INTHEBLACK November 2021 - Magazine - Page 17
the idea that business has significant
responsibilities beyond simply making profits.
The implicit warning is that, if capitalism is not
inclusive enough, it is doomed to fail, and we risk
social and environmental chaos.
LEADING THE CHANGE
In the wake of the COVID-19 pandemic,
commentators have been suggesting that a
re-examination of economic priorities, with a new
and bigger role for governments at its core, should
be considered.
In the UK, for example, insurance company
Legal & General has been a leader in this area,
releasing a Sustainability and Inclusive Capitalism
2020-21 report, which maps out its vision in the
three areas of environmental, social and
governance (ESG) practice – achieving net zero
emissions, making a meaningful social
contribution and growing the business in a
responsible and sustainable way.
Since the UK first went into lockdown, the
company has invested £1.5 billion (A$2.8 billion) in
UK towns and cities, supporting what it says is a
“levelling up” through promoting a more even
economic recovery from the pandemic.
In the US, Lynn Forester de Rothschild, partowner of The Economist magazine, has been the
driving force behind the creation of the Coalition
for Inclusive Capitalism. She advocates for carbon
taxes, a living wage and action to combat obesity,
which she considers to be a byproduct of capitalism.
In Australia, Sukhbir Sandhu has made inclusive
capitalism a special area of research in her role as
associate professor of sustainability and ethics at
the University of South Australia.
She sees inclusive capitalism as a “ladder”
that the business world is climbing, to reach an
advanced position of leadership and responsibility.
Sandhu says Friedman understood that, if the
unfettered pursuit of profit becomes a risk, then
it should be moderated. After all, if poverty
becomes too widespread, how will corporates sell
the products they make at scale?
“Risk management is definitely a big part of
it on the lower rungs of the ladder,” says Sandhu.
“But some would argue that all these ideas about
inclusive capitalism are just like putting lipstick on
a pig, because if you are managing them as risks,
“MY BELIEF IS THAT
CAPITALISM IS A GOOD
THING, BUT IT DOES
NEED TO REFLECT
THAT ONE GROUP
CANNOT BENEFIT AT
THE EXPENSE OF
SOCIETY AND THE
ENVIRONMENT. IF WE
GET TO A POINT
WHERE THIS IS
WIDELY RECOGNISED,
THAT WILL BE GOOD
FOR EVERYONE.”
ASSOCIATE PROFESSOR
SUKHBIR SANDHU,
UNIVERSITY OF
SOUTH AUSTRALIA
then you are not moving us fast enough to where
we need to go.”
FROM RADICAL TO MAINSTREAM
Another aspect of inclusive capitalism that needs
to be considered carefully, Sandhu says, is
regulatory compliance.
If businesses do only as much as they are
required, compliance becomes a box-ticking
exercise, indicating a lack of ethical commitment.
On the opposite end of the scale are businesses
that make a commitment to social and
environmental issues as part of their corporate
strategy, thereby transforming themselves from
“poachers to gamekeepers”, Sandhu says.
Institutional theory says that, when society
changes its expectations in a major way, some
companies “break free from the herd” to become
frontrunners and propel seemingly radical ideas
into the mainstream.
Sandhu is sceptical that governments can drive
change on a similar scale, due to typically short
election cycles in democratic societies creating
little commitment and too much policy
uncertainty. Similarly, even though consumer
sentiment can shape brand perceptions and
shame corporates into positive action, consumers
are not yet organised at a sufficient scale.
MIND THE GAP
While the greatest hope lies with activist
stakeholders and ethical corporate leaders,
Sandhu says “the magic happens when there is
both a bottom up and top down processes acting
together”.
“It’s not such a bad idea for the ‘social floor’ to
be higher and the ‘ceiling’ to be lower, because we
know when that gap is too high even the rich are
unable to live in these societies because they
become dangerous.”
In the long run, she says, income inequality does
not work for any society that seeks to function
effectively.
“My belief is that capitalism is a good thing, but
it does need to reflect that one group cannot
benefit at the expense of society and the
environment,” says Sandhu.
“If we get to a point where this is widely
recognised, that will be good for everyone.”
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