10
Net Positive World
Looking Around the Corner to Greater Challenges and Opportunities
We stand now where two roads diverge. But … they are not equally fair. The road we have long been traveling is deceptively easy, a smooth superhighway on which we progress with great speed, but at its end lies disaster. The other fork of the road—the one less traveled by—offers our last, our only chance to reach a destination that assures the preservation of the earth.
Those who contemplate the beauty of the earth find reserves of strength that will endure as long as life lasts.
—Rachel Carson, author of Silent Spring
When you set a big goal—running a marathon, writing a book, or mastering a new language—it’s exciting, but daunting. There are painful points along the way, like the famous “wall” in marathons, or moments of self-doubt. But when you get there, the feeling is amazing. All the training and late nights were worth it. It inspires you to shoot higher—maybe a triathlon this time? It’s exciting to feel like you have more in you.
The journey toward net positive is similar. If you’ve come this far, it’s impressive, and you should enjoy it. All of that work—to take responsibility and serve others, focus on the long term, blow up boundaries and set big goals, build deep trust, partner in dramatically new ways with all stakeholders, tackle the “elephants” that nobody wants to face, and develop a strong culture—will take you far. You’ve increased the good your business does for all stakeholders, and you’re seeing new growth and excitement among employees. You have credibility and the trust of stakeholders. Your business is stronger and the world is a better place because you and your company are in it.
You’re ready for more, and you’d better be. With expectations running high and the world moving fast, this level of performance will increasingly become the norm. It will get you invited to the party, but it’s not quite enough. The tough reality is that even if every company became a B corporation immediately and matched today’s most sustainable companies, we would still be on a dangerous trajectory. Here’s the main question: If companies move toward net positive, will we have changed the systems enough to create a thriving, equitable, just, healthy, and carbon-free world that works for all, now and for generations to come? Maybe not, but we have ideas on how to get there and what issues to address.
The elephants in the room, such as taxes, corruption, corporate power, and human rights, create risk for any company that doesn’t take part in the conversation. You can’t build a net positive business and society without tackling them. These issues are also, increasingly, draining financial and moral capital from business—the cost of doing nothing is continuing to rise. The issues we take up here, including reforming capitalism and defending democracy and science, go even further beyond business and the economy—the cost of inaction is reduced freedom and a dysfunctional society. They’re about long-term thriving for everyone. That scale of work needs credible net positive companies taking the lead.
The closer you are to net positive, the better able you are to drive the changes that need to come. You’re more resilient and can contribute even more to the larger good. You’ll also get a better look around the corner at what’s coming in the future, and receive an invitation to help design it.
We cannot shy away from the biggest of challenges, the ones that society increasingly expects business to help solve. There are big forces at play, and we have to push on. We must work to build not just net positive companies, but a net positive world.
Everything Is Accelerating
If things were static, or we had started earlier, we could move toward net positive at a good pace and be fine. But everything is still speeding up and our existential challenges are growing. Inequality somehow got much worse during the pandemic, as trillions of dollars rushed to the richest hands, while the bottom quartile went into a depression and more people fell into poverty. The world’s biophysical health keeps declining. We’re cutting down more forest annually than we did ten years ago.1 Climate change and extreme weather are speeding up—five of the six largest fires in California history happened in 2020.2
The seas will continue to rise and we are close to dangerous feedback loops in our natural systems. We’ve boxed ourselves in and things will get worse before they get better. How much worse is up to all of us and depends on how fast we race to net positive.
At a time when we need to come together as a species, we are moving apart through declining democracy, accelerating nationalism, and separation of people by ideologies (made worse by bubbles of misinformation). This dysfunction is dangerous. The surprise of the pandemic was not how it spread or the disease itself, but the utter inability of the world’s governments to work together.
But some upward trends are speeding up as well. Every day, we have more tools at our disposal, as technology gets smarter and more efficient, and the costs of building a clean economy continue to plummet. As Al Gore has said, “We’re at the early stages of a technology-led sustainability revolution, which has the scale of the industrial revolution, and the pace of the digital revolution.”3
The pressure on business to take more responsibility is growing, especially coming from employees. About one-half of millennials in the United States say they have spoken up to support or criticize their employer’s actions over a social issue.4 What happens when the more activist Gen Zers fully join the workforce?
In total, the case for action versus inaction strengthens daily, and we are gaining momentum. Most large countries have made carbon neutrality commitments (China will aim for 2060). Policy is likely to accelerate and we’ll see more rules that increase efficiency in transportation and buildings, promote nature-based solutions for farming and forests, regulate product end-of-life and circularity, mandate the mix of renewable energy on the grid, and more. At the company level, commitments on everything from carbon emissions to diversity levels are proliferating rapidly.
Finally, investors are, at long last, diving in. PwC estimates that sustainable investing will make up more than half of global assets by 2025.5 Moody’s predicts that the sustainable bond business will top $650 billion–plus in 2021; that’s 8 to 10 percent of the total bond market.6 Experience shows that at about 20 percent, we’ll see a tipping point and acceleration.
Net positive companies will be best positioned to match the moment. The leaders will create continuously growing positive impacts and see consistent improvements in their performance, their connections to stakeholders, and their opportunities for growth. As the work to build a net positive world gains speed, like a train moving out of the station, it will leave behind those that don’t jump on. The positive flywheel spins faster and faster.
Here’s the wild part: the pace of change may never again be as slow as it is now.
Net Positive 2.0: Working on the Biggest Systems Changes
We started this journey with five key principles of a net positive company: take responsibility for your full impacts; work for the long-term benefit of society; create positive outcomes for all stakeholders; improve shareholder return as a result, not an objective; and embrace transformative partnerships. In an accelerated world, the principles will remain the same, just more so.
We address here six society-level challenges that a net positive 2.0 company will take on:
- Be even more responsible for broader impacts (do more good)
- Challenge consumption and growth
- Rethink the measures and structures of success (such as GDP)
- Improve the social contract: focus on livelihoods
- Bend the curve on capitalism and overhaul finance
- Defend democracy and science, two critical pillars of society
Companies that go faster toward net positive will have more capacity and skills to work on these society-wide issues. They will redefine what a corporation stands for, and their collaborations will expand and aim for full systems change and regenerative models. Achieving the SDGs will become a given. Business will truly be part of the solution and not just less of a problem, helping the planet thrive and society function for all.
These are the biggest of all systems, so they can be intimidating. Break them down into pieces to address your contribution to the larger goal. Keep the larger missions in mind, but act at your scale. For example, you might start using different measures of success to fit into and encourage stakeholder capitalism. Or you could engage with customers and citizens about what they really need, and whether some consumption is necessary.
A CEO who talks about these issues might take some heat. Paul was sometimes criticized for “taking his eye off the ball” and focusing too much on meetings with the United Nations, leading task forces for the G7 or G20, or championing broader societal causes. But whose interests were the detractors defending? Not the common good.
It’s also an odd criticism when trust in business is so low (and trust is the ultimate currency). How will business regain society’s support? Through more focus on profits? By staying in its own bubble? No, it’s through working authentically to improve the world.
If we contemplate the big picture, the opportunities are vast. Donella Meadows, the environmental scientist who helped create the field of systems thinking, identified the top three leverage points for changing a system: its goals, its paradigms, and “the power to transcend those paradigms.” The last one is powerful. What if we looked closely at today’s economic paradigm—that our economy should maximize GDP and companies should be short-term profit maximizing machines—and understood that it’s just a story a small cadre of economists (all white men) essentially made up? We can transcend it and tell a different story. As Meadows said, “Everyone who has managed to entertain that idea … has found it to be the basis for radical empowerment. If no paradigm is right, you can choose whatever one will help to achieve your purpose.”7
So, let’s make our purpose thriving for all.
It’s freeing to look at the largest issues, with humility, and say, “Why can’t this be completely different?” In the end, we are talking about a new partnership with society where we put the interest of others ahead of our own (which will ultimately benefit us as well) and treat all players as equal, regardless of size or economic power. It might mean short-term sacrifices. But if you want to jump high, you have to bend the knees, do the work, and commit.
Are you willing to tackle the toughest issues and, more important, be a part of the solutions? Then, read on.
1. Be Even More Responsible for Broader Impacts (Do More Good)
The first commitment of a net positive company is responsibility for the impact it has across its value chain. But a company contributes to (or deducts from) the world in larger ways. Let’s use the Greenhouse Gas Protocol, which provides standards for how companies should measure carbon emissions, as a way to talk about broader responsibility.
The protocol puts corporate emissions in three categories, called “scopes”: direct burning of fossil fuels in your facilities and vehicles (Scope 1), emissions from purchased energy that you bought from the grid (Scope 2), and emissions from your suppliers and from your customers when they use your products (Scope 3). For most companies outside of heavy industry, transportation, and utilities, Scope 3 is the largest slice of the life cycle emissions pie. It’s weighted upstream for sectors like agriculture and apparel with heavy emissions in the supply chain, and downstream for those who sell energy-using products such as tech companies.
Companies can influence value chain emissions by working with suppliers on systemic change or by designing products that help customers reduce their impacts. Tech companies, for example, by enabling virtual meetings, help companies cut emissions from travel. And AI tools for precision agriculture reduce energy use on farms. Some refer to these as “avoided emissions” or, unofficially, as Scope 4. When Unilever helps Rwandan or Indonesian smallholder farmers get more productive, it reduces Unilever’s Scope 3 emissions. But it also helps communities avoid the emissions that come from cutting down forests—that’s Scope 4.
Two founders of the climate change NGO Extinction Rebellion, Roc Sandford and Rupert Read, have proposed that companies address two more levels of carbon emissions.8 Scope 5, they suggest, includes political influence. When a company lobbies against action on climate, it can lead to far more economy-wide emissions than the company’s own footprint. The net positive advocacy we proposed in chapter 7 is a Scope 5 activity, but a good one. Scope 6, Sandford and Read continue, is the influence companies have through advertising and messaging—do they support a consumption-based culture and energy-intensive lifestyles? Solitaire Townsend, founder of sustainable branding firm Futerra, has called for addressing what she dubs Scope X emissions, which would involve “work that restores and regenerates … healthy ecosystems and … takes responsibility for system level emissions.”9
This idea of scopes is powerful. Since that terminology is used mainly for carbon emissions, and we’d like to broaden the discussion, let’s call them Impact Levels. Consider six spheres of influence starting with a core of direct operations and moving out to include indirect operations, value chain, sector and community, systems and policy, and the world and society (see figure 10-1). As you move outward, your control greatly diminishes, and your focus will turn to influence, advocacy, and partnership.
In figure 10-1, we show the emissions example in line with the scopes framework. But we also give an example along a dimension of well-being, starting with employee safety at the core and extending out to human and natural world thriving at the largest level. Let’s consider a few examples of what these scopes mean in practice.
Some of our thought partners on this model, Daniel Aronson of Valutus and P. J. Simmons from Corporate Eco-Forum, explored with us how one company, Facebook, affects the world. At the core, employees have livelihoods, which is good. But, as Aronson points out, “the content moderators who have to read racist, sexist stuff all day suffer wellness consequences,” and that’s also Impact Level 1. Further out in Levels 3 and 4, we see the well-being of Facebook members and their communities, both the good (staying in touch with loved ones) and the bad (algorithms that show them things that make them angry so they’ll click more). Furthest out, Facebook has an impact on democracy itself. So far, Facebook has not taken responsibility for the outer levels.
Net positive companies address the outer impact levels, and you can tell when a company is taking ownership. When Microsoft pledges $500 million for affordable housing near Seattle, it’s acknowledging some responsibility for increasing living costs and pricing people out of the local housing market.10 When executives announce efforts to reduce systemic racism and increase diversity, they are talking about the outer levels of impact. Unilever was the first to issue Green Bonds in the consumer goods sector, and it required partner banks to commit to eliminate deforestation from their lending. When it selected an advertising or PR agency, it insisted they drop clients that were active climate deniers. Those are examples of using one’s influence to affect Impact Levels 5 and 6.
FIGURE 10-1
Impact levels 1 to 6
Thinking this broadly about responsibility will lead to some tough conversations. When Disney launched the movie Mulan in 2020, the media reported that the company had filmed in China’s Xinjiang region,11 where the Chinese government is holding in detention camps at least a million Muslims from the Uyghur minority. Was Disney wrong to film there? Is it the company’s responsibility to avoid working with governments with human rights abuses? We’re not sure, but by that standard, it would rule out a lot of countries, including, at times, the United States.
There really is no choice on all of this. Stakeholders will expect companies to address the broadest impacts. They are watching, and the questions will keep coming. So, get out ahead of it and think through the impact levels now.
What Net Positive Companies Do to Take More Responsibility
- Expand their visions and look hard at how the existence of the business affects society; they cast a wide net and look at the effects of effects of effects
- Consider their influence on policy and systems through action and inaction, asking, What are we enabling through silence?
- Ask how to improve their societal footprint, the broadest level of impact, and what they would need to do to create positive Scope 6 value
2. Challenge Consumption and Growth
We humans like stuff. The way we buy and use things has been getting more resource intensive—mindless consumption; fast fashion, where every day becomes a season; and same-day delivery of things we probably didn’t need anyway.
The planet’s limits are getting clearer. The amount of copper in every ton of ore has declined more than 25 percent in a decade, for example.12 Yet we continue to dig up more while the world is supposedly getting less physical and more digital. The “cloud,” it turns out, is not very light. We’re not living on the interest the world gives us, but drawing down capital and diminishing the capacity of the planet to support us. At current consumption rates, we would need multiple planets to support what will be nine or ten billion people living a decent quality of life.13 Earth is finite, and it won’t support our needs unless we rethink how we consume and start regenerating resources.
To thread this needle and allow our one planet to support us, the classic book Natural Capitalism provides a plan. Coauthor Hunter Lovins says it’s three steps: “buy time with efficiency, redesign how we make and deliver all goods and services, then manage all institutions to be regenerative of natural, human, and all forms of capital.”14 Agreed. There’s so much potential to improve efficiency: less than nine percent of everything produced gets reused, less than a fifth of electronic waste gets recycled, and upward of 40 percent of food is lost between farm and table.15
To address the drawdown of resources, we can pursue three paths of increasing difficulty: decoupling production from resource use (like the overarching goal of the Unilever Sustainable Living Plan [USLP] to double sales while holding footprint flat), building circular economies, and finding regenerative solutions.
A decoupled product is primarily made with renewable energy from recycled and renewable materials. It should also provide a living wage to everyone along the value chain. A circular model reuses or recycles all materials in an endless loop. Regenerative practices, most often mentioned with agriculture, could improve the world with every item consumed. Eating food from a farm or ranch that sequesters carbon in soil can be net positive on climate. The cutting-edge companies are already building these products. Shoe company Timberland is selling a Heritage Boot made with recycled content, insulation from PrimaLoft produced using air instead of heat (so it generates drastically lower carbon emissions in manufacturing), and leather from farms using regenerative agriculture practices.
We need to question growth, but ask a more nuanced question about what kind of growth we’re pursuing. If your company can produce a circular or regenerative product, then please grow. We want companies like Timberland and Patagonia, which have worked tirelessly to move toward a net positive model, to take a bigger market share. Ditto for one-for-one businesses like eyeglass chain Warby Parker (every pair of glasses you buy triggers a donation of a pair to someone in need). Growth can sound like the wrong goal. But we want good companies to be around for a long time, and that’s difficult to do by shrinking.
Clearly we have to look at growth differently. Some measures of company success should grow almost without limit—engagement and purpose of employees, customer satisfaction and joy, and community well-being. This is net positive growth. But in terms of physical material, the world is not regenerative, circular, or decoupled from today’s growth. The harder question on consumption, the truly heretical one, is how much stuff we need. A thriving world is one where every person has their basic needs met. Even that low bar would vastly increase material demand, as billions rise out of poverty.
Therefore, our two grand challenges are on a collision course. Since sincere climate action has started too late, we can’t hit the targets we need and reduce inequality to increase quality of life for billions without something giving. That something may need to be the consumption of the richest billion among us.
In the future, when regenerative agriculture is dominant, or when the grid and cars are completely clean, then current levels of consumption may be possible within our shared carbon budget. Since we can’t wait for those better technologies to get to scale. Instead, can we ask the well-off to check their wants versus their needs? Do the wealthiest need a lot of industrial grown meat in their diet? Do they need the third car or another thousand square feet in a house that’s already too big?
A tiny number of companies have been willing to pose these heretical questions … Patagonia famously said, “Don’t buy this jacket” in a Christmas ad. Eileen Fisher, founder of the apparel company that bears her name, said, “We think maybe we don’t have to sell so many clothes.”16 Dutch airline KLM ran a campaign (before Covid-19) asking people to fly less, suggesting they use digital technology or take the train for shorter distances.17 IKEA is launching a buy-back scheme for some used furniture (with a goal of full circularity by 2030).18 These leaders are suggesting that we make fewer, better, longer-lasting things and think hard before using a nonrenewable resource like jet fuel. But stories like this are scarce, and almost always come from privately held businesses. It’s hard to imagine big, public business taking the lead. But consumers may force the issue.
Eighty percent of respondents in a survey of US and UK citizens said they would make lifestyle changes, as they did during the pandemic, to stop climate change. They would avoid plastic, eat less industrial meat, and switch to green energy.19 Younger people who are more concerned with environmental degradation may challenge a consumption-based society, seeking a different path to happiness. Economist Juliet Schor, who studies attitudes on consumption and wealth, has shown that people who already have the basics can improve their well-being by taking a different path: “Earn less, spend less, emit and degrade less. That’s the formula. The more time a person has, the better [the] quality of life, the easier it is to live sustainably.”20 There’s a reason the “simplicity” movement is popular.
Companies are increasingly giving consumers more information to make better choices. Amazon launched a “climate-friendly” label, based on reliable certifications such as Cradle to Cradle, Fair Trade, Rainforest Alliance, FSC, and Green Seal. Unilever’s effort to put carbon footprint data on seventy thousand products will raise awareness. These things will help, but to date, inviting people to consume less has not worked well. It’s one of the noticeable failures of the USLP—it couldn’t budge people’s showering or washing habits, and selling less wasn’t much of an option either (people do want to get clean).
When $600 billion is spent annually on advertising to make us desire more things, a small campaign about reducing consumption doesn’t stand a chance. What if that marketing machine were turned toward creating demand for net positive products and services, or toward finding less meaning in stuff, and more in people and living in service of others?
This is tough and uncomfortable. The wealthiest of the world can and should ask themselves hard questions about what they can do without. As Mahatma Gandhi said, “The rich must live simply so that the poor can simply live.”21
What Net Positive Companies Do to Challenge Consumption and Growth
- Make regenerative approaches the default option in all they do; they seek to become net contributors, not takers
- Proactively use renewable or alternative materials
- Talk to customers and consumers to understand what they really want out of a product or service, a need that may be satisfied with less material use
- Set clear goals around absolute resource reduction and also ensure full recyclability and reuse (the fashion sector, for example, is moving toward recycling, rental, and resale of materials as their business models)
- Integrate nature positive and climate positive solutions into design
3. Rethink the Measures and Structures of Success (such as GDP)
The way we view progress is deeply flawed. We measure how successful people are by the number of dollars or followers they have. For companies, we focus on stock price and shareholder value. At the macroeconomic level, countries obsess over gross domestic product (GDP), which is a horrible measure of well-being of a society. It’s time to rethink these metrics. We need to measure what we treasure.
Reframe GDP and Well-Being
Having a sense of total economic activity is fine, but GDP is a dated measure from an era of manufacturing, before the rise of intangible value. It counts everything that raises spending as a good thing. More cancer and medical costs, reconstruction after giant storms, wars and conflicts, and liquidating other forms of capital like cutting down old-growth forest—these all increase GDP. It does not measure peace, justice, quality of education, mental health, air quality, or the protection of natural capital needed for our survival. It measures, in the words of Robert F. Kennedy, “everything except that which makes life worthwhile.”22
In using GDP, we’re also fooling ourselves. As Hunter Lovins, president of the Natural Capitalism Solutions, writes in her book A Finer Future: Creating an Economy in Service to Life, “Our mental model of how the world works tells us we’re winning when we’re really losing. GDP measures nothing more than the speed with which money and stuff pass through the economy. So the real question is, do we have the courage to create an economy in service of life, not consumption?”23 Can we manage societal systems to maximize happiness, health, and well-being?
Many people, including Nobel Prize–winning economist Joseph Stiglitz, have spent years advocating for a move away from GDP. Even the creator of the metric, Simon Kuznets, said it had nothing to do with well-being. But what do we replace it with?
There are a number of robust alternative measures for an economy:
- Genuine Progress Indicator, which looks at a country’s performance on broader economic, environmental, and social variables
- UN’s Human Development Index, which includes life expectancy, education, and income levels
- Happy Planet Index, which makes a formula of well-being, life expectancy, and reduced inequality, divided by ecological footprint/damage
- Gross National Happiness, which the small nation of Bhutan started measuring in 1972
The world is not debating the need for broader sustainability measures anymore, especially as the materiality of many of them continues to rise. We’re tracking over six hundred of these new metric efforts, as everybody joins the race to the obvious. The Wellbeing Economy Alliance is a group trying to coordinate multiple efforts to redefine measures of societal health. Most new initiatives are focusing on a wider list of measures of success in categories such as prosperity (including health and well-being), planet, people, and principles of governance.
What do these broader measures tell us? Mostly that people want the same things, and it’s not actually about money. The OECD developed a Happiness Index and measured well-being in all member countries. It found that people had similar priorities across cultures, and that health, security, freedom, and connection drove life satisfaction more than economics.24 People need dignity more than money. At low incomes, especially below subsistence, of course income and happiness are correlated. But once people have “enough”—which varies by country and one analysis pegs at around $75,000 per year in the United States—the correlation between happiness and income is nearly zero.25
A few midsize countries are working toward a fuller set of metrics. Most notably, New Zealand’s prime minister Jacinda Ardern announced in 2019 a first-ever “well-being budget.” The government, she said, should ensure health and life satisfaction, not just wealth and economic growth.26 Some cultures have informal ways of talking about more humane priorities—in Costa Rica, the phrase pura vida (“simple life”) is used as a greeting and philosophy.
In a finite world, we can’t increase the traditional economic metrics forever. But we can seek limitless growth of the intangible elements of a good life, such as well-being, joy, connection, meaning, and love.
Redefine the Corporation
The corporate world is also zeroing in on better metrics, with a soup of new initiatives and acronyms popping up. The EU’s Non-Financial Reporting Directive, the Task Force on Climate-Related Financial Disclosures, the EU Taxonomy (2020), the IFRS Foundation’s work to create a Sustainability Standards Board—all are driving a shift to better measurement. Europe leads, but there is new interest in the United States Securities and Exchange Commission as well. These groups will force transparency and help business get better at measuring and understanding its true costs and benefits to society—and those societal impacts are not small.
According to a study by TruCost, if companies had to pay for the natural capital and resources that they use for free, none of the biggest industries would be profitable.27 (It’s time, perhaps, to question the idea of “profit” as currently pursued. See the box “What Is the Right Level of Profit?”). The cost of food, for example, would be double if externalities were factored in. This is a feature of our system, not a bug. All the major corporate forms—such as LTDs, LLCs, or C corporations that aim to maximize shareholder returns—are externality-generating machines. They’re not fit for a thriving future. It’s a stretch, but if we priced externalities and all the players in the system, including finance, were long-term focused, those current forms might work. But they probably wouldn’t get us to net positive quickly enough anyway.
WHAT IS THE RIGHT LEVEL OF PROFIT?
John Mars, one of the family owners of pet food and candy giant Mars, once posed the question “What should the right level of profit be?” In the modern mindset of unfettered capitalism, that question does not compute; the answer is: “As much as possible.” But Mars was asking an important, nuanced question. Mars exec Jay Jakub, coauthor of the book Completing Capitalism: Healing Business to Heal the World, says that John Mars’s point was that “we’re only as strong as the weakest link in our value chain, and if we’re taking too much … [it] can create a squeezing effect among partners that actually disadvantage[s] the company.”* So, wringing every cent from suppliers might maximize short-term returns, but it weakens the system. This question is core to a philosophy that Mars developed, “the economics of mutuality,” which is, like net positive, about purpose and a better, fairer form of business and capitalism.
*David Gardner and Jay Jakub, “How Social, Human, and Natural Capital Create Value,” Rule Breaker Investing—A Motley Fool Podcast, accessed March 7, 2021, https://
So, what would a company look like if citizens, not shareholders, were the focus? A few other business structures have cropped up to try to answer that question by allowing companies to serve all stakeholders. The most prominent alternative is the legal designation of “benefit corporation” and the closely allied B corporation certification. Benefit corporations commit publicly to serve multiple stakeholders. In addition, France created a new form of governance that’s similar in spirit to B Corps—the Entreprise à Mission explicitly embeds purpose and a multistakeholder model into governance.
As we’ve said, two high-profile Unilever brands—Ben & Jerry’s and Seventh Generation—are B Corps, and Danone became the largest B Corp in the world when it certified its $6 billion North American operations. Every company should consider B Corp certification, at least in spirit and approach. You can take voluntary action to support deeper change. Patagonia donates 1 percent of sales to environmental activists, Generation Investment Management allocates 5 percent of profits to its Generation Foundation (which promotes a more sustainable form of capitalism), and Ben & Jerry’s social mission fund supports organizations fighting for a more just society.
A stakeholder-driven, net positive company might need a different ownership structure entirely. Family-owned businesses are more naturally aligned with long-term thinking, but the rest need new options. Dozens of multibillion-dollar organizations are owned by customers in co-ops. The world’s largest, Crédit Agricole Group, is a network of 39 regional banks and 7.4 million customer owners.28 A handful of companies have embraced employee stock ownership plans (ESOPs) where the workers get some part of profits and possible control. We also may see more pressure to put employees on boards; there are examples, such as transport operator FirstGroup, but it’s still rare.29
A more radical shift would be changing the ownership structure for large, public companies to free them to operate for the long term. John Fullerton, a former managing director at JPMorgan and founder of the Capital Institute, questions traditional ownership and financial models. He promotes an alternative called Evergreen Direct Investment (EDI).30 In this novel structure, a small number of long-term investors, such as pensions or national sovereign funds, would own “a share of the stream of the [company’s] cash flows.” There would be no public markets demanding unrealistic growth targets—just a handful of long-term investors wanting a reliable return. It’s a perfect match between older, cash cow brands and investors with long time horizons.
A company is just a construct, dating back to the Dutch East India Company of the 1600s. It has evolved many times and can again. The current form encourages incremental approaches to be less bad. That’s not good enough.
What Net Positive Companies Do to Rethink the Measures of Success
- Actively engage in the development of a fuller set of metrics to measure company success, stakeholder well-being, and a thriving economy and society
- Consider what alternative ownership and incorporation models like Benefit and B corporations, co-ops, ESOPs, and Evergreen Direct Investment would mean for the business
- Go well beyond minimal requirements to publish broader environmental, social, and governance measures, and clearly link them to value creation
4. Improve the Social Contract: Focus on Livelihoods
One of the world’s most pressing issues going forward will be social cohesion. Covid is pushing upwards of 150 million people back into extreme poverty.31 Unemployment has increased as the world lost work hours equal to hundreds of millions of jobs. The most vulnerable, especially women and youth, suffer disproportionately. Many of these jobs will not come back.
All organized societies have written and unwritten agreements between citizens and governments. Individuals give up the “freedom” to let our id run wild and do whatever we want; in exchange, the government provides the security of structure and rules. We function best when treating everyone with dignity and respect, using some form of the Golden Rule. We also have an unspoken contract with Mother Nature: we won’t use too much or abuse the privilege, and all we ask is that you please keep us alive.
The deal between business and workers once offered stability. Andrew’s father worked for IBM for thirty-five years, retiring with a pension (remember those?). He spent most of his career in a company that promised lifetime employment. But in 1990, IBM laid people off for the first time. In the decades since, union membership dropped and layoffs somehow became a sign to investors of good management. We need to rethink that.
The nature of work is undergoing deep change. New technologies, particularly AI and automation, are upending entire sectors. McKinsey estimates that as many as 375 million people will need to switch jobs and acquire new skills by 2030.32 The great paradigm shift in work will leave younger people particularly at risk. The International Labor Organization estimates youth unemployment at 13.6 percent, with another 12.8 percent in households below the poverty line.33 It’s rarely good for society to have a large number of idle people. Forty percent of youth who join rebel groups are motivated by unemployment and idleness—too few jobs leads to lower lifetime earnings, less success, unrest, radicalism, and migration.34
Focus on Livelihoods
To build a stronger social contract, we need to create jobs and consider how choices in business affect people. Agribusiness Olam once needed seven workers to produce one bag of cashews in Africa, but now only needs one. Olam’s CEO Sunny Verghese asks and answers a core question: “Do I have no accountability for the people displaced? No. The company’s responsibility extends to finding a viable option for people laid off because of new technologies.”35
Like Olam, Unilever has increased automation, and it has looked for ways to protect and create jobs throughout the value chain. The needs of business force tough calls like closing a plant to stay competitive, which critics may decry as hypocrisy for a purposeful company. With a larger view on job creation, the USLP had a goal to create five million livelihoods. Paul kept the tea business in the Unilever portfolio, not only because it serves a growing health drink market, but because it supports many thousands of tea farmers. A well-managed tea plantation can also be good for the planet. That doesn’t help the factory workers laid off from automation, though. Leaders must make hard choices, but need to explain them clearly and transparently, and do things with strong values and principles—like helping those displaced transition to new work.
The most innovative and counter-intuitive approach to creating jobs may be open hiring. Greyston Bakery in New York, which supplies brownie bites to Ben & Jerry’s for its ice cream, offers jobs “first come, first serve.” Anyone can sign up for an entry-level job. The company has hired people who served time in jail, lived in homeless shelters, or who have never held a legal job. Mike Brady, the former CEO of the bakery, points out that companies spend $3 billion annually keeping people like this out of work through roadblocks like background checks.36 Invest the money in people instead, Brady says. The company has thrived, and the stories of lives turned around are inspiring.
Net positive advocacy supports livelihoods as well. Unilever helped drive the passage of the Modern Slavery Act in the United Kingdom, and encouraged Consumer Goods Forum members to commit to the Ruggie human rights framework.
One of the biggest tests of our humanity and our social contract will be refugees. Roughly eighty million people—about as many as live in Turkey, Iran, or Germany—have been forcibly displaced today.37 The number of climate refugees in the coming decades could rise to a billion people or more.38 Some leaders hope to alleviate the refugee crisis through work. Hamdi Ulukaya, the billionaire founder of Chobani yogurt, created the NGO Tent Partnership for Refugees, which Unilever joined. As Ulukaya told Bloomberg, “a job, for a refugee, is day and night … that’s the point at which they find their life can continue.”39 Unilever’s Ben & Jerry’s created a four-month training and mentoring program, the Ice Academy, for “aspiring entrepreneurs who arrived in the UK as refugees.”
The idea of a social contract revolves around one core question: What do we owe each other? The answer is complicated, but given how connected everything is—we basically have one planetary and human immune system—we should make sure everyone has enough to survive and an opportunity to thrive. It’s one reason why Unilever recently told all suppliers that they must pay living wages by 2030.40 Earning money on the backs of others is not acceptable.
The International Trade Union Confederation (ITUC) has issued five demands for a new social contract: climate-friendly jobs as part of a just transition; rights and protections for all workers; universal social protection (that is, a floor on basic human needs and dignity); equality of incomes, gender, and race; and inclusion. These make a great framework for building a world where we leave nobody behind.
What Net Positive Companies Do to Improve the Social Contract
- Think of labor not as a cost, but as an asset to nurture
- Ensure basic principles of human rights and livable wages across the value chain
- Actively develop strategies to combat inequality and ensure just transitions where jobs are changing
- Collaborate with suppliers, governments, and civil society to eradicate modern slavery (by 2030)
- Embrace the challenge of solving broader social problems like refugees, youth unemployment, and skill development
5. Bend the Curve on Capitalism and Overhaul Finance
During the pandemic, we all became amateur statisticians, talking about flattening the curve of Covid-19 case growth. It means doing what’s necessary to slow the exponential growth of something dangerous.
We have other curves to bend.
Carbon emissions grew for decades in a roughly exponential way, tracking with the growth of population and economic output. The percentage of income and wealth flowing to the top 1 percent has grown more than linearly for decades. While some developed countries have flattened the carbon curve, holding emissions per dollar of GDP steady, the world is still driving toward a climate and inequality cliff.
Capitalism has been the superior economic system for generating well-being, at least compared to the others humanity has tried. But the recognition that something is wrong at the core of the system is growing. Not just NGOs and academics point this out, but CEOs and governments. Many of the largest companies are talking, even if superficially, about stakeholder capitalism. It’s no sexier a term than “sustainability,” but it makes the point that shareholders should not be the focus of strategy. Walmart’s CEO Doug McMillon has supported the logic of stakeholder capitalism, saying, “We simply won’t be here if we don’t take care of the very things that allow us to exist, our associates, customers, suppliers and the planet.”41
Salesforce CEO Marc Benioff says that “capitalism as we have known it is dead” and laments the “obsession we have with maximizing profits for shareholders alone … stakeholder capitalism is finally hitting a tipping point.”42 His enthusiasm is welcomed, but he may be ahead of himself. A multistakeholder approach is less alien to company leaders, but we’re far from the death of short-term, profit-maximizing capitalism.
Business leaders should take note of how deep the skepticism outside the business world runs. In the 2020 Edelman Trust report, 56 percent of respondents from around the world agreed that “Capitalism as it exists today does more harm than good.” Only 18 percent think the system is working for them.43 A quarter of Americans support the “gradual elimination of a capitalist system in favor of a more socialist system” and 70 percent of millennials say they’re likely to vote for a socialist.44 Most of them do not likely support the literal definition of socialism, government owning the means of production, but are attracted to Scandinavian-style democratic socialism. However they define it, these numbers are a warning.
We can only scratch the surface of a discussion on how to “fix” our system. There are a number of important thought leaders on reimagining capitalism for a finite planet under siege. It’s worth exploring their writings and thinking (see note for a partial list).45 In our admittedly abridged version of what is easily a book-length discussion, we’ll focus on two failures of capitalism that business can work on: failing to price valuable resources, and a financial market stuck on the short term.
The Original Sin of Capitalism: Externalities
For those who pray at the altar of the dominant, neoliberal-inspired economic model, two tenets are unquestioned: shareholder value is all that matters, and free markets (or freedom in general) will solve everything.
In that worldview, if a company does wrong by society, people will buy from someone else. If the environment is damaged, property rights and legal action will stop polluters. But no matter what, liberty remains more important than the environment (this is a narrow liberty that only applies to companies, since people deserve freedom from pollution as well). The theory says that unfettered markets will magically take care of these issues.
To buy this story, you have to believe in multiple fairy tales, including the demonstrably false idea that markets function seamlessly, with perfect information flows and perfect competition. In the real world, market power is heavily concentrated in a few hands, we don’t have all the information we need, and markets were never free. They are plagued with the fatal flaw of externalities. Many societal costs and benefits from a company’s operations are not reflected in the price of goods or services. The atmosphere has been a free landfill for our carbon emissions, and something that costs zero gets used a lot. The societal bill for climate change will be many trillions of dollars, and the cost is effectively infinite in uninhabitable places. But polluters don’t pay for any of that.
Climate change is the greatest market failure in history. Inequality is a close second, and the market for wages does not reflect real value. Essential workers who risked their lives during the pandemic often held minimum-wage jobs. They kept the rest of us who can work by Zoom alive.
To change how we use the world’s bounty, we need to value scarce resources, either through voluntary pricing or by regulations or pressure from customers. Hundreds of companies have voluntarily added internal carbon fees, but generally as a “shadow price,” which calculates what a project would cost if there were a tax. A smaller group of companies collect real cash from business units to invest in climate action, including the following:
- Unilever: €40 per ton fee, with the money funding eco-efficiency projects
- LVMH: €30 per ton price that its luxury brand “houses” have to invest in carbon reduction46
- Siemens: £31 per ton fee in the UK alone47
- Microsoft: $15 per metric ton, charged to divisions, with the funds going to investments in energy efficiency or clean tech. In 2021, it added a $5 per ton tax on value chain (or Scope 3) emissions as well.48
These are important efforts, but economists estimate that the price of carbon needs to be upwards of $100 per ton to reduce emissions fast enough.49 Carbon is theoretically easy to put a price on. The emissions from different forms of energy are a matter of physics, and a tax can be administered at the refinery, gas pump, or other logical, trackable point in the chain.
Natural capital is much more complicated. How much are healthy forests that cleanse groundwater, or provide flood protection, worth? A World Economic Forum report estimated the value of natural capital that underpins all economic activity at $125 trillion, much bigger than the global economy.50 Finding better estimates of the value of natural capital has been in the works for years. The Capitals Coalition developed a protocol for companies to measure how they affect and depend on the natural world.
A decade ago, Kering’s Puma brand created an environmental P&L to estimate the value of natural resources it relied on in its value chain. The unpaid services from nature were roughly $100 million, a sizable chunk of profits. This knowledge was interesting, but didn’t change the company or sector’s practices much—without pricing externalities, why would behavior fundamentally change?
Over time, though, companies will be held accountable for their impacts. Even if there’s no dollar value or market, the “price” of misusing resources could be loss of sales, reputation, employees, or license to operate. As Peter Bakker, president of the World Business Council for Sustainable Development, says, “The days where we can only optimize returns on financial capital are over.”51
We can’t perfectly assess the price of the resources we draw on, but it’s clearly not zero. Companies should use net positive advocacy to push for real prices, even if imperfect. We can wrangle about the size of the fee, but with some cost on externalities, the financial world can create markets at scale—and if there’s real money involved, you can bet they will.
Finally, some things cannot be priced, but need to be protected or regenerated. Preservation of rare species would qualify. Not everything has a measurable value or can be regulated away. Net positive companies understand this.
Overhaul the Financial System
John Fullerton of the Capital Institute developed a framework for “regenerative finance.”52 He hopes to bring the financial system in line with, and in service to, people and planet. Fullerton challenges the “assumed truths about finance,” such as the idea that financializing everything, and continually increasing the size and influence of finance on the economy, automatically leads to efficiency, growth, and prosperity. It hasn’t done that at all, unless you count the prosperity of bankers themselves.
Fullerton advocates for principles like more transparency; generation of real, long-term wealth; collaboration; resilience; making finance a means to a healthy economy, not the end itself; and keeping finance at the right scale within the economy (at the time of the 2008 financial crash, banks reaped an absurd 30 percent of total corporate operating profits).53
In line with Fullerton, we believe that the idea of “fiduciary duty,” interpreted as maximizing short-term profits, needs a rethink. As one of the world’s top experts on integrated reporting, Bob Eccles, has written, the idea that fiduciary duty equals shareholder primacy “is an ideology, not the law.”54 It’s yet another story that we can rewrite.
A group led by Generation Foundation (part of Generation Investment Management), the UNEP Finance Initiative, and Principles for Responsible Investment (PRI) is working to challenge the traditional view. The CEO of PRI, Fiona Reynolds, says the project means to “end the debate about the inclusion of ESG factors in fiduciary duty.”55
Andrew Liveris, former CEO of Dow, helped found Focusing Capital on the Long Term (FCLTGlobal), and works to fix the financial system. As Liveris sees it, we need two points of attack on investors: new government policies and higher transparency—“We need to shame them,” he says.56 He suggests regulations on short-term trading and hedge funds because “stock markets are like Las Vegas and bear no resemblance to reality.” He wants more disclosure on risks like climate change, better metrics on company progress against the SDGs that pension funds can incorporate in investment decisions, and new incentives for asset owners to stop rewarding them for short-term performance.
Some long-term investors are trying to change the system from within. When Hiro Mizuno ran Japan’s $1.5 trillion government pension fund (GPIF), he shifted it toward ESG, but he didn’t come at it with a sustainability lens. His interest was in managing long-term risk since GPIF’s size made it what he called a “universal owner”—that is, at their scale, they basically were the market. If you own that much for a long time, only systemic risk matters. But, Mizuno says, the conventional portfolio management strategy focused only on how to beat the market, not how to make it better. ESG was the best way he found to communicate his point about long-term value management, since every dimension of ESG “becomes relevant in the long-term scale.”57 But if ESG is a relevant risk, he asks, “how do you hedge it?” A brilliant observation we could apply to climate, pandemics, and supply chain disruptions. How do you hedge those risks? (Becoming a net positive company is a good start.)
The current short-term approach, Mizuno says, is a systemic failure and a “tragedy of the horizon.” Managing assets for the quarter is “technically right, but holistically wrong.” That sounds like our entire economic system.
What Net Positive Companies Do to Bend the Curve on Capitalism
- Price externalities, put a price on carbon in their operations, collect real money, and invest it in reducing carbon emissions more
- Use corporate political power to aggressively advocate for a regulatory price on carbon
- Work in collaboration with NGOs and others to put directionally correct prices on hard-to-measure natural resources like water and land use
- Encourage the financial system to value ESG and the long-term by shifting their own investments to sustainable investing and by proactively talking to investors about how the company’s ESG work creates value (don’t wait for analysts to ask)
6. Defend the Pillars of Society
The list of principles that underpin a just society would be long, but would certainly include democracy, protected freedoms, equality, a free press, and a commitment to science and fact. All of these societal pillars are under attack in increasingly blatant ways. Calling the press the “enemy of the people” is not subtle.
The global rise of autocratic leaders creates tough choices for companies. It’s bad for business and society. In the B Team’s report, The Business Case for Protecting Civic Rights, they conclude that “countries with higher degrees of respect for civic rights experience higher economic growth [and] higher levels of human development.”58 During the pandemic, rights deteriorated everywhere, and 87 percent of the world’s population is living in countries now rated “repressed,” “obstructed,” or “closed.”59 More than half the world lives under regimes with significant human rights violations: concentration camps of Uyghurs in China, violence against Muslims in India, and children separated from their parents at the US-Mexico border. Russia, Turkey, Hungary, Brazil, and others have shifted toward autocracy and reduced freedoms (as did the United States for four years). Should companies stop working with these governments? Perhaps, but if you do, you abandon half the world.
Business leaders can’t sit it out, but they need to be statesmen, not politicians. So, stay true to your values. Think hard about what you won’t accept from government partners. It’s a fine line. Say too much, and you may alienate leaders and reduce any influence you have; say too little, and you tacitly support autocracy and repression. When McKinsey told its Moscow employees not to join protests in support of Putin’s opposition, the Financial Times likened it to propaganda, and a US senator sent the company a letter saying the incident “raises serious questions about McKinsey’s core values.”60
Companies can challenge attacks on freedoms and fight for justice. Unilever has used its advertising to promote inclusion. It has spoken out against intolerance, including in India as violence against Muslims rose. Companies are coming out of their shell when the attacks on the pillars of society are obvious. Unilever’s Ben & Jerry’s fought voter suppression in the United States, working to help citizens who once were barred from voting (because of a criminal record) cast their ballot once again. The B team often speaks up on corruption, human rights violations, or money in politics. These are all cancers on society that undermine democracy.
In the run-up to the 2020 election in the United States, some organizations used their voices for the first time. The magazine Scientific American and the New England Journal of Medicine—both of which had never made a political statement in their history, going back to the 1800s—endorsed Joe Biden, because they feared that science was being undermined. Business leaders signed statements in support of free and fair elections (the Leadership Now Project) and civic participation (the Civic Alliance). The US Chamber of Commerce and the union AFL-CIO, in a rare combined statement, called for all votes to be counted when the sitting president questioned, without basis, the legality of mail-in ballots.
After losing, Trump and his enablers perpetrated the big lie that he had actually won the election, instigating an armed insurrection and takeover of the US Capitol building on January 6, 2021. An appalling 147 members of Congress (all Republicans) voted, after the deadly attack, to overturn the election results. As we’ve mentioned, many businesses paused political donations. But an impressive list of big companies stopped donating only to those 147 members. (Shamefully, some companies have already started donating to the insurrection supporters again.) In the following months, some US companies also opposed numerous laws passed by state Republican parties to restrict voting rights.
Business can also take action in its operations to counteract bad policy. As deforestation in the Amazon increased under Brazilian president Jair Bolsonaro, soy and meat buyers increased pressure on their suppliers to stop deforestation and respect human rights. Those are legitimate business choices that don’t address politics. Unilever often continues doing projects that improve lives, such as nutrition or health and hygiene initiatives, no matter what’s going on with the government. In places with human rights concerns, these projects are needed even more. Change happens from within, and leaving those regions to suffer won’t help.
Attacks on democracy and the press are grave, but we’re most concerned about efforts to undermine fact and science. The rise of “fake news”—meaning doctored and fabricated information, not just stories you don’t like—has led to vast misinformation. In the United States, those peddling the insane QAnon conspiracy convinced millions of people that Democrats were running a child-trafficking ring out of a pizza restaurant. In Myanmar, after mobile phone penetration skyrocketed from 1 to 90 percent in just seven years, Facebook became the primary source of information.61 The UN determined that fake, incendiary news on Facebook led to genocidal violence against the Rohingya people.62 Unilever was one of the first to stop advertising on platforms that incite hate and spread misinformation.
Populist politicians have long tried to confuse citizens about what is true, making the case that nothing is known for sure. And companies have cast doubt on facts that they find inconvenient, such as ExxonMobil waging a despicable war on the science of climate change for decades. Public trust in information is at a low.
None of this is good. Every company with a stake in science and truth—which is everyone, but some sectors more than others—must defend reality. Go public and say out loud, “We believe in facts and science.” If that’s a political statement, then so be it. Speaking out is, paradoxically, how we can best depoliticize it. After Trump made statements about rushing a Covid-19 vaccine to market, a group of the world’s largest pharma companies issued a statement that they would follow the science, not politics. It’s disturbing that they even had to say it.
How can we possibly tackle global, shared challenges and seek a just, equitable world if we can’t operate from a single basic set of facts on everything from climate change to pandemics to racism?
What Net Positive Companies Do to Defend the Pillars of Society
- Get off the sidelines and speak out publicly, alone or collectively, to protect democracy, freedom, science, and truth. This isn’t only an issue for science-based companies; all are at risk when politicians declare their own reality.
- Work to correct misperceptions that their own employees may have
- Find ways to use the power of the business, like supply chain purchasing, to fight dangerous policies
- Take the long-term view and continue to work directly with communities, even in countries with serious human rights or democracy issues—it’s better to be part of the change than run away from it
“A Higher Moral Ground”
Throughout history, every generation feels that it’s living in the most important time ever. But perhaps now it is true. Technology has never advanced so fast. The world has never moved so quickly. We have never known so much about our world as scientific insights change our understanding of reality. There have never been so many people competing for space and resources—almost eight billion of us, an unimaginable number to the ancient Greeks.
Even citizens at the dawn of the twentieth century—when the world discovered much of what we consider modern, such as electricity, cars, and planes—would be shocked. At that time, about 1.6 billion people roamed the planet, but spread out, with days of travel between them. Now, about one long lifetime later, the majority of humanity is essentially connected in one global organism (two-thirds of all people now have mobile phones).63
The two of us have worked for decades to help the business community evolve, thrive, and bring about a new world—to make business a force for good. We do not believe humanity will make it through the gauntlet of the mid-twenty-first century without business taking a prominent role in solving our shared challenges instead of contributing to them.
We’re facing existential issues. Will things get worse or better? It’s in our hands. The solutions to our decades-long global crises—climate change, biodiversity loss, inequality, the racial divide, and poverty, among others—lie in empathy and compassion, in systems thinking, and in collective action. We can choose the direction we go and what kind of world we create. We can have a net positive impact on all around us and build a place where people and organizations give a lot, but also receive a lot in return. We have the tools to make enormous progress on everything that ails us. We can eliminate dire poverty, we can decarbonize, we can protect land and species.
We will choose our destiny, together. We’re asking for more trust, more courage, and more humanity. Do you care? Do you have the willpower? Can you find the moral leadership to do what we must? If you join us in this most critical journey to net positive, you may open yourself up to criticism. You’ll make mistakes. But the rewards are enormous, for you, for your business—which will thrive in a whole new way—and for all of us living together on this spinning, imperfect ball.
In 2004, the Nobel Prize Committee awarded Kenya’s Wangari Maathai the Peace Prize for her life’s work, the Green Belt Movement, which planted more than thirty million trees and improved the lives of a million African women. In her Nobel address, Maathai noted that the committee, by giving her this award, was challenging the world to broaden the understanding of peace.
“There can be no peace without equitable development,” Maathai said, “and no development without sustainable management of the environment in a democratic and peaceful space.… In the course of history, there comes a time when humanity is called to shift to a new level of consciousness, to reach a higher moral ground. A time when we have to shed our fear and give hope to each other. That time is now.”64
Yes, it is.