Fifty years ago, The New York Times published an essay by Milton Friedman titled, “The Social Purpose of Business Is To Increase Its Profits”. On Sunday, the paper published a collection of responses to the piece from thought leaders like Howard Schultz, Dambisa Moyo, Joseph Stiglitz, Erika Karp, Larry Fink, and Anand Giridharadas. Also Sunday, a new business network called Imperative 21 launched a campaign promoting a RESET of our economic system.
Halla Tomasdottir, co-chair, Imperative 21 and CEO, The B Team, explains the need for this RESET:
“Fifty years of shareholder primacy has left us facing a climate emergency, collapse in our natural system, unjust and unsustainable levels of inequality and low trust across society. It is critical that leaders everywhere come together in a RESET… We must… make sure we build back better with the many populations our current system has left behind. It will take radical collaboration between the private sector, public leaders and citizens to create the economy we need.”
Imperative 21 represents 70,000 companies, 20 million employees, $6.6 trillion in revenue, and $15 trillion in assets under management. Originally convened by the Ford Foundation, Imperative 21 has facilitated a co-creation process with 250 global allies to identify three principles for the economic system we need. The Imperative 21 principles are:
- Recognizes the interdependence of healthy people, planet, and economies; reimagines the relationships between the private sector, government, and civil society; and ensures that everyone has access to free and fair markets.
- Removes structural inequality; ensures leadership and ownership are more representative and investment more accessible; uses technology to advance democratic ideals and human rights; and promotes greater voice, power and opportunity for those currently marginalized.
- Measures success based on credible common metrics of value creation for all stakeholders; creates incentives that reward business and investments creating social and environmental value; and enhances standards of fiduciary duty.
Is Such A Major RESET Really Possible?
Imperative 21’s call represents a major shift in how we work and live. The good news is that some companies are already doing business in this way. Specifically, certified B Corps are audited by an objective not-for-profit to measure how ‘good for the world’ they are, on many of the dimensions highlighted by the Imperative 21 principles. Debra Dunn, Global Board Member of B Lab, pointed out: “Certified B Corporations are the models for the economic RESET we need, where people and planet are prioritized, and businesses are held accountable.”
Furthermore, the RESET that is called for offers win-win-wins for business, employees, and society. JUST Capital is a network steward of Imperative 21 that has been polling the American public about their views on corporate conduct for 7 years. JUST’s CEO, Martin Whittaker, said, “Our polling work over the years has made clear the public’s desire for a more just economy and in particular the overwhelming support that exists for a stakeholder-led approach. The good news is that there’s also a powerful business case for stakeholder leadership.”
Research out of Harvard Business School also finds that companies that pay attention to the sustainability factors (the elements of the Imperative 21 principles) that are material to their business, they perform better over time. Further, research shows that investors care more about these sustainability strategies than many CEOs think. Larry Fink’s 2018 investor letter was one of the first calls from a mainstream investor for companies to “serve a social purpose,” but this sentiment is becoming more and more common among institutional and private investors.
Consumers are also increasingly voting with their wallets, choosing brands that align with their values. During Covid-19, companies like Whole Foods and Equinox were slammed for not providing proper support for their employees to stay safe and healthy – which enables customers to stay healthy. Then, after the murder of George Floyd, companies scrambled to showcase what they had been or were now going to do to improve racial equity and inclusion in their ranks. It will be interesting to see which of these intentions turn into action. Which is where the Imperative 21 principles could be a guiding force.
Imperative 21’s first major action has been the RESET campaign, designed to change the dominant narrative that Friedman’s 1970 essay managed to set, despite the fact that he wrote it as a little-known, relatively extreme economist. Holly Gordon, Chief Impact Officer of Participant, a network steward of Imperative 21, explains: “In order to change systems, we need to change culture and beliefs, and storytelling is our most powerful tool to change the culture of business forever. We must tell stories that inspire widespread demand for businesses to prioritize people and planet, and empower people everywhere to imagine and build toward shared prosperity, sustainability, and equity.”
The imagery is beautiful, and this campaign is an excellent first step to set a vision and build excitement and credibility for it. The real RESET will come in the next phase, when all of us, as leaders, employees, and citizens get to work making the change to realize the Imperative 21 principles and the RESET campaign images.
How Can I Support The RESET?
As with any initiative for change, big or small, there is a valuable role for you to play, regardless of your background, geography, or current position. We all have ways to contribute to change on three levels: Me, We, and the World, and that is true in the case of contributing to the RESET. Further, much as Harvard showed that sustainability is good for businesses, contributing to positive change is good for us as people too, in terms of our mental and physical health, as well as our professional performance.
Let’s review the ways we can each contribute to this RESET, at these three levels of Me, We, and World.
ME: Improving Your Own Knowledge And Mindfulness
As with any change, the first step is close to home. We must each familiarize ourselves and get comfortable with the mindset of this RESET. It looks different than how most of us have been trained to work and live, through our schooling and professional development. It is critical for us each to learn how the RESET is possible, and why it’s so essential to our well-being. Then we can understand how to change our ways of working and living accordingly, as well as bringing others along with us.
WATCH or READ: Doughnut Economics, a description of a more regenerative version of capitalism written by an Oxford economist and being piloted in Amsterdam.
WE: Building Inclusive, Interdependent, and Accountable Teams
The next step is to bring our teams along with the RESET. These might be formal or informal teams, in our personal or professional lives. What’s important is that we share the RESET images and the Imperative 21 principles, and open conversations about how we could use them to evolve our team’s work.
Remember, improving your company’s sustainability practices in the environmental, social, or governance dimensions, can improve your company’s bottom line. And we need business to play a role in solving today’s major crises of global health, racial equity, environmental degradation, and economic uncertainty. In the words of Daryl Brewster, CEO of another Imperative 21 network steward, Chief Executives for Corporate Purpose (CECP): “Given today’s societal expectations and challenges, it is time for leading companies to drive positive social impact through sustainable business.”
TRY: Use B Lab’s B Impact Assessment tool to begin evaluating your company’s practices, and how good for the world they are. It’s free to use, and you might get some good ideas of quick wins that would bring you closer to the RESET.
BUY: Shift one of your family’s or office’s recurring purchases to buy from a certified B Corp, a company that is externally audited to ensure they are good for the world – and thus, in line with the Imperative 21 principles.
WORLD: Supporting Just and Regenerative Institutions
Finally, you can support the public and private institutions who are doing the work in terms of local action, global awareness, and policy change. Invest your attention, time, and money in political candidates and not-for-profits that are doing the work to change the specific elements of the Imperative 21 principles, or the culture change to build awareness and support for the RESET more generally.
Choose the elements and scale that resonate most with you, and spend your time and money accordingly. Not all of us have to participate in all parts of the change, so do what means the most to you personally, whether environmental, social, or governance change. For those of us in the American context, it is important that some part of your efforts address the centuries of racial injustice in this country that will hold our progress back until we fully reconcile. Rodney Foxworth, CEO of another Imperative 21 network steward, Common Future, reminds us: “There is no economic justice without achieving racial justice. Economic justice demands a RESET that redistributes power, prioritizes equity, and ensures economic opportunity for everyone.”
DONATE: Find not-for-profits that are contributing to solving the problems you care about most, whether that’s one of the network stewards of Imperative 21 working to catalyze businesses toward the RESET, or a community organization working for racial justice, environmental interdependence, human rights, or otherwise.
VOTE: The RESET requires policy change as well as private sector action. So vote. And help other people to do the same, by donating or volunteering for voter registration and activation initiatives.
And first and foremost, you can be part of the RESET by sharing these spectacular images, created by Amplifier with Participant and BBMG for Imperative 21, to entice others (in English, French, Portuguese, or Spanish) to learn more about what is possible by replacing Exclusion with Inclusion, Neglect with Respect, and more. Take pride in demonstrating your support for an interdependent, just, and accountable form of capitalism – you’ll land on the right side of history.
Click here to try out our Me-We-World diagnostic tool to find a specific action that matches how YOU want to be involved in the RESET.