It is often said that the corporation has been the most effective wealth generator in history. But as the financial crisis and ensuing world recession have starkly illustrated, corporate and social interests are often in deep conflict. And yet, multinational corporations (MNCs) can be a positive force in the global economy, often raising standards of living and work practices when operating in developing nations. Here David Finegold, dean of the Rutgers School of Management and Labor Relations, suggests ways to encourage corporations to meet the interests of the social stakeholders that make their existence possible.
1 Build better boards. Push corporations to increase diversity among directors; listen to outside experts, including critics; tie CEO pay to performance; and consider the interests of employees, customers and communities rather than just investors. Check out the Aspen Principles.
2 Support B corporations. There are more than 300 such companies, which “meet comprehensive and transparent social and environmental standards via the B Rating System” (see bcorporation.net) and are thus committed to generating a positive social impact along with profits. Support legislation in your state, like the recently passed bill sponsored by Maryland State Senator Jamie Raskin, that recognizes these organizations.
3 Promote shared capitalism. Organizations get the best long-term results when they combine employee ownership with a strong employee voice in decision-making. Support the Worker Ownership, Readiness and Knowledge Act. Go to nceo.org, and read the March 1 Nation article on “The Cleveland Model” of employee-owned businesses.
4 Reform business school education. Courses on sustainability, social entrepreneurship, corporate social responsibility and ethics have grown, but we need a more fundamental examination of the purpose of an MBA. Check out Net Impact network and join the Academy of Business in Society.
5 Enforce existing regulations. More than three-quarters of low-wage US workers are not paid the overtime to which they are entitled, and millions endure minimum-wage and health and safety violations. Perhaps the simplest way to promote more responsible corporate behavior is to enforce laws already on the books. And in addition to lobbying for more government inspectors, we should enlist unions, worker centers and other NGOs to monitor employment practices. Go to the Issues section at the National Employment Law Project.
6 Limit corporate political power. Business wields too much power in the political process. This has harmed not only society but often firms themselves, such as when banks pressed for deregulation that, in some cases, led to their own collapse. The recent Citizens United Supreme Court decision will most likely exacerbate the problem. For more, and to sign a petition for an amendment overturning it, go to freespeechforpeople.org.
7 Fight the race to the bottom. Competition among states and countries to attract investment and jobs has loosened restrictions on corporate behavior. Measures to combat this trend range from voluntary self-governance (Global Impact) to activist initiatives to strengthen labor and environmental standards. See workersrights.org and betterwork.org.
8 Support global solidarity. Unions, worker centers and NGOs can use new technologies to build networks counterbalancing the power of MNCs. Especially promising are blue-green alliances and organizations such as Green America. Check out Solidarity Exchange.
9 Foster alternative organizations. Those with socially responsible practices include microlending combined with microfranchising, public-private partnerships, open-source networks, native corporations and hybrid organizations. Check out Vestergaard-Frandsen.
10 Put your money where your values are. The most direct way individuals can affect corporate behavior is as consumers and investors. Purchase products and services from socially responsible businesses, and put your retirement savings in socially responsible investment funds, which yield returns comparable to other equity funds (see Social Invest). Linking your values to your money sends a clear message to corporations that they can do well by doing good.
CONCEIVED BY Walter Mosley with research by Rae Gomes
“Ten Things” is a monthly feature. Readers who wish to propose ideas for it should e-mail [email protected]