Making business better
What do we mean by our mission statement to “Make business better”? Here’s the two-sentence version from Quartz co-founder and CEO Zach Seward:
“We believe companies should solve real problems without creating new ones. The global economy must be as inclusive as it is innovative, balance financial incentives with the needs of our planet, and elevate leaders who act with integrity, empathy, and foresight.”
And here’s editor-in-chief Katherine Bell’s answer, from an essay describing her vision for a more progressive business journalism:
“Before we consider whether a company is succeeding—whether it’s financially sustainable, improving over time, treating its employees well, or properly balancing its stakeholders—we have to look more closely at its purpose (the real one, which is often not clear in its mission statement). What useful thing has the company set out to achieve? Who does it benefit, and who does it harm? If it succeeds, what will its net effect be on society and the environment?”
But the best way to explain what we mean by Making business better is to share the stories we’re writing about the most important challenges and opportunities in global business.
Almost every aspect of our global system—agriculture, transportation, energy, construction—will need to be rethought and redesigned over the next three decades to put the planet on a safe climate trajectory. It’s the greatest challenge, and opportunity, of our time.
Businesses around the world are responding, from corporations decarbonizing their operations, to investors divesting from fossil fuels, to startups developing novel technologies to lower emissions.
It’s one thing for companies to say they stand for equality and another to build truly inclusive organizations. Take the fashion industry: In the wake of George Floyd’s murder, numerous fashion and beauty companies went online to post their messages of support for the Black community and the Black Lives Matter movement, as well as to pledge their own commitments to change. But a Quartz investigation of fashion companies’ Instagram posts found that these companies’ commitments to diversify were mostly bluster. And even many companies that try to be more inclusive choose initiatives that backfire. But a growing number of organizations are walking the talk, building equitable, inclusive, antiracist, and feminist workplaces that are welcoming, purposeful, and profitable.
“What we find is that people really do want to be good allies; they just don’t know what that is. And so to the extent that we can equip them to do that while taking a more proactive rather than blaming perspective, we’re able to engage and activate them.” —Melissa Thomas-Hunt, social scientist and diversity expert, and advisor to Airbnb
Since the invasion of Ukraine in late February, more than 600 major Western companies have either completely stopped doing business in Russia or limited their operations beyond the requirements of government sanctions. Companies are supporting Ukraine in other ways, too: setting up satellite internet, connecting refugees with transportation and jobs, donating revenue earned in Russia to relief efforts, and serving as informal infrastructure for direct donations to Ukrainian citizens. This swift and thorough response from the private sector is the latest evidence of the immense power companies wield, and how much change is possible when they make brave and ethical decisions.
What does an ethical decision consider? In an interview with Quartz, Harvard Business School professor Nien-hê Hsieh laid out the five key values that he teaches students in ethics classes:
- Rights. “Are there certain basic rights that either impose constraints on what we are permitted to do to others, or are there basic rights that entitle people to certain claims on us?”
- Well-being. “What is your responsibility to help promote well-being in certain cases? For example, with customers. What is your responsibility to make sure that you’re not harming their well-being with your products or services?”
- Fairness. “How do we try to manage trade-offs across people when it involves their well-being and interests? For example, in the workplace, what is it fair to pay people? When is it fair to treat people in different ways?”
- Trust. “We ask [students] to consider two conceptions of trust. One idea is trust as reliance: You trust me or we trust the company because it’s reliable, or it says what it will do. Then there’s a deeper kind of trust that’s fundamental to business. You see this in the idea of fiduciary duties, which is the idea that I trust you, for example, if you’re an investment manager, because you have my interests in mind as well.”
- Autonomy. “To what extent are you promoting or enhancing people’s autonomy?”
- Power. “Corporations have a kind of power and impact on society that individuals don’t. And so that adds another level of thinking about the legitimacy of corporate action and the ideal role of business in society.”
In 2006, three university friends who had worked in a variety of sectors wanted to remake the way business was done. They created B Lab, a nonprofit certifying body that would administer a process for companies to assess themselves based on criteria arranged in five themes: governance, workers, community, environment, and customers. Today there are more than 3,300 certified B Corps around the world including US apparel maker Patagonia and French multinational Danone. The B Corp movement aims to save capitalism by reinventing it.
Follow the money
There’s a movement for investors, too, and it’s starting to transform finance.
ESG stands for environmental, social, and corporate governance—criteria that investment firms are increasingly using to screen the stocks and bonds issued by companies. It refers more broadly to ethical investing, and the ecosystem of index funds, assessment, and activism that has sprung up around it.
BY THE DIGITS
- ~$40 trillion: Money held in ESG assets worldwide
- $53 trillion: Total of ESG assets worldwide by 2025, according to Bloomberg Intelligence
- 1/3: Proportion of global investments that could be ESG by 2025
- 90%: Millennials active in the markets who say they believe in sustainable investing, according to a 2019 study by Morgan Stanley
- $285 billion: How much ESG funds grew in 2020 alone, a 96% increase over 2019
Milton Friedman’s theory of shareholder capitalism kept things simple: Companies should not break the law, and other than that they ought to serve shareholders. By contrast, “stakeholder capitalism” or “corporate social responsibility” can seem hazy, unfocused, and not rigorous.
So here’s a short checklist for what a better form of capitalism would require of businesses, in plain English and in economic jargon:
- Solve a real problem for someone (in econ terms, create “surplus”)
- Share the rewards fairly (customers, workers, suppliers share in the surplus—and not just those who are members of privileged groups)
- Don’t pollute (minimize negative externalities, or at least pay for them)
- Follow the rules (follow the law in spirit, not just in letter)
- Be a good corporate citizen (compete fairly, and don’t undermine the institutions on which you depend—including government and civil society)
That’s it. A little more complicated, sure, and a little harder to write down as a mathematical model. But we believe it’s what’s needed in a world beset by inequality, climate change, and (one more econ term) countless market failures. We can’t just leave these problems to the market, and we can’t just leave them to governments or philanthropists either. There’s a growing global movement that asks businesses to aspire to more—and at Quartz we’re covering that movement every day, and participating in it ourselves.
We hope you’ll join us and support our work by becoming a Quartz member.