Why Businesses Should Value People and Planet as Well as Profit
Old paradigms of business continue to wreak havoc on the global economy. In business schools, we are taught that captains of industry are tasked with serving shareholders above all others because that’s what businesses were placed on the Earth to do: to grow and thrive, creating needed products for customers. Through this misguided precedent, the highest priority for business leaders was to keep the business alive under the auspices of returning increasingly larger amounts of profit to those who invested in our companies. If we didn’t, our shareholders would go elsewhere. We lost sight of the intrinsic value of people and exploited the resources of the planet in pursuit of maximizing margins above all else.
Something is wrong with this global business model. It’s destroying the planet, creating larger and larger wealth divides, and failing to deliver on shared prosperity for all. We’re running out of time to seek new solutions to these issues. The clock ticks louder every year.
A New Paradigm of Business Is Upon Us
We’re at a turning point in history. Now is the time to replace the broken model we teach students in business school and replace it with a new paradigm of business that, like Berrett-Koehler founder Steve Piersanti’s new paradigm of leadership, is based in stewardship of both people and planet.
In this new paradigm, companies will embrace frameworks of abundance, purpose, and restoration of both people and planet rather than exclusion, fear, or scarcity. Relationships between people will be balanced with results — not sacrificed for one or the other — and companies and employees will serve causes far greater than themselves.
How We Got Here
If all this sounds too good to be true, know this: The call for more socially and environmentally conscious business is not just an isolated moment in history but one that’s been building for the last 30 years.
Why did companies such as Ben & Jerry’s, Tom’s of Maine, and The Body Shop spring up to challenge how businesses should be run? For one, focused reason: They were fed up with the status quo.
These and other entrepreneurs emerged with the notion of serving the triple-bottom line—people, planet, and profit—instead of the single-bottom line of profit. Many small companies followed suit, but larger publicly traded companies remained bound to Wall Street’s demand for ever-increasing quarterly revenues and profits. In response to this growing community of leaders and employees committed to the triple-bottom line, The Social Venture Circle (once the Social Venture Network) was born and issued a bold call to action. Their mission is “to build businesses that drive the NEXT economy: one that is regenerative, equitable and prosperous for all.”
The only problem? All of this was still more or less on the fringe.
Where We Are Now
Thanks to the growing number of organizations embracing this mission over the last few decades, we’ve come a long way. The Certified B Corporation, benefit corporation, and Conscious Capitalism movements are in full swing. Even much larger companies are committing to a sustainable business model that places people and planet first. But most of the companies are still private, and founders of triple-bottom-line companies wonder if their new business models will outlive the founding generation.
In summer of 2019, the Business Roundtable, representing CEOs of some of the largest corporations in the United States, announced that they could no longer afford to only serve shareholders at the expense of other stakeholders. Their Purpose Statement committed to:
- Delivering value to customers
- Investing in employees
- Dealing fairly and ethically with suppliers
- Supporting the communities in which we work
- Generating long-term value for shareholders
If the CEOs of the Business Roundtable are really committed to these shared-equity principles, it represents a dramatic move of triple-bottom-line values to the mainstream of business. But proponents of progressive business models, such as B Lab co-founder Jay Coen Gilbert, caution that such mainstream companies must follow up their words with actions before we can really say with conviction that a new dawn is upon us.
It’s Time for Action
What will the next 30 years bring?
We have to lead by example. As more organizations and businesses join the call to serve people and the planet, we witness the successes that these organizations have celebrated. We also realize that we don’t have to choose in an ultimatum — people or the planet, profit or people — there is a new, inclusive way. At Berrett-Koehler Publishers, we’ve worked hard to cultivate a culture of stewardship as we deliver on our mission to create a world that works for all.
There’s still a lot of work to do for the next 30 years. And it’s up to all of us to define this new paradigm as we work to make it a reality.
For more, see the longer version of this post published by Berrett-Koehler Publishers.
B the Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
It’s Time for a New Paradigm of Business was originally published in B The Change on Medium, where people are continuing the conversation by highlighting and responding to this story.
