The Role of Business in Society
There is evidence from the very earliest days of man (and woman) of people trading the things they have for the things they want or need.
Businesses— of the formal, recognized by the state kind—have also been a part of society for a very long time. The oldest continuously surviving business, until recently, was Kongo Gumi, a Japanese temple construction business founded in 584 AD, that still carries on today (though as a subsidiary of another company).
Today, the corporation is the standard legal form adopted by large-scale private enterprises. Most all of us work for a some corporation or another.
Corporations can be formed for any lawful business or purpose. It is generally held that “a business corporation is organized and carried on primarily for the profit of the stockholders.” Of course lawyers all know that this case law comes from a 1919 case Dodge v. Ford Motor. And profit they have. The largest company today, Apple, has a market cap of $710 billion, which is greater than the Gross Domestic Product of the entire country of Switzerland (or Sweden, or Norway, or Argentina for that matter).
There is nothing inherently wrong with this size. The innovations the largest companies have brought about have created an endless array of useful devices (I’m using one such device to type right now). But as resources are becoming further constrained and our planet is being pushed to its limit, our corporations will have to evolve and be oriented to sustainable growth and include the true costs of their products and services.
You see by 2050, when kids today will join the workforce, we’ll have 10 billion people on the planet, and that’s fully double the number of people on the planet when I was born (in 1982). All of these people will need to eat, have a place to live, and have clothes on their backs and all of that is going to happen with fewer resources than we have today. The next generation’s ability to thrive will be determined largely by actions all of us make, not in 10 or 20 years from now, but today. And a lot of that is around environmental degradation and climate change.
And that’s a little where the rubber meets the road. Corporations, particularly public corporations, have become very focused on short-term earnings. And this makes sense because executive compensation is generally tied to these earnings. But this, as the economists would say, creates perverse incentives, those unintended consequences that the system was not intended to create.
Let’s take our industry as an example. The fashion industry is responsible for a full 10% of the carbon output the whole world creates, it is also responsible for 20% of all fresh water pollution, our polyester is now 85% of the human-made material found on the world’s shorelines and the industry’s hunger for fabrics like rayon and modal causes up to 100 million trees being cut down each year. (To explore more on the subject, you can hop over to our article here. [sources below]
Corporations are looking at short term growth, but that singular view is constraining the growth potential for the next generation.
We have serious challenges ahead of us. As citizens we’re going to have to come up with more than a plan to turn our lights off and recycle our plastic, and corporate citizens will have to shift to a growth model that accounts for the true cost of production.
Corporations are always looking to innovate. The next great innovations will be coming up with sustainable growth solution.
At Zady we’re working to demonstrate the future corporation. We’re embedding transparency into everything we do. We work to develop quality products, products that aren’t just marketed to get the consumer to buy them, but products that are created with the user in mind. We are not externalizing corporate responsibility into a separate department, the responsibility we have as a corporation of the future is to build a sustainable means of dressing the global population. And to explore more about defining sustainability click here.
What if instead of corporations just being in the business of selling things, they were in the business of making the world better?
For further exploration on the subject of the future of business and the role of business in society visit:
The B Team: http://bteam.org/
The B Corporation: https://www.bcorporation.net/
To learn more about the current weaknesses in the fashion world visit our piece on Fashion and Corruption
Sources: 1. http://www.textileworld.com/Issues/2010/July-August/DyeingPrintingandFinishing/ClimateChange-CarbonMitigationAnd_Textiles 2. http://www.theguardian.com/sustainable-business/water-scarcity-fashion-industry 3. http://www.theguardian.com/sustainable-business/2014/oct/27/toxic-plastic-synthetic-microscopic-oceans-microbeads-microfibers-food-chain 4. http://canopyplanet.org/news/225/299/Forest-friendly-fashion/