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It’s Time to Embrace the Wisdom of the Triple Bottom Line

Dr. Paula Gable December 12, 2018

In a recent Marketplace podcast reporter Sabri Ben-Achour noted with concern that US productivity has been flat for the past 10 years or so. This is somewhat puzzling, because the economy, as a whole, is up. However, the worker’s output of goods or services per hour worked remains stagnant.

Productivity is an important metric because it ties into profits, which, at least theoretically, reflect a worker’s wages and thus a sense of well-being. In the world of economics, productivity is a big deal.

In keeping with traditional economic dogma, Ben-Achour posited that we need a technical fix to boost productivity —new widgets and gadgets to make workers more efficient — technological breakthroughs to boost yield and improve the quality of life for the masses.

The traditional treatment for a “diagnosis” of low productivity is to invest heavily in research and development to boost productivity and ultimately profit. But let’s step back from economic conventions for a moment to ask a fundamental question:

Why is profit now seen as the ‘be all and end all’ of business?

In large part, you can either blame or credit Milton Friedman, a University of Chicago professor who won the 1976 Nobel prize for economics. One of his most significant contributions was Stockholder Theory —or the Friedman Doctrine: a company’s only social responsibility is to increase profits for the owners (stockholders), as long as it doesn’t engage in deception or fraud.

However, in light of the October release of the United Nation’s International Panel of Climate Change (IPCC), we cannot continue to do business as usual. The UN Report makes it crystal clear that we are facing a very real and imminent global threat of Biblical proportions.

As Charles Darwin’s Theory of Evolution warned in 1859: change or die. A century later, Rev. Dr. Martin Luther King, Jr. acknowledged that in the nuclear age, “We must learn to live together as brothers or perish together as fools.” By extrapolation, this could lead to the logical conclusion that we must decrease carbon emissions now, or our planet will soon become uninhabitable. It is that simple — and that scary.

For reasons such as this, economics was dubbed “the dreary science” after T. R. Malthus predicted in 1789 that population would always grow faster than food production, dooming mankind to unending poverty and hardship.

Fortunately, Malthus was wrong — in part, because we have applied human intelligence and creativity to develop new technologies that dramatically increased agricultural yields. (In recent years, we have seen the drawbacks of current industrial farming practices, but that’s an important conversation for a later date.)

The encouraging news is that we still have incredible reserves of untapped creativity and intelligence available to us — in fact, more so than in the past, due to global telecommunications, which make knowledge transfer virtually instantaneous to anyone with unfettered internet access.

Investing heavily to convert from fossil-fuel to 100-percent green energy would be the obvious albeit extremely unpopular approach to reducing carbon emissions. The answer is simple but not easy, because there is much at stake for those who profit from the production, distribution and use of oil, gas, and coal.

So much of the global economy is driven by carbon-based fuels that to challenge the status quo in this marketplace is to jeopardize one’s own livelihood. We have a common expression for this: “Don’t bite the hand that feeds you.”

Furthermore, questioning “best practices” of profitable carbon-dependent companies is effectively a fool’s errand, because human systems that feel under attack will quickly react to maintain the status quo (per Bowen Systems Theory).

So, what will it take for the world to voluntarily wean itself from fossil fuels and adopt renewable energies? The successful answer will require out-of-the-box thinking. As Albert Einstein once said, “We can’t solve problems by using the same kind of thinking we used when we created them.”

Perhaps part of the unconventional answer is to change the way we measure and reward “success” in the industry. Imagine what might happen if we replaced the Friedman Doctrine of “profits first and only” with the triple bottom line: profits, people, and planet. This term, coined in 1994 by John Elkington, places equal value on shareholder return on investment, quality of life for people, and sustainability of the planet.

Imagine what might happen if we replaced the Friedman Doctrine of “profits first and only” with the triple bottom line: profits, people, and planet.

This old-fashioned notion of corporate social responsibility (CSR)  is suddenly becoming popular again, as business leaders and investors embrace the wisdom of the triple bottom line. In fact, some CSR leaders acknowledge being inspired by the centuries-old wisdom of the Native Americans, who made decisions to benefit the next seven generations.

Imagine if corporate executives and world leaders took this “seven generation” approach to heart. We already have the technical ability to shift to 100-percent  green energy. Solar, wind, and wave power come to mind immediately. Other technologies may be on the near horizon. What’s lacking is the will to invest multitudes of dollars to replace carbon-based fuels with renewable or zero-emissions energy.

At present, there’s no immediate, financial return on investment to shareholders. Instead, business would sink vast amounts of capital into technology that would likely result in a financial loss — at least initially. Executives who made these decisions based on current metrics would be considered fools and would quickly lose their jobs. And, rightly so, for they are charged by their boards with maximizing quarterly earnings, as per the Friedman Doctrine — not safeguarding the future for generations to come.

Yet, given the significant environmental, social, and economic threats global climate change places before us, it is becoming hard to deny that we need drastic, global changes in energy policy, production, and use, lest we “perish together as fools.”

Realistically, a full-scale shift from short-term financial gain to long-term “triple bottom line” thinking will “never” happen if we alienate the fossil fuel industry, which provides jobs, investment income, status and meaning to millions of people around the world. The personal losses to those with a vested interest in the status quo are just too high. What is needed is a fundamental shift to rewarding decision makers for their skill in achieving a triple bottom line.

National policies and non-binding global treaties are not enough. We’ve tried that with limited success. What is required is a new way of thinking — a change of mind and heart and maybe spirit. That’s a goal of the conscious capitalism community: including planet, people, and profits in the metrics for corporate success.

In fact, many conscious-capitalism proponents largely agree with Forbes business writer Steve Denning that the Friedman Doctrine is “the world’s dumbest idea,” which must be rethought and replaced.

Emphasis on profits alone was a limited approach in the 20th century, and in the 21st century it is obsolete. However, Friedman’s folly is so engrained in our economic system and our culture that we need a quantum shift in thought to transition from carbon-based to renewable energy sources.

Technical fixes to global environmental problems — alone — are effectively futile without an accompanying paradigm shift.

Technical fixes to global environmental problems — alone — are effectively futile without an accompanying paradigm shift. In the simplest terms, we must move from a consciousness of “me first” to “We’re all in this together.” The shift requires an understanding of our interconnectedness: an individual’s economic profits cannot trump the wellbeing of the planet and its inhabitants. It also requires a change of mind and heart — what Zen practitioners call shin, often translated as “heart-mind.” It requires an awakening to the realization that we can no longer separate the wellbeing of “self” from “other.” We’re all in it together, on the only planet we have ever called home.

Shifting our mindset from “me” to “we” has been the goal of many great religious leaders for millennia. Today, it is more than a spiritual goal. It is essential for long-term viability. We need awakened leaders to lead a thought-revolution at the global, national, and local levels.

Research in developmental psychology and sociology has shown that no human organization can develop beyond the consciousness of its de facto leader. So, we need to choose or cultivate wise and compassionate leaders for this work of awakening.

Part of the challenge is that people who are drawn to corporate leadership are rarely purely altruistic. And, it’s really hard for the average business executive to shift focus from quarterly earnings to the greater good of the planet, because it goes against the prevailing values and reward system in America’s corporate culture — and perhaps our primal instincts for individual survival.

Time is running out. Rather than continuing to lay waste to resources without concern for the future, we must return to being responsible stewards of our shared environment. To do otherwise leaves us greedy and ignoble, locust-like, rather than awakened human beings.

Will we continue to adhere to the Friedman Doctrine of self-centered, short-term gains, or will we partner with enlightened leaders to transform and promote business as a source of good?

Will we continue to adhere to the Friedman Doctrine of self-centered, short-term gains — which may be the root cause of much of the global angst we feel today — or will we partner with enlightened leaders in business, education, politics, and education to promote the values of corporate social responsibility to transform and promote business as a source of good? That is the struggle we are seeing today, played out on both the micro and macro levels — clashes of individual and societal values in a world in transition between pre-scientific, modern, and post-modern world views.

Shifting global consciousness requires choosing and funding a nimble, global team of wise and compassionate, nearly ego-free leaders who can put the betterment of the planet and its people ahead of personal motives. The key is getting them to work together to bring the rest of the world along,  voluntarily, because they inspire others with the vision of a sustainable economy and healthy planet.

Perhaps this was part of Albert Einstein’s vision when he posited that our fundamental task as human beings is to “free ourselves from prison by widening our circle of compassion to embrace all living creatures and the whole of nature in its beauty.”

Climate Action / Stakeholder Capitalism
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