transgressions against the broader wellbeing of humans and the planet we all share. An economic system that rewards corporate profit at all cost at the expense of everyone else is losing its shine.
One way we’re seeing a shift in the global economy is through what some call “sustainable capitalism,” a philosophy embraced by the B Corp movement. Professor and author Chris Marquis is a strong proponent of the idea that capitalism doesn’t have to be bad. It can be a force for good when structured through the lens of sustainable businesses.
Chris spoke on the Social Entrepreneurship & Innovation Podcast about how the B Corp movement is integral to shifting businesses toward social good and how much progress they’ve made in the last decade for a more equitable, livable future.
What Is Sustainable Capitalism?
First, let’s define plain old capitalism as it predominantly functions in society today. Capitalism is an economic and political system in which production is privately controlled to create profit for its private owners.
Given the opportunity for and evidence of exploitation and abuse when profit is the motivator and it’s all held by for the benefit of a small group, “sustainable capitalism” may sound like an oxymoron.
But the concept of sustainable capitalism stands for the idea that capitalism, when wielded justly, is capable of being a force for good in the world. Sustainable capitalism seeks to meet the needs of the present without compromising the needs of the future. This form of capitalism doesn’t seek profit to make a few wealthy, it seeks profit that can fuel positive change for shared benefit. It also regenerates by putting as many resources back into the environment as were taken, if not replenishing it with more than it had before.
The roots of sustainable capitalism actually date back to 1999, when the term “natural capitalism” was coined by authors Amory Hunter, L. Hunter Lovins, and Paul Hawken, to describe the reintegration of ecological (as well as economic) goals into business.
Why Isn’t Capitalism Sustainable?
Through individual pursuit of wealth and state pursuit of high GDP (gross domestic product), countries like the United States have expanded at the expense of the planet, fueling global warming. The measuring stick for success is profit and it’s pursued at all cost. While the financial gain is narrowly focused on a small group, the capitalist system has given rise to corporations that are alarmingly responsible for environmental destruction we all have to pay for.
In a paper on sustainable capitalism, author John Ikerd points out that, “all economic value comes from either earth or society. The economy itself produces nothing of value; it simply facilitates our individual relationships with each other and with the earth.”
Capitalism has been destroying the exact thing that makes it successful: natural capital. And, these corporations create suffering for the other resource that gives it life as well: human beings. If the only focus is to bring in money, then supporting sustainable livelihoods for the people within a corporation is perceived as a direct threat to the main objective. This human exploitation may not exist between decision makers of a company but further down the supply chain—out of sight, out of mind, and still, often, even if in sight, still pushed out of mind.
If corporations continue to be reliant on fossil fuels, deforestation, and unjust labor practices, they’ll eventually put themselves out of business or they will have destroyed the only world we have that can host them.
Take Coca Cola for example. The corporation is the top plastic polluter in the world, causing irreparable damage to our waterways and our bodies by contributing to the plastic that seeps its way into our food, our drinking water, and even our clothes.
How does plastic get into the ocean and into our bodies? It comes from microplastics that have slowly broken down over time from, say, plastic Coke bottles. Of course, the pollution hurts the general public, but Coca Cola itself relies on clean drinking water for their products as well. In other words, by continuing business as usual, Coke is threatening the very natural resource that they need to survive as a company—water sources and the people who they need to buy their products.
Is Sustainable Capitalism Possible?
We think yes, as long as companies can uncompromisingly preserve sustainability in business. And when this can turn into a requirement by law, we have even more faith in it. The evolution of capitalism suggests that consumers have the power to mold the future of the economy to take a form that is more in sync with their ethics and values. Studies show promising trends: 70% of millennials say they would stop supporting a business they don’t agree with and 66% say they are willing to pay more for a product that does social or environmental good.
Businesses that embrace the sustainable capitalism ideals are doing amazing things: innovating waste-free products, dispersing ownership in their business, engaging in reforestation projects, implementing fair hiring practices to reduce recidivism, the list goes on and on. So, good news: some businesses are already reshaping the capitalist paradigm by minding the triple bottom line, prioritizing the social and environmental impact before profit. But, as in all heavy-weight changes, there is still progress to be made.
First, legislative efforts to cap fossil fuel emissions and hold companies accountable for their levels of pollution are essential. Laws and regulations should incentivize renewable energy for companies of any size to do business in a truly sustainable way. Secondly, there must be a movement away from narrow shareholder primacy and into greater community benefit including stakeholders affected by business at every stage of operations.
The B Corporation Movement
We’re big fans of the B Corporation movement. So, what is a B Corp? A B Corporation (aka B Corp) is a business that has undergone a rigorous third-party certification process by the nonprofit B Lab, earning the force for good business star that comes with the Certified B Corporation label. To meet the standard, B Corps have to put purpose at the core of their business. It has to run through each decision and development in the company. They’re exceptionally mission-driven companies and often are founded purely to fight global issues like waste pollution or resource access.
There are more than 3,500 Certified B Corps around the globe of various sizes whose values extend beyond shareholders, prioritizing benefits for all stakeholders within their community. In 2020, two B Corporations went public, and six multinational corporations are in the process of certifying. Each company is evaluated through a B Impact Assessment that measures key impact areas: corporate governance, the environment, workers, customers, and community. This evaluation shows a path forward to a sustainable economy that doesn’t leave much room for the flaws of traditional capitalism. Every aspect of the B Corp movement is about meeting the highest standards for positive impact. Within the B Corp community, positive impact is non-negotiable, and members of the B Corp community are always raising the bar not only for what’s possible, but what is expected.
If you’re buying something new, would you choose to support a B Corp or a polluting, exploitative, traditional company? Okay, maybe that’s a loaded question. But really. If you’re on the B Corp train, we’re right there with you. As more and more consumers make these choices, traditionally operating companies won’t be able to compete as they once did.
The B Corp Difference
The difference between B Corps and the large companies traded on Wall Street who may have corporate social responsibility initiatives lies in their motive. B Corps exist to provide a benefit to people and the planet. Innovation is embedded within their DNA, instead of being an afterthought. Their sustainability efforts exceed beyond the short-term and their decision-making is rooted in the solution that’s best for everyone involved, not just investors.
B Corps need to certify every three years and track metrics to ensure adherence to all guidelines year over year. This covers any changes in supply chains and business models. Keep in mind that a B Corp is not always a “benefit corporation.” Public Benefit Corporations (PBC) adhere to a legal structure that prioritizes purpose, transparency, and accountability. This is a recognized legal status in 35 states that indicate a business is committed to legal requirements around impact. On the contrary, a corporation with a flimsy CSR program in place simply isn’t beholden to the same level of accountability.
Chris Marquis, Author and Professor at Cornell University
In 2009, Chris’s students at Harvard Business School told him that while they enjoyed learning about the corporate social responsibility practices of big companies, they preferred the erupting B Corporation movement and its loyal collection of socially conscious businesses.
The more Chris learned about the B Corp Movement, the more he saw how it could positively impact all ecosystems across economic, environmental, and social sectors. His decade of research into sustainable businesses yielded his new book, Better Business: How the B Corp Movement Is Remaking Capitalism.
Chris now lives in New York and teaches at the Cornell SC Johnson School of Business. His research has won multiple awards and he continues to explore how sustainable capitalism can reshape the modern understanding of capitalistic economies, all while educating the next generation of CEOs, co-founders, and economists.
“The B Impact Assessment is like a learning tool. It’s a benchmarking tool, you learn about what best practices are, you learn about what other companies are doing. It really provides a way to become authentically stakeholder-driven. And because you’re measuring these items, you can actually also be more accountable and transparent as well.”
Take Action: Supporting the B Corp Movement & Sustainable Capitalism
As consumers, there are a number of ways that we can participate in the trajectory of the economy and the future of capitalism.
- Shop B Corp: Use the B Corp Directory to search the B Corp community for brands that align with your own values to make a positive environmental impact. You might recognize some of your favorite brands like Ben & Jerry’s and Patagonia!
- Do Some Digging: If you have a favorite clothing or electronic company, dig deeper into their backgrounds. Do they have standards for social and environmental responsibility? Do they outline how they’re meeting benchmarks in sustainability and emissions reductions? If not, consider spending your dollars elsewhere and look for alternatives at Buy Ensemble.
- Shop Local: Your locally owned zero waste or wine shops are the brainchild of a dreamer in your own backyard. Support these startups or small businesses in your local community and witness the power of business before your eyes.
Closing: A Better Future For People & Planet
Capitalistic economies don’t have to put people and the planet last on the agenda. The B Corp movement illustrates how the wellbeing of the planet and business can be connected, just as humanity is to the planet.
Our collective future is dependent on the decisions we make today. From how we choose to spend our money and even whether or not we use socially responsible banks to hold our money in the meantime, we can all make an impact on the future of sustainable capitalism.
Additional Resources & Links Mentioned from the Episode:
- Chris Marquis on LinkedIn and Twitter
- Better Business: How the B Corp Movement Is Remaking Capitalism by Chris Marquis
- The Value of Everything and The Entrepreneurial State by Maria Mosacato
- The B Corp Directory
Sustainable Workplaces Manager & Writer
Jackie is the Sustainable Workplaces Manager at Urban Green Lab, a sustainability education nonprofit in Nashville, Tennessee. She’s passionate about connecting people with actionable ways to make a positive impact on the environment. She graduated from Dickinson College with a degree in Environmental Studies and a certificate in Social Innovation & Entrepreneurship. Jackie worked in the nonprofit world in Washington D.C. for Ashoka and the National Building Museum.
Jackie enjoys hiking with her rescue dog, finding craft breweries, and traveling the globe in search of plant-based eats.