Their contribution to economic development, the millions of jobs they generate, the PR and advertising blitzkrieg unleashed around their achievements continue to help build a public impression that all’s well with corporations and their strategies. The fact that many of the businesses need to reorient their working and move towards sustainable development is lost in the hype surrounding the growth.
The common refrain is: such a change should stem from within and there are enough instances of the transformation already set in motion. Though aware of the impact on the environment and the road taken to the goals, people tend to largely ignore the future for the present. While there is no dearth of materials throwing light on the ways of the corporations, many end up sermonising. Pavan Sukhdev Corporation 2020: transforming business for tomorrow’s world is set to fill the vaccum. It is bound to stand out for analysing the subject in detail, in a well structured format, for its neat presentation and force of conviction.
“So much has been written by so many excellent authors on ‘tomorrow’s corporation’ that it may appear surprising that anyone would imagine that still more is needed. Three reasons tell us otherwise. The first is that the change won’t just happen ... too much optimism built around the example of forward-looking corporate CEOs and incomplete models and anecdotal observations of correlation between corporate sustainability and corporate success. Second, there are no elegant or easy solutions. Too many people tell us that transformation is already well under way, often arguing that it is all about transparency, or all about ownership, which under-represents the complexity and extent of the challenge we have on our hands. No one institution alone, be it government or civil society or the market or the corporation itself, can overcome this challenge. Third, the challenge is too often presented as an environment challenge or a social justice issue or both. But it is in fact a challenge of survival for the corporation itself, for the modern economies, and indeed for human civilization …”
Starting with their genesis, over a hundred years from 1820, the book touches upon various aspects of today’s corporations — the author calls them Corporation 1920. The hundred years, the book says, freed the corporation from social purpose and established the primacy of profits as the corporation’s raison d’etre . “A landmark judgment in the United States (Dodge v. Ford, 1919) affirmed that the purpose of the corporation was indeed its own self-interest… the key drivers of Corporation 1920’s success are demand creation and expansion, product innovation and low-cost production.”
Responsible entities
It is a work that makes a strong case for why the corporations, extolled as agents of change, should transform and become responsible entities. “There are too many elegant and well-argued theses for corporate evolution, redesign … which under-represent (and thus avoid addressing) the complexity of the challenge … This complexity is deeply engrained in the legal history of the corporation, in post-war economic history and in the ascendancy of democracy and free market capitalism. It is also inextricably linked to our prevalent systems of subsidies and incentives for a brown economy, an economy model which has delivered progress for a century and a half in the Western world, and is now providing growth and development worldwide but exposing the whole planet to unacceptable social and environmental risks.” A goodwill ambassador of the United Nations Environment Programme, the author says the corporations, essentially manufacturing units and those in the business of exploiting natural resources, were able to get away with “negative externalities” or the significant social costs that they pass on to the wider world.
What puts the book on a higher pedestal is the manner in which views are aired, without sounding like a campaign and convincing the reader that the recommendations are ideal and achievable too. Along the way a gamut of tools, from lobbying, leverage to advertising employed by today’s corporations with the sole objective to sell more are brought to the fore. The chapter on advertising, how the campaigns were designed and implemented, makes for an interesting read. These include the campaigns of tobacco companies promoting smoking among women as a tool of weight control and a symbol of feminism and female liberation, and that of baby food manufacturers. “Marketing and advertising converts wants into needs, sometime creating new wants out of human insecurities, which are then skillfully transformed into new consumer needs that must be met. Ethics in advertising are at best an aspiration, most often an option to be exercised when it suits the client and at worst, an oxymoron.”
The book also mentions the good work by some corporations such as Infosys in India and Brazilian cosmetic firm Natura. “Positive externalities” like Infosys’ skill training that builds earnings potential or Natura’s measures that lead to greater economic security and improved family and social status for housewives employed as sales agents help build new relationships and new communities. Such initiatives build social capital among employees, suppliers and customers. “All material externalities deserve measurement, disclosure and management — be they negative or positive. They are the increasingly visible ‘footprint’ of today’s corporation.”
A case in point is the BP oil spill in the Gulf of Mexico, which has come to be known as a Deepwater Horizon. The environmental impact assessment study of BP, the book says, “appeared to be a shoddy example of cut and paste from an earlier EIA. It listed the conservation of the walrus, a mammal only found in the Arctic, as one of BP’s objectives. It also suggested Professor Peter Lutz, an expert on the impact of oil spills on sea turtles, as a ‘go-to’ person in case of emergency, although the venerable scientist had died in 2005.” “The key point to note about corporate externalities is that, although they represent costs to society, they are difficult to control because they are not illegalities, at least not at the time they were caused.” The ecological realities of the 21st century necessitate a reorganisation of the production and consumption of natural resources. Designing sound and fair taxation policies is a huge challenge, and political solutions are rarely perfect, according to the author.
The book comes up with a prescription for future corporations — the four strands of a new DNA. Apart from pursing goals closely aligned with those of the society, the corporations should create financial capital through their operations, but without depleting natural capital, social and human capital. “Corporation 2020 can be a modern day community, tied by a shared culture created by its values, mission, goals, objectives and governance. It can recreate a sense of belonging that has been lost due to the forces of modernisation and globalisation, and become an institute of learning.”
