A Call to Redefine Profit

Jul 25

More than a decade ago, Council Fire was born out of a vision of organizations melding pursuit of financial profit with a purposeful drive to improve the lives of others and restore our environment. Convinced that unconceived alliances were needed and future successes would be measured against multiple bottom lines, a new type of global change agency emerged. As one of the earliest members of the B Corp movement, Council Fire remains at the forefront of sustainable business and this new approach to building long-term value for communities at all scales.

However, today’s world bears little resemblance to that of 20 or even 2 years ago. Political extremism, wealth gaps, a warming planet, and a global reckoning on racism have moved us past a tipping point.

More than 80% of our original forests are gone.
1.3 billion tons of food are wasted as 2 billion people suffer from hunger annually.
30 million are enslaved in forced labor.
The richest 26 people own as much wealth as 3.8 billion.
And the UN has declared we have 12 years to prevent irreversible climate impacts.

Two realities are now undeniable:

Climate Is A Dominant Driver Of Our Future. The latest IPCC Report made it clear:

Human influence has unequivocally warmed the planet.
Climate changes are happening faster than anticipated.
We’re locked into 30 years of worsening impacts no matter what.
And while we can limit the warming beyond 2050 with dramatic action, it's a mammoth undertaking requiring a level of political will most governments have yet to muster.

Inequitable Economic Systems Prevent A Unified Response:

Pre-pandemic, most societies were already struggling with persistent and growing inequalities in opportunities, income and wealth.
The twin public health and economic crises have further divided us and laid bare the destructive impact of inequities in access to education, jobs, technology, and public services.
These crises create a fertile breeding ground for malnutrition and public health threats, made painfully clear by the spread of COVID in the most disadvantaged communities.
Widespread violations of human dignity on the basis of race, ethnicity, sexual orientation, religion or gender, all feed social unrest and threaten society’s fragile peace and stability.
And, while unemployment and extreme poverty soared, the rich enjoyed shocking gains from rising asset prices.
These injustices have left deep scars.

So where do we turn?

We must look to the private sector. Business has to lead the way in combating climate change and building an economy that works for all people and the planet. We can’t wait for governments and public interest groups to do it.

The private sector has the need, opportunity, and resources. Without their full engagement, success is most likely impossible. It’s estimated that more than 50% of GWP is driven by the private sector. Without redirecting that activity and resources, we cannot act in time.

Climate change is already impacting business:

Extreme weather impedes the distribution of goods
A lack of water disrupts manufacturing
Pollution causes health issues and lost work days
Fish are leaving traditional grounds and farms are battered by drought & fire
Broken ecosystems are spurring pandemics. COVID’s estimated $22 trillion loss to the global economy shows just how costly planetary crises can be.

And business behavior has huge social impacts:

A lack of commitment to workers decreases longevity and institutional knowledge
Wage inequality obstructs the supply of talent and ideas for innovation
Unequal access to wealth accumulation eats away at commitment. When you have nothing to lose, you have nothing to invest
Racism costs the US economy nearly a trillion dollars each year

The good news is that fixing these challenges presents the greatest economic opportunity of our time. Multi trillion-dollar markets in transportation, food, infrastructure, energy, finance are all in play. A recent study found that meeting the UN SDGs can unlock trillions in value and create hundreds of millions of jobs this decade. Those benefits are ours with modest investment, especially when compared with the cost of climate change.

And it’s never been easier or more profitable to shift to low-carbon operations. Clean economy technologies - renewables, batteries, smarter AI, big data - have become radically cheaper and are being implemented at scale. 90% of new energy put into the global grid in 2020 was renewable.

Companies that embrace environmental, social, and governance action are outpacing competitors. More than 80% of ESG funds outperformed their benchmarks in 2020. And new sustainable business models are catching fire. B and Benefit Corporations, for-profit companies are committing to meeting rigorous standards of social and environmental performance, accountability, and transparency. These 5000+ businesses are being joined by new ones every day and nearly 200,000 have used the B Corp framework to measure, understand and improve their impact. From Mom & Pop enterprises to publicly-traded corporations, they’re charting the course for the entire global private sector.

Investors are joining the fray. Businesses are setting nonnegotiable climate and diversity targets for suppliers. Financial regulators are demanding disclosure and transparency. And employees, perhaps the most powerful stakeholders of all, want employers that share their values. Some 50% of US Millennials say they’ve already staged walkouts or spoken up to support or criticize employer action on social issues.

We have the solutions.

Thousands of companies are collectively scaling transformative business practices that address climate change and racial equity and fuel a new, stakeholder-based economy. Paul Polman, former CEO of consumer goods giant Unilever points out that these companies:

Operate to benefit multiple stakeholders first, which then benefits investors
Take full ownership of all company impacts
Embrace new and deep partnerships, even with critics
Tackle systemic challenges by rethinking advocacy and the relationship with government

Some examples:

Greyston Bakery, a New York City institution addressing job inequities and unconscious bias by pioneering “Open Hiring” - Put your name on a list, get a job when one comes up, no questions asked.
Unilever’s “Sustainable Living Plan” with aggressive targets to improve a billion lives and slash its environmental impact in half. With UNICEF, their soap brand has taught hundreds of millions of children and new mothers the health benefits of washing hands, helping to avert millions of deaths from easily preventable diseases.
Luke’s Lobster, a seafood company battling rising ocean temperatures by rewarding sustainable behavior, decarbonizing its fishing fleet, and transforming a century’s old industry one boat and one fisherman at a time.

Our new reality demands they are joined by hundreds of thousands of other businesses, all redefining success by creating not only financial wealth, but environmental and social wealth that can be equitably shared by all. We must all work together across sectors, disciplines and geographies to find the way forward.

Resources

Council Fire

A Call to Redefine Profit

Local Investment Strategy #2: The People You Love

Showing Up For Racial Justice