Corporate Purpose

Who Speaks for Future Generations?

At a moment of planetary crises—ecological, social, economic—long-termism is in short supply. Representing the interests of the unborn requires both a new consciousness and new institutional arrangements. In the case of a corporation, a new governance entity in the form of a Futures Council is one such arrangement. The Council would serve as a watchdog and advocate for future generations in matters pertaining to a the organization’s purpose, strategy and policies. For corporations beholden to short-term pressures, intergenerational stewardship must be ingrained at the highest levels of fiduciary and executive decision-making. Anything less will fail to align corporate activity with the vision of a just and thriving planet in the coming decades.

A Moment for Business Statesmanship

The first weeks of the Trump presidency have raised profound anxieties among government leaders and citizens alike. Amidst rising uncertainty, one group that stands to lose the most is global business. Corporate leaders who fail to take a stand in the face of destabilizing actions do a disservice to their reputation, workers communities and shareholders. Will business leaders rise to this urgent occasion?

The Soul of a Great Transition: Social Life Cycle Assessment and the Quest for a Humane Future

Social Life Cycle Assessment (LCA)—the analysis of social impacts spanning the complete value chain of a product or process—has never been more important than it is today for understanding and correcting widespread social injustices. In an increasingly interdependent world, we need to think and analyze systematically. Social LCA helps us expose in systemic fashion the social consequences of the dominant global development paradigm and, in so doing, has a vital role to play in redirecting global change towards a Great Transition future.

Corporations in a Great Transition

The “Corporations in a Great Transition” workshop focused on imagining a new corporate narrative and new corporate forms and communicating such innovations to change the conversation about the role of business in society. It consisted of three sessions: Visions (what corporate futures are desirable to build just and sustainable societies), Models (what types of corporate forms are needed to achieve alternate visions), and Pathways (who the change agents are and how can they be mobilized).

New Rigorous Ratings Tools Help Investors and Companies

Impact Investing for Rural Wealth Creation: Investing for Financial Returns and Community Impact

Making investments that generate financial value as well as social and environmental value (impact investing) is becoming increasingly popular as more traditional forms of investing are showing signs of widespread failure. This report outlines investment systems that provide returns to investors and lasting positive impacts for communities, and addresses financial challenges experienced by rural communities. It also provides examples of key participants in the investment chain and successful strategies for connecting rural communities with investors.

The Five Capitals of Integrated Reporting: Toward a Holistic Architecture for Corporate Disclosure

If integrated reporting is to evolve into more than the casual juxtaposition of financial and sustainability information in paper or electronic format, these two traditions must converge toward a reporting architecture that builds on the strengths of both while enabling assimilation of new knowledge, new issues, and new metrics that flow from the social, environmental, and economic dynamics in the twenty-first century.

Originally published in Robert Eccles, Beiting Cheng, and Daniela Saltzman, eds., The Landscape of Integrated Reporting: Reflections and Next Steps (Cambridge, MA: Harvard Business School, 2010).

System Limits of Finance: Thoughts on Economic Redesign for the 21st Century

We are reaching the limits of the kind of economy we now have—not only ecologically, but financially as well. In this lecture to John Katovich’s “Capital Markets” class at Presidio School of Management, Marjorie Kelly looks at two schools of design for the social architecture of our economy: generative design and extractive design.

Democratizing the Corporation

The various corporate governance initiatives that have arisen over the past decade have achieved significant strides toward containment of harms without altering the fundamental obligations and duties of corporations to broader societal interests. Corporate directors are more vigilant, managers are more attentive, and shareholders are better protected against losses linked to breakdowns in corporate governance, but shareholder primacy still remains intact. This chapter argues for the need to democratize corporate structure in order to make corporations better suited to the challenges and demands of the twenty-first century, and offers prototypes for such reforms.

Originally published in Heiko Spitzeck, Michael Parson, Wolfgang Amann, Shiban Khan, and Ernst von Kimakow, eds., Humanism in Business (New York: Cambridge University Press, 2009), 229-247.

From Corporate Responsibility to Corporate Design: Rethinking the Purpose of the Corporation

These are trying times for corporate social responsibility (CSR). Two decades after its conception, one senses among many a kind of fatigue, impatience, even despair about the limits of CSR. Recent studies and skeptical perspectives yield a picture of CSR as a contingent movement, involving actions that will be undertaken only if the demands of priority stakeholders—namely investors and consumers—are concurrently met. It is time to think more systemically, beyond the boundaries of CSR, if business is to achieve the level of social contribution it is uniquely capable of making.

Originally published in the Journal of Corporate Citizenship 33 (Spring 2009): 23-27.

Corporate Design: The Missing Organizational and Public Policy Issue of Our Time

Corporations are arguably the most powerful social institution of modern society, yet “Corporate Design” has yet to find a place on the public agenda. Debate thus far has focused on single companies and single issues; it has been driven by crisis rather than by a proactive discussion. The authors propose a new and more intentional, analytic approach.

Originally published in New England Law Review 42, no. 4 (Winter 2008): 761-786.

Confessions of a CSR Champion: It’s Time to Rethink the ‘C’ in CSR

In evaluating the progress of CSR (corporate social responsibility), Allen White sees the limits inherent in dealing with the symptoms rather than addressing the deeper issue, i.e., redefining the entire concept of the modern corporation. The article addresses issues of governance, rewards and incentives, and ownership.

Originally published in Stanford Social Innovation Review (Winter 2009): 31.

Principles of Corporate Redesign

The juxtaposition of corporate power with persistent inequity and unsustainability raises profound questions about whether corporations are upholding their end of the social contract or, indeed, whether the social contract itself needs to be rewritten. This paper calls for rethinking the fundamentals of business-society relations to improve equity and examines structural solutions necessary to reconcile corporate contributions and societal needs.

Why We Need Global Standards for Corporate Disclosure

After two years of gradual revelations concerning undisclosed information on suicidal risks to children on antidepressants, a federal advisory committee in September 2004 recommended that such drugs be labeled to alert physicians and consumers of this risk. The antidepressant story is noteworthy in its own right, shedding light on the tangled web of legal, regulatory, economic, and ethical issues surrounding disclosure practices in the pharmaceutical industry. The complex interworkings of an emerging global economy make it necessary for corporate standards for disclosure to be established and enforced.

Originally published in Law and Contemporary Problems 69 (2006): 167-186.

Business Brief: Intangibles and CSR

Intangibles such as reputation, trust, and capacity to innovate—all widely recognized as fundamental to strong financial performance—are at the same time integral to the CSR agenda. Astute management of global supply chains, visionary environmental products and services, and proactive risk management through anti-corruption and HIV/AIDS initiatives are the kinds of practices associated with both CSR and quality of management. For the investment community, any determinant of quality of management is viewed as key to the overall assessment of company competitive prospects. This brief is an opening exploration of the intangibles-CSR relationship and provides a framework for understanding this relationship.

The Grasshoppers and the Ants: Why CSR Needs Patient Capital

This paper explores why and how capital markets undermine CSR, and what is being done—and should be done—to enlarge the pool of “patient capital.” CSR is about intergenerational stewardship of resources. It focuses on enriching the stock of human and natural capital, and on creating wealth that is enduring and equitably distributed among those responsible for its creation. Juxtaposing these attributes of CSR with trends in capital markets, the misalignment between the two is serious and intensifying. The solution lies in a concerted effort of all market players—companies, analysts, investors, accounting bodies, and the public at large—to begin moving capital markets from a mentality of trading and transaction to one of care and custodianship.

Fade, Integrate or Transform? The Future of CSR

CSR is at a crossroads. After a decade of evolution, the pathway forward defies easy prognosis. Will external events and company choices relegate CSR to a passing fad, leading to its fading from corporate and public agendas? Or will CSR reach full fruition as it becomes aligned, integrated, and fully institutionalized in company strategy and operations? Or, alternatively, is something more transformational on the horizon as CSR morphs into a deeper change mode, becoming a force for altering corporate purpose at the most fundamental and systemic level? This paper frames three potential scenarios, intentionally designed with stark differences in content and implications for companies and their stakeholders, and then assesses how the history of the CSR movement may inform its future.

Corporate Reporting: New Wine, New Bottles

A quiet renaissance in corporate reporting is gradually transforming its purpose, content, and readership. This transformation predates the recent spate of accountability misconduct, but is accelerating because of it. In a few short years, a new generation of reports will have moved from the extraordinary to the exceptional to the expected, thereby establishing a new standard of transparency unimaginable even a decade ago. For forward-looking managers, opportunities abound to stake out leadership positions among investors, employees, customers, and communities.

Knowledge, Wealth and Information: The Case for Global Corporate Disclosure Standards

Though the contours of corporate obligations are gradually becoming more sharply delineated, the absence of accountability and enforceability at the international level remains a major stumbling block to achieving parity between rights and obligations. This paper argues for global disclosure standards as an integral part of such accountability. It uses the pharmaceutical industry as a case study, focusing in particular on the social cost of non-disclosure. Although the contours of a generally accepted disclosure framework are identifiable, details of sector-specific disclosures remain fluid. The issues need to be articulated, the indicators defined, and the measurement protocols developed.

Lost in Transition? The Future of Corporate Responsibility

The dizzying pace of corporate social responsibility (CSR) initiatives continues unabated. For its champions, CSR is moving quickly from a curiosity to the mainstream. For its skeptics, it remains too marginal and too voluntary to make a real difference in business behavior. A decade of proliferating codes, collaboratives, conferences, and courses warrants pause and reflection by both theorists and practitioners alike. What path are we on? And is the path we are on the right one?

Corporate Governance & Corporate Sustainability Reporting: A Vital Link in 21st Century Accountability

The rise of corporate governance as one of the preeminent business issues in the early twenty-first century raises fundamental issues about the character of the modern corporation. How will it be managed, monitored, and regulated? How will it be held accountable to its stakeholders? Who are these stakeholders? And how must boards and managers conduct themselves in an increasingly complex, global economy in which decisions and events become public knowledge at “Internet speed”? This paper argues that strong and effective corporate governance will be increasingly characterized by sustainability reporting that provides full disclosure of environmental impacts, business practices, employment policies, health and safety standards, etc.

Sustainability and the Accountable Corporation

The pace at which corporate sustainability reporting will evolve is highly uncertain. Indeed, given the current state of environmental reporting, it may seem like a distant vision. Yet the same could have been said about environmental reporting a decade ago. And with the emergence of sustainability as the dominant paradigm for future development, it may well be that corporate sustainability reporting takes hold with an intensity and durability that surprises even the skeptics. For this to happen, such reporting will need a far more definitive framework than environmental reporting has now. The many reporting initiatives that have appeared in the last decade offer valuable insights into how such a framework may evolve.

Originally published in Environment 41, no. 8 (October 1999): 31-42.

Snapshots of Environmental Cost Accounting

This report demonstrates the financial results of actual environmental accounting applications. It highlights thirty-nine cases of companies using various forms of environmental accounting (EA) and offers a more detailed review (snapshot) of all of these cases. The snapshots represent applications of EA in small, medium, and large businesses in a variety of industries, and in a range of business decisions. Examples run the gamut from a small manufacturer of wooden doors examining an investment in a new lacquer process, to a large multinational health care products company measuring the value of its proactive environmental management program.

Pathway to Product Stewardship: Life-Cycle Design as a Business Decision-Support Tool

Numerous firms have begun incorporating environmental effects as a criterion in product/process design. However, because life-cycle design (LCD) is used as an internal decision-making tool, its strengths, successes, and limitations remain largely undocumented. This report uses case studies from three companies—(1) IBM, (2) Bristol-Myers Squibb, and (3) Armstrong World Industries—to understand how LCD is finding its way into business decision processes.