There has been a debate about the responsibilities of businesses for 50 years. The battle of words is still going on, but investors, customers, employees, and the public are moving forward. The question is not if but how far the pendulum has shifted. More and more, employees and consumers are choosing companies based on what they stand for, as shown by the surveys.
The creation of shareholder wealth is not something that great companies are appreciated for. You couldn't find a better example of a company with a clear purpose than Patagonia and Chick-Fil-A. They stand for what they think is right. Our favorite companies are purpose led.
I have benefited from shareholder capitalism. It has brought us reductions in poverty, longer lives, and great shareholder returns, but it has also made its gains at an enormous cost. The world is on fire and we are all aware of it.
Big Business knows that shareholder capitalism doesn't serve us. Actions haven't caught up to words despite the new name. The flowery language of annual reports is not compatible with standard forms of incorporated companies.
The Benefit Corporation, a form of incorporated that puts people, environmental, and governance aims alongside profit inside company legal charters and requires specific goals and improvement over time, has gained traction recently. These two innovations make companies responsible players in society.
As a Benefit Company, we have been able to clarify our responsibilities. We measure and manage our environmental footprint by using recycled fabrics and repairing and re-selling used clothing. We created a company that is committed to being a positive force in society by using purpose capitalism.
We changed our mission a few years ago because we wanted to save the planet. The clear definition of purpose has forced us to go much deeper into what it will take to have zero negative environmental impact while still making great products.
We are in the 50th year of our existence. The value of the company has been given to a charity by the founder and his family.
It was easy for us as a closely held company. The goal is for companies to make transparent purpose commitments that make sense to their business and to be held to account by their communities.
Companies have responsibilities to their workers, customers, the environment, and yes, their shareholders. If we want a better world for our children and other creatures, this is the future of business.
Charles Conn is a businessman.
The opinions and beliefs of Fortune are not reflected in the commentary pieces.
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