Green business model nears

CAPITALISM as we know it will become a thing of the past and a new economic model will evolve that will ensure environmental and social sustainability, according to Deakin University corporate citizenship research unit director David Birch.

“Clearly triple bottom line thinking lies at the heart of new economic thinking, which positions people and not just economic growth at the centre of sustainable economics for society overall,” Mr Birch told a recent Committee for Economic Development of Australia breakfast.

“It also starts to look at what constitutes interaction and dialogue and engagement between companies and the communities in which they operate.

“It’s moving away from philanthropy and a licence to operate activity.

“It’s moving much more toward the building of much more sustainable economies among businesses and society and government. And there are serious challenges to that.”

Mr Birch envisages a future where the company boardroom will become more of a public domain, with community and environmental representatives playing a leading role in shaping decisions and the future of the company.

He said it would then be the companies, in partnership with the community, that would shape public policies and bring about the new economic order. Governments would be sidelined to the role of facilitator, bringing the various groups together.

However, Mr Birch said one of the most fundamental impediments was that the time frame to make these changes in company behaviour could be more than 20 years, whereas company directors’ and managers’ performances were often measured on a monthly or yearly basis.

“Most of us only operate from month to month and don’t have a long-term time frame,” he said.

“What you have in Australia, as elsewhere around the world, is a number of companies who have visionary leadership that are driving the changes.

“I think you have lot of companies that like the idea but don’t know how to do it and don’t know how to make it part of their core business.”

Mr Birch said while environmental reporting was already becoming more commonplace, the same could not be said for social reporting.

Mr Birch said that, unlike environmental and financial measures, social impacts were harder to quantify and report on, so another method would need to be found.

The Chamber of Commerce and Industry of WA made its position on the role of corporate governance clear in its recent Corporate Social Responsibility report.

“By increasing business costs, blurring accountability and impeding the efficient operation of capital markets, the advocates of corporate social responsibility and stakeholder entitlements would impede the business sector’s capacity to make its greatest contribution to the economy and society,” the report says.

“The real virtue of the good corporate citizen is that it generates returns for investors by providing customers with the goods and services they want, at prices they are prepared to pay, while proving trustworthy and responsive enough to earn repeat business.”

The chamber warns that directors need to tread carefully. Gratification of personal values at the expense of owners’ interests would be contrary to their position to build shareholder value.

At the same time, disagreeing with the prevailing acceptance of corporate citizenship could invite a public outcry, which may also have a negative impact on shareholder value.

“Business leaders committed to maximising shareholder value are obliged ... to keep quiet any reservations they might have,” the report said.

The chamber believes the onus of balanced reporting lies with those less constrained in academia, the media, think tanks and business associations.

“Society, the environment and the economy would all lose out if anti-corporate idealogy is allowed to hold sway because no-one dares to contest its presumption of exclusive moral virtue,” it says.