When capitalists call for market revolutions

The world must be in trouble if capitalists are beginning to call for “market revolutions.”

Peter Bakker, President of the World Business Council for Sustainable Development, calls for a “revolution of capitalism.” Markets, he argues, must learn how to value and manage multiple forms of capital, including the human, social and natural forms.

A common theme expressed by speakers at our Breakthrough Capitalism Forums, stresses that the inertia of the old economic order is now a massive constraint on the necessary system change.

“The system is blind to potentially existential threats,” warned Jeremy Leggett, a leading solar energy entrepreneur. Indeed, he argued that the current order is “dysfunctional almost to the point of being suicidal.”

Happily, a new generation of business leaders and innovators is emerging, as spotlighted in our recent report, Breakthrough: Business Leaders, Market Revolutions. Most breakthrough initiatives, however, are as yet experimental, fragmented, and not in clear line of sight for key decision-makers—often because they fail to provide short-term pay-offs in terms of jobs, revenues and taxes.

Worse, emerging solutions are often fiercely contested by incumbents, because they threaten their existing business models.

To drive change at the level and scale now needed, those pushing for breakthrough capitalism argue for clearer market rules and incentives—and for a rebooting of economics and accounting. With governments off balance, can businesses begin to fill the gap? The report’s main message, confirmed as our Breakthrough Capitalism roadshow has rolled through Germany, Singapore, Colombia, Canada and Abu Dhabi in recent months, is that they will have little choice in the matter.

So what to do?

At Volans, the answer involves new types of business models, and efforts to build critical mass— socially, politically and economically. That’s why we joined forced some years back with Virgin Unite, Sir Richard Branson’s foundation. The aim: to work toward what has since become The B Team, co- chaired by Sir Richard and by Jochen Zeitz, former Chairman and CEO of the German sportswear brand PUMA.

Jochen and I first met at a Virgin Unite roundtable outside Geneva—and promptly decided to write a book together. While at PUMA, he pioneered the Environmental Profit & Loss (EP&L) accounting methodology. After the first round, he announced that in 2010 PUMA’s “environmental loss” through its supply chain was valued at €145 million. The approach is now being rolled out across Kering, the parent company for PUMA and some 20 other brands, including GUCCI and Bottega Veneta. Each brand is due to complete an EP&L analysis by 2016.

A great start, but Jochen always saw the EP&L as the first step toward a fuller triple bottom line analysis—with the logical (if even more challenging) next step being Social Profit & Loss (SP&L) assessments. As it happens, 2014 marks the twentieth anniversary of my first coining of the triple bottom line, so our book, due out in September, will focus on tomorrow’s bottom line.

While much of business continues to take small steps toward sustainability, this would represent a giant leap for accountants, business and humankind.

 

John Elkington is Executive Chairman of Volans, and Co-Founder of SustainAbilityBusinessWeek describes him as “dean of the corporate responsibility movement for three decades.” His most recent book is The Zeronauts: Breaking the Sustainability Barrier (Earthscan/Taylor & Francis, 2012). Follow on Twitter @volansjohn.

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