no-poverty-mdBy Paul Polak and Mal Warwick

Since our book, The Business Solution to Poverty, was published, we’ve heard from some readers that business has “no business” meddling in social issues. Unfortunately, this is not a surprise. Even now, well into the 21st Century, there are many people in the corporate sector who insist that the only purpose of any business is to make profits for its owners—or, in corporate-speak, to enhance shareholder value. That’s nonsense. This keyhole-narrow view of business is an artifact of the 20th-Century financial industry, which has redefined business in its own self-image.

Wall Street typically evaluates the worth of a company in terms of its quarterly financial statement—an astoundingly shortsighted view that ignores what businesses actually do. Outside the financial sector, which produces little of intrinsic value, businesses produce, market, and distribute products and services that the public values. That used to be enough. In recent years, though, businesses are finding that increasing numbers of consumers and investors expect more of business than . . . well, simply doing business.

Companies that fail to address the legitimate needs of their many stakeholders—including employees, customers, suppliers, and the communities where they do business—and that are not working to lighten their environmental footprint are slipping behind those that do. In fact, recent research shows that the companies that adopt such policies and practices, businesses we call stakeholder-centered companies, are rising to the top of their industries in shareholder value . . . the metric that Wall Street favors the most.

A business is simply the embodiment of a set of ideas about how a group of people can achieve a particular end by collaborating with one another. Should these ideas be limited solely to companies that adhere to today’s bottom-line-centric corporate model? Not as far as we’re concerned! It’s equally legitimate for a business to dedicate itself to addressing a social or environmental issue as it is to produce a particular product or service. And there is nothing that prevents businesses addressing social or environmental issues from earning attractive profits doing so.

We’re hardly the only people who feel this way, to judge from the large numbers of young folks all over the world who are emerging from business schools and universities to form new businesses expressly designed both to pursue a social or environmental mission and to turn a profit. More power to them!

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