I am at the 2nd Summit on the Future of the Corporation in Boston where I have been asked to speak about “Building sustainability from within: harnessing capital to drive long-term horizons.” Here’s what’s on my mind…
Seventh Generation has spent 21 years in pursuit of this objective. We have built a successful model that represents a new possibility. We have taught and influenced thousands of other businesses. We have established a solid case study that supports the argument that a more sustainable company can generate returns that far exceed the returns of the average business. And yet, sadly, the world is little better off. In fact, by most measures we have consistently moved more quickly in the wrong direction.
I was giddy with hope back in November when Obama won the election. I believed that we stood at the edge of the positive change that was so desperately needed. This was the moment we had been waiting for, an opportunity that I believe arises only once in a generation.
Today, seven months later, I am more deeply concerned than ever. More cynical. I’m not hopeless, but I have lost my boundless excitement and my sense that the future I had hoped for was just around the corner. While we are moving in the right direction under our new leadership, making positive changes from climate change to credit card debt, by every measure, our progress falls far short of what is needed. The progress we are making is incremental at a time where revolutionary change is needed.
Our political and economic structures and systems, governed by largely invisible and ever more dangerously concentrated powers, will not change direction willingly. In the face of this opposition, we end up not with what is good but with simply with a little less of what is bad. We are on a slightly more positive trajectory, but hardly on a direct course to a sustainable future.
It seems abundantly clear that our financial system will not be forced to restructure in a meaningful way. Global warming will bring devastation upon the planet that may be delayed by a decade, but will come nevertheless. We will not build a new educational system capable of delivering the talent required to lead us toward the world we want to leave to our children.
This is not a condemnation of the new administration, but a sad recognition that while the current incremental, highly compartmentalized change is so pleasing after eight years of a world led by Bush/Cheney, it is simply not adequate.
Judith Samuelson of the Aspen Institute articulated the “Root Causes,” of the challenges we face but have not yet begun to address. While there are many more that one could think of, this list highlights those issues:.
- Repurposing the Corporation to benefit society and all stakeholders rather than solely shareholders.
- Align Incentive Systems to support a long-term point of view. Whether it’s how we tax capital gains or pay CEOs, we have institutionalized incentives that value exactly the wrong type of behavior.
- Get all money out of politics with publicly financed elections
- Mispricing of risks and consequences. As long as we allow the externalization of costs, we will continue to encourage corporate decisions that are at odds with the long-term interests of society.
- Disconnection between money management (Wall Street) and capital providers (pension funds and individual investors). Today, professional money managers manage money to maximize their economic interests at the expense of the interests of those that provide them with capital.
I will continue to spend a lot of time thinking about these things. But not for the next two weeks — I am off on a much-anticipated and extremely welcome family vacation.