The Rise of the Good Corporation
By Erica Velis
“In an age when the speed, intensity, and complexity of change increase constantly and exponentially, the ability to shape change—rather than being its victims or spectators—depends on our competence and willingness to guide the purposeful evolution of our systems, our communities, and our society.”
– Bela H. Banathy
It’s been a long time coming, but we have reached a turning point. No longer an idealistic fringe cause, “green” has gone mainstream. Sustainability and Corporate Social Responsibility have grown into strategic issues with boardroom heft. And it’s no wonder why.
The world is changing at an incredible pace—and our environment is changing faster than predicted. The planet is warming, ice caps are melting, species are disappearing, the oceans are overfished and resources are stretched. With seven billion of us now on the planet, and a projected rise to 9.3 billion by 2050, our situation will only become more precarious. Of all the challenges before us, none may be more critical than balancing the demands of economic growth with the need for long-term environmental sustainability.
For brands, the pressures of resource scarcity, price volatility and the looming threat of climate change, make an already competitive marketplace all the more complex. There is no longer any doubt that the business case for sustainability is strong. Simply put, efficiency saves money. However, as markets shift and social media becomes increasingly influential, the power of the consumer will continue to grow, as will their expectations. And, because of their sheer size, scale and impact, the expectations for global brands are high. A sustainability plan—and an image that reflects environmental stewardship and good corporate citizenship—is no longer a “nice to have” side project, it’s a “must have” business asset.
"…some of the most successful companies of all know that sound practices and a positive corporate image drive value."
No one wants to be the bad guy, yet, when it comes to social problems and environmental issues, the modern corporation often gets blame, deservedly or not—and brands, as resonant, ubiquitous symbols, become emblematic of both the triumphs and missteps of today’s companies. In different times, perhaps it would be all right to take a bit of flack when times get tough and go on with business as usual. However, as we explored in a related article, The Unintended Consequences of Prosperity, we are not living in ordinary times. The role of business is changing in response to the urgent issues of our day, and the power of brands is increasingly being harnessed to rally people behind a cause, raise awareness about critical issues, and influence consumer behavior in positive ways. Out of the crucible of consumer demand and unprecedented global pressures, a new kind of corporation is emerging: The Good Corporation.
In some ways, corporations have always been “good.” For all the criticism they receive, they have also advanced human progress, solved burdensome problems, and made the lives of countless people richer and easier. We have never had so many choices, and so much luxury and convenience. Yet, the uncomfortable truth for many people in business is that the activities of corporations that have enriched and benefitted us have also largely contributed to the crises we are facing globally—economically, socially and ecologically.
Historically, corporations were not intended to take on social responsibilities or solve environmental problems. They were designed to maximize profit. The very nature and structure of the corporation compels executives to prioritize the interests of their companies and shareholders above all other things. That has been “business as usual”—a company’s legal mandate to pursue its own self-interest, regardless of the harmful consequences it might cause to anyone or anything outside it. However, because of their relatively new status as dominant institutions, the undeniable scope and impact of their operations, and the escalating demands of consumers, the corporation is evolving.
The hierarchical, command-and-control, relentlessly self-interested corporation of the past (and its underlying ideology) is animated by a narrow conception of human nature and natural law that is too distorted, rigid and uninspiring to last in the world we live in now—which is complex, diverse and ever-changing. The model it is predicated upon has outlived its usefulness and, if current trends are any indication, will be gradually phased out and replaced by more dynamic organizations. However, rather than dwell on the limitations or errors of the “old” corporation, it may be more helpful to outline the qualities that will help us identify and understand the structure and attitude of the “new” corporation.
Those who will emerge as corporate leaders in the 21st Century will:
- Continually work to identify steps that will move their company from its current state to a desired sustainable future
- Develop a strategic vision for their organization that integrates sustainability into all business operations, from sourcing and manufacturing to distribution and end-of-life product solutions
- Respond to business, environmental and social challenges through innovation, creative solutions, transparency and a nimble, adaptable stance
- Understand that their brands are living assets whose strength, vibrancy and allure is directly related to the resiliency, health and power of their organization
- Realize that sustainable initiatives offer significant competitive advantage by benefitting the bottom line, reducing or insulating a business from numerous risks, and enhancing an organization’s image and public perception
Brands are channels through which our collective aspirations take shape. They are sources of inspiration and vehicles by which stories (about ourselves and our reality) are told. Brands have undeniable impact; they shape collective behavior, values and beliefs—and, intentionally or not, they change the world.
The mega-companies that own and manage major brands have the power to either perpetuate the exploitative, energy intensive paradigm of the Industrial Age—or facilitate ecologically benign ways of sourcing, manufacturing and distributing that consider human rights, human health and the welfare of the planet. They have the power to tell a new story—and the power to transform the way we live for the better. Fortunately, some of the most successful companies of all know that sound practices and a positive corporate image drive value. They also know that brands that factor sustainability into their operations and communications satisfy the critical need to achieve and maintain differentiated positioning in an increasingly competitive marketplace.
"…it no longer matters who is to blame for our predicament; what matters is that we—corporations and consumers—take responsibility for the direction and impact of our society."
Good corporations understand that society must become ecologically and socially as well as economically sustainable, and that business plays a major role in this evolutionary process. They further realize that sustainable practices provide important benefits to their own organization and to everyone and everything outside of it. As we move forward into the future, with all its foreseeable challenges, we can assume that sustainability will become increasingly important.
At this point, it no longer matters who is to blame for our predicament; what matters is that we—corporations and consumers—take responsibility for the direction and impact of our society. Human beings are agents of evolution. Companies are agents of change. Brands are potent catalysts. Business, being the economic engine that drives the world and one of the chief influencers of our time, could very well be the solution we are looking for as we dare to imagine a new era where Good Corporations abound.
We must remember, however, that it’s not corporations that determine our collective fate, but people. Therefore, the future is in our hands: Business is neither “good” nor “bad.” It has no conscience of its own. Whether it will become a force for positive transformation—or not—depends on us.
Erica Velis is a Content Editor in Interbrand's Global Communications Department