Corporate Power and SB

Corporate Power and SB

It’s time to rethink advancing sustainable business.

In the world of sustainable business, we talk about and attempt to enact practices that go beyond “maximizing shareholder value”, which is doublespeak for profit taking. Going beyond organizing business around just profit taking is an essential dimension of sustainable business.

John Elkington, in his book, Cannibals with Forks, is credited with popularizing the notion of the triple bottom line (TBL) of people, planet, profit. At the time, Elkington was articulating an idea that placed emphasis on the need for business to move beyond simply complying with laws and regulations. As Elkington saw it, since government and the regulatory environment tended to move too slowly, and therefore was unable to effectively reign in business behavior, enlightened business leaders ought to adopt a TBL strategy. In a sense, Elkington was advocating for a movement of sorts.

Elkington was also pointing-out the obvious: For business to simply operate on the single bottom line – profit taking – the result would be increasing social inequalities and the eventual destruction of the biosphere. A trend of this sort would not be good for business, or for anyone else, for that matter. So, the enlightened business leader ought to recognize the obvious and act in the best interest of the business itself.

The TBL is built around the idea that business ought to make decisions, not based solely on profit taking, but on creating value that would reduce and eliminate social, environmental and economic injustices. In so doing, as the theory goes, businesses would ensure their long-term survival, because continuing down the single bottom line of profit taking would eventually tear-us apart and devastate the biosphere. As more and more businesses moved in the TBL direction, those that did not would simply lose in the marketplace. In other words, Schumpeter’s notion of “creative destruction” would take hold.

Elkington’s TBL dates back to nearly thirty years ago; since then, the term has morphed into all sorts of expressions. The latest, which is environmental, social and governance, or ESG, is the one gaining the most traction and conveniently sidesteps any mention of profits. It’s about governance, not money.  And herein lies the question: governance of what and by whom?

In a recent Innovation Forum article, “The culture wars trap for sustainable business”, author Mallen Baker bemoans the state of political affairs writ large and the quandary this is creating for leaders working to advance sustainable, TBL business.  “Culture wars” is a dog-whistle of sorts; it masks a deeper concern: achieving social justice, or creating “people value”, as Elkington might put it. Baker seems to be at a loss for solutions to the culture wars trap. This may have something to do with the way in which the Innovation Forum makes money.

The Innovation Forum, a relatively large, international organization, at least in part, makes money through memberships and by convening large businesses and others for the purpose of dialoguing about sustainable business. Being critical of, say large, multinational businesses would be a sure-fire way of alienating members and not getting “butts in the seats”, as event planners like to say.

One example of the “traps” Baker describes is the recent kerfuffle surrounding Ben & Jerry’s Ice Cream. The issue has to do with one of Ben & Jerry’s social justice initiatives, and a decision the parent company, Unilever, made that conflicts with that initiative. To put things in context, it’s worth taking a brief look at Ben & Jerry’s Ice Cream.

According to its website, “Ben and Jerry open[ed] their first ice cream scoop shop in a renovated gas station in Burlington, Vermont.” The business started in 1978, and at the time, Ben & Jerry’s was doing some innovative things with their ice cream: They were adding chunks of tasty morsels that go well with ice cream. Although this sort of thing is common today, it was unique forty years ago. Ben & Jerry’s Ice Cream became popular and the business grew quite nicely.

In a recent Wall Street Journal podcast, Jerry Greenfield (the Jerry in Ben & Jerry’s) is quoted as saying, “I don’t know that we were hardcore hippies per se, but we certainly believe in peace and love, not as a cliche, but that we’re all in this together. And our role as human beings is to help take care of each other.” At the highest level, living in “peace and love” is a notion with which one would have a hard time arguing. Many of us would likely agree that living in peace and love and taking “care of each other” is where sustainable living starts. After all, living in peace would mean no more military industrial complex, rumors of war and all the rest that goes with war, or an empire building mentality.

Core to Ben & Jerry’s mission is advancing social justice through their business practices. Ben & Jerry’s is one of the first businesses to be B-Corps certified, which is a testimonial to their commitment to doing more than profit taking.

By the 1990s, however, Ben & Jerry’s Ice Cream was having financial problems. An opportunity to sell the company to Unilever came along, and while the decision to do so was a difficult one, the deal went through in the early 2000s.

Unilever is a large, multinational corporation that took-in revenue of $62B in 2021. Alan Jope, CEO at Unilever, received a total compensation of $4.9MM for the same year. The overwhelming majority of us have no idea what these figures represent, and while $4.9MM is relatively small change in comparison to the salaries of other titans of corporate industry, it is an astronomical sum. To put it into perspective, the median, individual income for a person living in Detroit is $20K. Alan Jope’s compensation is 249 times that of the median Detroit income. That Mr. Jope is likely incapable of understanding what it means to exist on $20K per year is a monumental understatement.

When Ben and Jerry sold their business to Unilever, the sales contract included a governance arrangement that gave the Ben & Jerry’s brand its own board of directors. The Ben & Jerry board would have control over the social mission of the business, while Unilever would control everything else. This seems to have worked well – at least for a while. Today, the relationship between the Ben & Jerry board, and that of Unilever’s leadership is beginning to smell like rotting ice cream. The problem has to do with Baker’s culture war trap.

Recently, Ben & Jerry’s desire to advance living in “peace and love” led them to taking a stand against Israeli settlements on the West Bank. This particular social justice issue is perhaps one of the thorniest in the Western world. It’s controversial for many reasons, not the least of which is a confusion about the difference between anti-Semitism and anti-Zionism. But when it comes to culture wars, who cares about the meaning of words? It’s much easier to score points by conflating two completely different ideas, and then going to a social media platform, such as Twitter, and posting a note without the benefit of context. Who has time for context? Besides, when you’re at war, the only thing that matters is inflicting damage, and in this case, damage is measured in retweets. And since our buying habits – much to the chagrin of economists and others who seem to think we behave rationally – are driven more by our emotions, than anything else, angry cries on Twitter can have an immediate and negative effect on sales. For a large, multinational such as Unilever, Twitter wars about Palestinian social justice issues are not a good thing.

According to a BBC story, the Ben & Jerry’s division of Unilever, under the direction of its social mission board, wanted to prohibit further sales of its product in Israeli occupied territories on the West Bank. This, of course, led to outcries of anti-Semitism and the Twittersphere exploded with its half-truths, conflations and poorly worded notes. Eventually, folks with lots of money and power pressured Unilever management – the folks taking care of everything else having to do with Ben & Jerry’s – to intervene, which they did. Ben & Jerry’s ice cream will now be sold on the West Bank.

And what of the social justice mission, the notion of advancing “peace and love”?  It seems to have taken a back seat to ensuring Unilever’s overall profit and loss statement remains in the black. In other words, Unilever cannot afford a pissant division of its operations to threaten its reputation on the global market. There’s just too much revenue at risk, especially when the overwhelming number of us have no time to understand complex ideas such as Zionism. Instead, we scroll through our devices, come across an inflammatory term, such as anti-Semitism, and then boycott anything made by Unilever. The folks running large multinationals, the rarified few who “earn” the likes of $4.9MM per year, are not necessarily stupid. They hold one thing in common with the rest of us working stiffs: They know where their bread is buttered.

Despite what the Supreme Court has concluded (Citizens United) corporations are not persons. When we hold events, such as the ones the Innovation Forum conducts, and invite employees of large corporations to speak about what the corporation they represent is doing to advance sustainable business, we’re hearing what the corporation wants them to say, not what they think. And to a significant extent, what the corporation wants them to say is shrouded in groupthink and doublespeak.

Ben Cohen and Jerry Greenfield, two friends who were affected by the social context in which they lived (e.g., the grotesque nature of the Vietnam War and the profound righteousness of the Civil Rights movement) decided to start a business that went beyond profit taking. And while the two may not have done a very good job of balancing the books, they had the right idea. To keep the business alive and going, however, they wound-up “selling out” to a multinational that led them to believe (and had it written into the sales contract) the corporation would uphold their sense of social justice. All of that has gone out the window and now will be argued by teams of lawyers in some courtroom.

Far too many of us have bought into the idea that business, left to its own, will somehow follow Elkington’s notion of grasping the long-term “benefits” of becoming sustainable, or following the TBL. Yet, in the time since Elkington’s ideas hit the mainstream, we’ve seen carbon emissions track a hockey stick like curve. We’ve also seen the likes of ExxonMobil mount a corporate financed campaign of disinformation that’s led many of us to believe global climate change is not caused by human behavior. When corporations, creatures of human invention, are allowed to affect our body politic as ExxonMobil has done, the power of the demos (the people) is so diluted as to become meaningless.

While Elkington’s notion seems to make sense, it’s not working and we are headed for disaster. It is the government, and the power of regulation on which we must rely to do something about the behavior of business. Government, unlike what Ronal Reagan led so many of us to believe, is not the problem: Corporate power, and its incestuous relationship to our democracy, is the problem. Our body politic is in a very poor state of health, and unless we undertake collective action, we will continue to head toward an Hungarian like autocracy, wherein courtiers of the Davos Man control everything we do. And what of folks like Ben and Jerry, small business leaders who want to use business as “a force for good”?  They’ll likely battle Twitter wars with folks who believe the world is flat and rides on the back of a turtle, and that climate change is just a left-wing conspiracy theory designed to curtail their ability to buy large SUV’s and all the toys that go along with having fun Up North.

Unless we wrest back control of our democracy, and put power in the hands of the people, not corporations, we will continue our ever-increasing slide toward extinction. In Michigan, we have an opportunity to do something about our democracy. If things go as they ought, and are not undermined by our state’s legislature, a ballot proposal, Promote the Vote 2022, will appear on our November ballot. We, the people of Michigan, need to do everything we can to get folks to vote for this proposal.

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