Welcome to the Greenleaf at 21 blog series. To celebrate our 21st birthday, over the next few months we will be sharing original posts by influential Greenleaf authors, in which they discuss how their field has changed over the last 21 years and what they hope to see change in the future. This article by Steve Lydenberg explores what needs to be done to move responsible business into the 21st century:
As we move into the heart of the 21st century, the twin sisters of corporate social responsibility (CSR) and socially responsible investment (SRI) stand at a crucial juncture. Each has won a certain respect in its respective world. It is unclear, however, whether they will now be able to lead the way down a path toward fundamental reform or will simply end up as interesting sideshows along the well-trodden road of business as usual.
The best of corporate managers now acknowledge their responsibility to the full range of their stakeholders – employees, customers, communities, suppliers and the environment. The most progressive money managers now offer products that invest in the creation of just and sustainable societies. Yet scandals persist, bribes are paid, workers die, rivers are polluted, banks collapse, CEOs get rich while the young walk the streets without a job. Justice sits on the sidelines and sustainability remains an elusive goal.
For CSR and SRI to lead mainstream business and Wall Street down the road to deep and persistent change, they must be able to channel these powerful forces in three fundamentally different directions.
First the business and investment communities must be persuaded that in the world of the 21st century vital societies will not emerge if all they pit themselves incessantly against government and civil society, but only through the cooperative and mutual support of all three of these elements of society that together can create truly inclusive governance. A world of nine billion persons struggling for survival and dependent upon limited resources of the natural world will only maintain its balance and stability if each of these three understands the needs of the others and all work together toward shared prosperity.
Our job will only be done when we have created more than just an idea, but also driven that idea through to fundamental cultural change.
Second, they must be shown that the stories of price and returns alone will not sell their products and services, that consumers and investors understand that every daily item that they buy, every stock or savings account in which they invest, tells a story that is tied to workers’ prosperity or exploitation, to communities’ livability or degradation, to the preservation or destruction of the natural environment. The cheapest for all is not always the best for all. We know that orange juice does not spring magically from the trees in the orchard into our glass on the table.
Third, CSR and SRI must help the business and financial communities relearn a lesson they seem to have forgotten: their task is to create value in society, not to extract value from it. It is all too easy to seize on opportunities for short-term profits – to pick up a ten-dollar bill from off the street – and think oneself an expert at management and investment; to drain voiceless workers or natural resources of their life and claim prosperity. It is much more difficult, but far more valuable, to invest in the wealth-producing capacities of fertile minds and the ingenuity of those that have the know-how and vision to build to last.
We must address the crises of today – the climate is tilting toward unpredictability, inequality and joblessness are destabilising societies, the demands for access to healthcare are going unmet. The short-term fix alone, however, will not do the trick. When the sun rises tomorrow, we may be compelled to stabilise the boat in rocky seas, but when the sun sets we had better have thought about the long-term goals of our voyage.
We – advocates – deserve due credit for investing the concepts of CSR and SRI with the credibility they have today. Our job will only be done, however, when we have created more than just an idea, but also driven that idea through to fundamental cultural change.
With thanks to Steve Lydenberg.
Steve Lydenberg has been active in socially responsible investment for the past three decades, currently with Domini Social Investments as Partner, Strategic Vision, and as a Founding Director of the Initiative for Responsible Investment.
He is the co-author of Dilemmas in Responsible Investment, the first book specifically written for teaching and professional training in responsible investment. Dilemmas in Responsible Investment examines the problems responsible investment practitioners face daily. It emphasises the importance of asking the right questions as well as getting the right answers; and the importance of process as well as product.