I regret that I missed an important discussion several years ago when the question of shareholder primacy arose with the decision for Ben and Jerry's to accept a Unilever offer for their brand.
Not long after, I'd written about Milton Friedman's shareholder value myth and our argument for doing business which puts social value before shareholder returns.
As the TriplePundit article noted, Ben and Jerry defended their selling out by claiming that it was their responsibility to maximise the financial interests of shareholders.
P-CED on the other hand, asserted that a business could operate entirely for the benefit of society if that was the will of directors and shareholder and it was declared in the corporate charter. In other words, no special legal form is needed for business to operate for the common good.
"If a corporation wants to donate to its local community, it can do so, be it one percent, five percent, fifty or even seventy percent. There is no one to protest or dictate otherwise, except a board of directors and stockholders. This is not a small consideration, since most boards and stockholders would object. But, if an a priori arrangement has been made with said stockholders and directors such that this direction of profits is entirely the point, then no objection can emerge. Indeed, the corporate charter can require that these monies be directed into community development funds, such as a permanent, irrevocable trust fund. The trust fund, in turn, would be under the oversight of a board of directors made up of corporate employees and community leaders.”
It's been a decade since The Body Shop sold out to L'Oreal, with Anita Roddick saying that it would better serve the interests of society with the leverage she could create. .
Has it happened? That's difficult to determine, but the Roddick Foundation has been giving grants to good causes which hasn't yet amounted to £652 million. That unfortunately includes Cage who have been linked to terrorist activities. .
it would be unfair to suggest that this was done knowingly but it does illustrate how charity can do harm without knowledge from operating on the ground.
All of this would seem to be eclipsed by John Mackey of Wholefoods Inc who advocates 'Conscious Capitalism'
Wholefoods have just thrown in the towel over Monsanto GE products, but there are darker matters still
Describing Mark Gafni as a visionary he's now under fire for his association with the rabbi with a dark past.
"[Gafni] teaches on the cutting edge of philosophy in the West, helping to evolve a new ‘dharma,’ or meta-theory of Integral meaning that is helping to re-shape key pivoting points in consciousness and culture.”
I'd like to say that I've rever read such a load of grandstanding bollocks, but the web unfortunately is full of the shit.
Mackey however, says something interesting about the side of business creating value for society needing to be more visible than the shadowy side.
He also opines on shareholder primacy, but that's as far as it seems to go.
We asked it too, coming to the conclusion that its about people, all people.
I connected today with author Nancy Levine, who campaigns to end the silence over abuse. Nancy shared an article from Scrips College describing how Wholefoods fails abuse survivors.
In turn, I shared with her, our story of speaking out about child abuse, in what were described as 'Death Camps' for children. This work had been undertaken by the man who argued against shareholder primacy 20 years ago. Aside from the involvment of organised crime one of the greatest obstacles had been those who woud render us silent, to build their own reputations. That included the BBC and The Sunday Times who claimed nobody was raising the alarm.
The censorship continued when Guardian Sustainable Business hosted a discussion about business operating for social benefit. Among these "thought leaders" we'd been alone in putting it into practice.
Coming back to Unilever, it was CEO Paul Polman who wrote of Where Our Moral Compass Meets the Bottom LIne a while ago Interestingly on Arianna Huffington's medium.
"When people talk about new forms of capitalism, this is what I have in mind: companies that show, in all transparency, that they are contributing to society, now and for many generations to come. Not taking from it.
It is nothing less than a new business model. One that focuses on the long term. One that sees business as part of society, not separate from it. One where companies seek to address the big social and environmental issues that threaten social stability. One where the needs of citizens and communities carry the same weight as the demands of shareholders."
Here's that Guardian editor again fawning over Polman being a human being. Polman still believes that shareholder activism can undermine social benefit.
It bears an uncanny resemblance to what I'd published on McKinsey some weeks earlier. The New Bottom Line described the origin and application of this "new business model" with emphasis on a 'Marshall Plan' for Ukraine and its primary childcare reform focus in a country where social stability would soon unravel:
'This is a long-term permanently sustainable program, the basis for "people-centered" economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine's poorest and most desperate citizens, rather than a "top-down" approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first -- not secondarily, along the way or by the way. '
This it should be noted is not the 'Marshall Plan' published on Huffington Post after Ukraine descended into violence
That it is backed by oligarch Dmitri Firtash should be indication enough that those it greatest need will have to wait, At a cost of $300 billion, it's 200 times the cost of a bottom up approach and has no plan to show for it.
Be the change they told me. Yet resistance to change seems to be greatest from those who talk the walk of others.
What's going on, you may wonder. I couldn't say it better than Sergiy Leshchenko, MP and anti corruption activist.
"In an attempt not to be branded as a money launderer and to save himself from being transported to America in handcuffs, Firtash has launched a multifaceted campaign to clean up his image, recruiting dozens of politicians, intellectuals, lobbyists and cultural figures in Europe and the US. "
But wait. To the rescue, alone, Britain's best known Dick
Heads up suckers. You're daydreaming your way into a future where oligarchs control democracy while business leaders build reputations on ideas they will never put into deeds.