As someone who is excited about what the future holds and being positive about our collective creativity to solve problems in the world, sustainable business is an important topic. In a time where we’re not short on challenges to solve - from clean energy to wealth inequality to caring for our fellow citizens - our hope can be placed in the entrepreneurs and the organisations they create that shape our future.
Our vision talks about a positive future of sustainable businesses - one which is curated by cultural pressure to ensure that financial capital is deployed into those businesses which do in fact make our world a better place and contribute to solving problems rather than creating new ones. Is there a way to ensure this isn’t just something we’re doing but it a movement across all businesses?
As the winter holidays are a great time to reflect on our mission, our hearts are warmed by reading a book which starts to look at the changes which would, and should, be enacted to start to make better businesses ensure the greater good.
The book looks at the six evolutions of the corporation; from public institutions, stage based corporations, through to the industrial era, the rise of financial backed capitalism and most recently the knowledge driven intellectual era which we see today in the digital business models.
Mayer puts forward a seventh model - the mindful corporation. This looks at bringing in “purpose” explicitly into the firms’ DNA.
Corporate law and accountancy are the heros of the book - by looking at how the legals of a company reflect its purpose and its accounting reflects a true and accurate picture of the costs - internal and external - of generating a profit.
Purpose before profit is an emerging theme with many people writing about it (FT, Forbes, HBR. Coupled with the shift of large investment funds such as Vanguard and Blackrock taking note of ESG (environmental, sustainable, governance) certified asset classes, meaning that financial capital is flowing into the businesses which are protecting our natural and social capital.
In the US the “benefit corporation” or “B-corp” has been attracting significant investment flows with purpose built into the corporate structure as opposed to the conventional Friedman profit maximisation for shareholders.
This shift could also renew the senses of purpose to financial, law and accounting professionals to be the custodians of the future prosperity and wealth created by the businesses which we work for every day.
Mayer goes on to talk about how natural and social capital should be accounted for in the “Performance” chapter of the book. This is a huge shift in thinking and the concept of “maintenance” is very topical. In our opinion there is a slightly flaw in mixing “perfect vision in retrospect” with the ability to be able to account for unexpected damage done by a product. Perhaps that is a job for a regulator?
Capitalise loves working with accountants for the reason that we’re with a community of people who truly understand the importance of a company’s legals and their financial statements.
What’s more at macroeconomic level, the importance of a company’s articles and their financial statements really can help solve issues we see today. From how we maintain our natural capital to protect our environment and how we ensure fairness with the people who buy into our purpose and can continue to do so.
Long live sustainable business!