How to make business a force for good
Guy Dauncey is a practical utopian. He lives on Vancouver Island.
Most of us know that business as usual doesn’t work. Along with its many obvious benefits, it has given us the climate crisis, the biodiversity crisis, and the affordable housing crisis. We’ve been told a thousand times that the free market economy is the best and indeed the only kind of economy that works, but surely there has to be a better way. There are thousands of companies serving the planet and we thank them, but voluntary efforts are not enough. We need government action. The urgency of these crises requires the complete transformation of the economy. So let’s start.
- Pass a social business law
It wasn’t long ago, before the transition to financialized capitalism in the 1980’s, that every business owner knew what their goal was. We must recapture the business from the cold steel clutches of maximized shareholder value. To achieve this, the Parliament of Canada and the United States Congress should each pass a Social Purpose Business Act requiring each company to adopt a new charter outlining their social purpose and agreeing to a set of commitments that the United States reflect nations 17 Sustainable Development Goals, including annual reporting on their climate targets and impacts. To lend force to the law, after five years any company that did not adopt the new charter would lose access to government procurement contracts, pay higher corporate taxes and pay higher interest rates on bank loans, courtesy of central banks. I suspect that the new charter would be welcome for many companies and would not pose a problem – 73% of executives surveyed from United Way’s Social Purpose Institute believe that having a social purpose will help their business navigate in today’s turbulent environment.
- Strengthening governance for social purposes
One of the expectations of the new charter would be for companies to have 50% women and ethnic diversity on their boards. 2021, women held 23.4% from the offices of directors of companies listed on the TSX. In 2018, only 5.9% of directors in the Financial Post there were 500 blacks, while today they make up 23% of Canada’s population. For larger corporations, governments must enact various publicly appointed boards of trustees that would be a voice for the common good and for nature.
- Form partnerships with unions
It makes no sense to deny your workers their inherent human right to organize. Governments in North America must pass laws similar to those in Germany requiring workers to elect representatives who make up one-third of the boards of companies with between 500 and 2,000 employees and 50% in larger companies. A healthy partnership would open the door to mutually negotiated advantages like Germany’s short-time workthat allows employers to send workers home in times of economic crisis or reduce their working hours, with the state covering a large part of their lost income, or something like that Sweden’s job security councilsgive employers 0.3% of their earnings to retrain redundant workers and help them find new jobs.
- overcome oligopolies
What chance does a smaller company have if a rival company is allowed to merge with its rivals and control the market, as has happened with Canada’s supermarkets, banks, telecom companies and newspaper chains? Is it correct that a handful of companies can use their oligopolistic power to raise prices and depress wages? We need Parliament to legislate the dissolution of oligopolies and restore a competitive market.
- Encourage employee personal responsibility
What can an owner do if they want to retire but don’t have a transition plan? In its 2022 budget, the federal government announced that it would amend the income tax law to introduce employee property foundations. But the government must complete its work on the proposed trust, which would help employees buy their business, either as a workers’ cooperative or as an employee stock ownership plan (ESOP), backed by legal advice and financial loans. The benefits would be manifold. In the USAafter the 2008 crisis, employees/owners were four times less likely to be laid off, according to the National Center for Employee Ownership. ESOP staff have 25% more pension provision and receive 5 to 12% more wages. Over 10 years, ESOP companies have 25% higher job growth. In the US it is Fifty times fifty The goal of the initiative is to increase the number of employee owners to 50 million by 2050.
- demand personal responsibility
Limited liability companies are considered “individuals” who have rights, among other things, to employ people, buy land, and extract resources. They are granted eternal life and are able to thrive no matter how much damage they cause to people or the planet. When their owners and directors want to avoid legal liability for a crime, they form a subsidiary to take the blame; In this way they enjoy immunity if they commit a human rights or environmental violation. By all principles of moral philosophy, blame should be placed only where there is agency. Only persons have agency. Executives, directors and investors should be held accountable for their misdeeds, not the company. Such a change enacted by law would increase risk for shareholders and directors, obliging them to assume greater social responsibility while reducing risk to the planet, communities and workers who have far too long been searching for profit through the companies were .
- Adopt a collaborative mindset
The Italian region of Emilia-Romagna has a strong cooperative business tradition. According to the so-called Emilian model, private companies join together to form a cooperative cluster in which they pool funds to invest in joint research and development, purchasing, training, technology transfer and export. They help each other by sharing contracts and subcontracting to rivals, knowing that altruism will be reciprocated. As a result, Emilia-Romagna has become one of the most prosperous regions in Italy, with the fourth highest per capita income, fourth lowest unemployment and lowest inequality between rich and poor in Europe. It’s difficult to legislate for such a cultural shift, but the government could do its best to encourage this kind of sharing and collaboration because the benefits are so obvious.
As for banking and finance? That’s for another day.