The Future of Capitalism: Building a Sustainable Energy Future
Over the past several decades, one of the great discussions within capitalism has centered on defining exactly what a business is and what its obligations are to society at large and to the many stakeholders participating in business systems, including customers, shareholders, employees, suppliers, and communities, to name a few.
The obligations to society have been defined in different ways at different points. For many retailers, the focus has been first and foremost on serving the customer. For others over the past couple of decades, the focus was myopically on the shareholder. With the advent of shared-value, double-bottom-line, triple-bottom-line, and related movements, we have seen a broadening of the discussion to recognize the importance of multiple stakeholders and the need to promote social, environmental, and financial value.
Long-term capitalism goes one step further, asking companies to actively reshape the systems in which they operate. Those systems could include the complex of logistical and shipping services that move goods around the globe, the web of overseas contract manufacturers on which companies rely, or the array of energy suppliers that fuel worldwide operations. Long-term capitalism takes a deeper view of business’s role in society, recognizing that, in the long run, the interests of stakeholders converge with the interests of the broader community. The actions of any one company may reverberate throughout the various systems in which it operates, generating second- and third-order benefits as well as negative externalities. Under long-term capitalism, companies recognize that fact and, through concerted action with others of sufficient scale, work to ensure constant improvements to those systems.
There are compelling reasons companies should seize the initiative to drive social and business benefits. First, in an interconnected world facing unprecedented environmental and social challenges, society will demand it. Increasingly, a basic expectation among customers, governments, and communities will be that the companies they do business with provide a significant net positive return for society at large, not just for investors. This will be a part of the implicit contract or license to operate.
Second, adding these other forms of positive return and improving systems will make the business more sustainable in the long term. Every company should be able to contribute value to society through its core businesses. By collaborating with other members of their networks and pursuing initiatives that draw on their particular capabilities, they can make society stronger in ways that also fortify their business. There is generally ample scope to do this, even for companies facing near-term earnings pressure, because the overlap between short-term, close-in interests and longer-term, interests is almost always large.