The term “externalities” refers to positive and negative effects that businesses have on other stakeholders but which are not reflected on the firm’s financial statements. For example, a firm can have a positive externality if it hires ex-convicts and thereby reduces the likelihood (and social costs) of repeat offenders.
Unfortunately, in 2018 the negative ecological externalities of the world’s 1200 largest businesses were estimated to be about $5 trillion (a 50% increase from 5 years earlier), an amount that is greater than the total profits of these firms. Even if all these firms were to meet their greenhouse gas emission goals, this would represent merely 25% of the amount required from them to meet the 2°C goal of the Paris Agreement. In other words, these firms on average cause over $600 of negative externalities per each of the almost 8 billion people on the planet. That is a lot of damage, especially considering that one-third of the planet earns less than $2 per day. While the costs of these externalities are often borne by especially by those who can least afford it, the profits from these firms’ activities benefit the relatively rich who can afford to purchase shares, thus further widening the gap between rich and poor.
Question: What sorts of businesses give you hope when it comes to creating positive social and ecological externalities?
 Note that figure in this paragraph are US dollars. Makower, J., et al. (2020). 2020 State of Green Business. Oakland, CA: GreenBiz Group.
 The largest 500 companies in the world generated about $2.15 trillion in profits in 2018. “Global 500” Fortune.
 Makower et al. (2020).
 In all, 2.4 billion people lived on less than US $2 a day in 2010. Poverty Overview. The World Bank.
Some people believe that the primary purpose of business is to maximize financial profits. We forget that this primary focus on financial well-being is relatively recent. For example, former CEO of RJR Nabisco, F. Ross Johnson—who in the 1980s “helped make the phrase ‘increasing shareholder value’ more than a buzzword”—notes that maximizing owners’ financial capture was not considered the primary purpose of business when he started out in the 1950s, nor can it be the primary purpose going forward. For example, the Google Ngram below shows how: “profit maximization” is a socially-constructed phrase that started to be used in the 1940s, “shareholder value” started to be used in the 1980s thanks to people like Johnson, and “value creation” and “triple bottom line” started in the 1990s.
The socially constructed nature of the purpose of business was in full view when the Business Roundtable—a group of 200 large corporations that includes giants like Apple and JPMorgan—issued a new “Statement on the Purpose of the Corporation” (https://opportunity.businessroundtable.org/ourcommitment/) that challenges the long-held view that corporations should primarily serve the interests of its shareholders: “we share a fundamental commitment to all of our stakeholders.” Despite such changes, negative externalities and income inequality continue to rise, and research suggests that the social and ecological performance of signatories of the Business Roundtable during the early months of the COVID-19 pandemic was no better than other corporations in terms of protecting jobs, workplace safety, pursuing racial equality, and they were 20 percent more likely to announce layoffs or furloughs, and less likely to donate to relief efforts.
Question: Can you imagine a time when “profit maximization” and “shareholder wealth” will be replaced by “sustainable business” and “the well-being of the 99%”?
 Cited in Bell, G.G., & Dyck, B. (2012). Conventional resource-based theory and its radical alternative: A less materialist-individualist approach to strategy. Journal of Business Ethics, 99(1): 121-130.
 Wheeler, K. J. and 193 others (2019). Statement on the purpose of the corporation. Business Roundtable. https://opportunity.businessroundtable.org/ourcommitment/ Gelles, D., & Yaffe-Bellany, D. (2019, Aug 19). Shareholder value is no longer everything, top C.E.O.s say. New York Times. https://www.nytimes.com/2019/08/19/business/business-roundtable-ceos-corporations.html
 Goodman, P.S. (2020, Sept 20). Stakeholder capitalism gets a report card. It’s not good. New York Times. https://www.nytimes.com/2020/09/22/business/business-roudtable-stakeholder-capitalism.html; Useem, J. (2020, Aug 6). Beware of corporate promises. The Atlantic. https://www.theatlantic.com/ideas/archive/2020/08/companies-stand-solidarity-are-licensing-themselves-discriminate/614947/
A holistic term like sustainability defies piecemeal understanding. In other words, in order to understand deeply what sustainability means for business, one must understand how business fits with larger systems and problems in ecology (e.g., the carbon cycle), sociology (e.g., meaning of community) and economics (e.g., varieties of capitalism). It requires understanding how sustainability at an organizational level is related to the larger issues facing humankind, such as economic inequality, climate change, and the growing power of multinational corporations. This demands understanding basic ecosystems and fundamentals about human nature and the social order.
Question. Do you agree that it is important for managers to learn about eco-systems and basic fundamentals of human nature? Or is it tough enough for managers to learn about accounting and finance and marketing, and we should leave it to others to learn about and care for the ‘big picture’? What are the dangers if the titans of industry, or even everyday managers, are not trained to think about these larger ‘big picture’ issues?
We are happy to share another interview from the same research project that we have profiled in our past few posts. In this interview Shaun Loney, co-founder of Aki Energy, explains how Aki is an Indigenous owned and operated organization that hires Indigenous people to install geothermal heating systems. Aki Energy saves taxpayers money while it reduces greenhouse gas emissions, supports the local multiplier effect, creates on-going employment in remote communities, and provides a more secure source of energy.
This is the final part in our series of interviews with enterprise managers who follow principles consistent with Social and Ecological Thought. This interview is with Laura Tait and Chad Wiens who operate Heart Acres Farm, a small farm near Winnipeg that grows vegetables in environmentally-friendly ways. Their vegetables are sold in farmer’s markets, and they supply 70 households who have purchased a share in its Community Supported Agriculture (CSA). In addition to caring for the earth, Chad and Laura are passionate about enhancing social well-being in the larger community, including working with inner-city organizations.
All interviews in this series were conducted by Savanna Vagianos for a research project at the University of Manitoba. We are grateful for this research, the permission of all parties to post these recordings, and for Jonathan and Paul Dyck who provided audio editing and background music, respectively. Again, these interviews were originally for a research project, so the sound quality is not ideal. However, we believe these are still worth sharing.
We continue our series of series of interviews of enterprise managers who follow principles consistent with Social and Ecological Thought. This interview is with Sarah McLachlin, the founder and manager of Sarah Sue Design, a place-based women’s clothing designer and manufacturer in Winnipeg that seeks to operate in sustainable and ethical ways. Sarah has a life-long interest in fashion design and many life lessons in how to operate a business in this industry, and in Slow Fashion more generally.
This is the second in a series of interviews with enterprise managers who follow principles consistent with Social and Ecological Thought. This interview is with Sherry Sobey, founder and manager of Generation Green, a retail store which sells environmentally-friendly products ranging from cosmetics to household cleaners to bulk food, and of Acorn Café, a vegan café that is attached to Generation Green.
All interviews were conducted by Savanna Vagianos for a research project at the University of Manitoba. We are grateful for this research, the permission of all parties to post these recordings, and for Jonathan and Paul Dyck who provided audio editing and background music, respectively. Again, these interviews were originally for a research project, so the sound quality is not ideal. However, we believe these are still worth sharing.
This week we begin a series of interviews with enterprise managers who follow principles consistent with Social and Ecological Thought. All interviews were conducted by Savanna Vagianos for a research project at the University of Manitoba. We are grateful for this research, the permission of all parties to post these recordings, and for Jonathan and Paul Dyck who provided audio editing and background music, respectively. Again, these interviews were originally for a research project, so the sound quality is not ideal. However, we believe these are still worth sharing.
The first interview is with Kalen Taylor, the Executive Director of Purpose Construction. Purpose is a construction company in Winnipeg that hires people facing multiple barriers to employment. It was initially started to hire people who had finished a 6-month training program called BUILD Inc, an acronym that stands for "Building Urban Industries for Local Development." Today 60 percent of Purpose Construction’s employees are refugees and newcomers to the country.
The idea of the “common good” has a history going back as far as Aristotle. Usually this phrase refers to a specific community of people (e.g., an organization, a city) or to all of humanity. The idea of the “integral common good” suggests that we are also members of a larger ecological community (e.g., we depend on plants for food and oxygen), which COVID-19 has reminded us of recently. As members of this socio-ecological community, we also have moral obligations to other members. For a description of the integral common good and its implications for management practice, see my recent paper "The integral common good: Implications for Mele’s seven key practices of humanistic management” in Humanistic Management Journal. It can be downloaded at https://brunodyck.weebly.com/managing-sustainably.html.
Tall Grass Prairie Bakery is a place-based SET firm that has been around for 30 years. It has inspired the start-up of many other SET firms and is featured in chapter 7 of our book. Here is a short video that describes its response to COVID-19, in part by going back to its roots.