Corporate America: Making the world a better place…or not.
That used to be the tagline of this blog, and it remains the standard I use to judge companies.
Are the jobs they create enabling their employees to flourish? Are their products and services improving lives? Are their shareholders earning good returns? Are they making their communities better?
Put simply, how well are they serving workers, customers, shareholders and communities?
Most companies, it seems to me, would like to serve better. To do so, they need better incentives. These incentives can take the form of government regulations (sometimes needed, but rarely optimal, because regulators often become captives of the industries they are supposed to oversee), industry standards (like sustainable forestry standards or Hollywood movie ratings, which general work well) or social expectations (like the growing desire of customers to patronize “good” businesses or avoid “bad” ones).
That brings me to my 2010 wish list. Each creates an incentive for companies to do business better.
Climate change regulation: Until Congress passes a law making it more expensive to burn fossil fuels, there’s no hope of solving the global climate crisis. This could be a simple carbon tax, the complex and pork-laden Waxman-Markey cap-and-trade bill passed by the House or the promising cap-and-dividend proposal from Senators Cantwell and Collins. Each approach has benefits and flaws, which we’ll get into some other day, but the best thing that could happen to business (and the planet) in the 12 months ahead is for the U.S., at long last, to stop allowing companies and the rest of us to pollute the atmosphere at will.
Corporate governance reform: What will it take for Congress, the SEC and America’s shareholders to recognize that so many boards of directors are failing at their job? You would think the near-collapse of the banking system would do it. Or the yawning gap between CEO pay and performance. Or the fact that so many corporate mergers end badly. The breakdown of corporate governance isn’t an easy problem to solve, but there are plenty of good ideas out there, ranging from requiring directors to win a majority of shareholder votes to finding ways to give activist shareholders more power to recall underperforming boards. The best boards will encourage companies to take a long-term and expansive view of their role in society. My friends Nell Minow (of The Corporate Library) and Bob Monks have been working heroically on these issues for decades. Reform is long overdue.
Sustainability ratings: How do the cleaning products of Seventh Generation, Method, Clorox and Tide compare? What’s the carbon footprint of a plastic bottle of Dasani, versus Aquafina or Poland Spring? Measuring the environmental impact of consumer products is a gargantuan task, and assessing the social impact is even harder. These aren’t jobs for the government. But a consortium of academics pulled together by Wal-Mart is trying to develop a sustainability index, as is a division of Underwriters Laboratory (which I wrote about here). It will take years to finish the job, but I’m hoping that Wal-Mart and UL they make real progress in the year ahead.
Human rights in China: As the economies of China and the U.S. become more intertwined, it’s incumbent on global corporations to use what clout they have to make clear that they disapprove of the way basic human rights are routinely violated in China. Companies that fear speaking out on their own should organize their peers to do so as a group. They could voice their support for political dissidents and environmental advocates, provide funding to human rights organizations and aggressively monitor the workplace and environmental practices of their suppliers. China shouldn’t be too big to fault.
Electric cars: Lots of forces have to come together for the electric car business to take off this year—a price on carbon would help, as would tax incentives for buyers and support for an infrastructure of charging stations. Most of all, consumers need to embrace electric cars—neither the automakers nor the government can force them on people, needless to say. But the environmental and national-security benefits of electric cars are so compelling that it’s my wish that 2010 become the year when electric cars move from talk to reality.
Happy New Year, blogreaders! Let’s hope 2010 is a good one for business, and for the rest of us.
{ 4 comments… read them below or add one }
Good wishes, I agree with all of them.
I have a question for you though. Do you think companies can combine the goal of making profit with the principle of treating workers well? I’m not trying to imply that all companies treat their workers badly, but companies such as Walmart have a bad reputation when it comes to workers rights.
If human rights are improved in China, what makes you think that companies won’t just move their factories to another country where the rights of workers are not as well protected?
Keep up the good work!
I absolutely think that companies can combine profit, doing “good” and treating their workers well. The Wal-Mart example is complicated–the company got out of balance, I think, putting so much emphasis on their low prices that they squeezed their workers and suppliers–but I see companies like Southwest Airlines and Starbucks (and many more) that are good employers as well as very successful and good for their communities.
As for China, there’s always the danger that companies will engage in a “race to the bottom,” i.e., look for cheap workers and lax regulation, but many also bring their labor and environmental standards to wherever it is they operate. I just think too many companies have given China a free pass on the human rights issue.
Happy New Year, Marc! I share your hope for a great 2010 and offer a voice of support to your wish list. While it’s too early in the day to offer a real toast, I’ll plan to raise a glass to taking steps forward on all five this year.
Cheers,
Lisa
Marc, hope 2010 brings you the best of wishes!
Wondering what your thoughts are with respect to electric car adaptation? My concern is that the real way to effectively do this is with some amount of collaboration among automakers. (Perhaps aligned with the responsibility of making people’s lives and communities better?) Better Place’s infrastructure concept is one of the strongest that I’m aware of, and would ease society’s transition. But if automakers continue to insist on specialized parts, specifically batteries, the public may wait until the technology advances to such a degree that electric cars can make longer distances on a single charge. Which could mean years before they really hit mainstream.
With the US auto industry remaking itself, a show of working together to facilitate the transition to electric vehicles would demonstrate real change in their approach to business.
Any thoughts?
This should be an exciting year with the roll-out and testing of several electric autos from a range of automakers within the US.
Cheers,
Nicole