Tuesday, November 23, 2004

Total Corporate Responsibility: A new business paradigm

From Seventh Generation:
Of course, we see limitless growth as a positive and have put it at the center of our economic measurements because our business activities don’t measure the true costs that unending expansion creates. On their ledgers, corporations don’t account for the environmental damage and health issues caused by their unsustainable practices. Only the costs of things like labor and raw materials are used to calculate prices and profits, an approach that’s foolhardy at best.

For example, even though traditional foods are cheaper to buy than organic food, they’re actually more expensive to grow and eat. Conventional agriculture relies on the use of pesticides that diminish soil fertility, poison waterways, pollute the air, harm wildlife, and sicken farm workers and consumers. These are all very real costs created by traditional farming operations. However the bills for these environmental fixes, clean-ups, and health care fall to governments, insurers, and the general public. If these expenses were added to the agribusiness’ bottom line, the costs of conventional food would soar and organic foods would be the cheaper alternative.

Because the costs of goods and services do not factor these “hidden” costs into their bottom line, the downside of growth is ignored and no incentive is created to do the right thing. In fact, our government regularly creates incentives to do as little as possible by deregulating industries to the point where, in many cases, there is no regulation at all. The result is not a free market, but a free-for-all market in which government does not hold businesses accountable for the true costs of their operations and the unhealthy effects on society those operations promote.

If we are to create a truly sustainable culture, we are going to have to change these economic arrangements. This is not something CR can do. Instead, we need to see CR as a subset of the larger idea called TCR. In Dixon’s words, “The TCR model takes CR to the next level by shifting the focus to system change. TCR encourages firms to continue traditional CR activities. However, the emphasis is placed on working proactively with others to promote system changes that hold firms fully responsible. TCR suggests a new mindset for business. Rather than seeing itself as one entity operating independently from the rest of society, business would see itself as being part of one interconnected system. It would give priority to the good of the overall system, and in so doing ensure its own prosperity.”

That’s a great idea, and it’s based on three concepts:

* Interconnectedness, which means that a business is part of one interconnected system.

* Actualization, which means that the main purpose of business is to help society achieve its greatest potential.

* Posterity, which means that the primary obligation of this generation is to preserve and enhance society for future generations.

Those are big changes from the current paradigm. And change, of course, is the scariest of things, especially on this kind of level. In order to make it happen, we’re going to need open minds that can see beyond the limits of our current system and into a brave new world of possibility. We’ll then need the will to go there.