By Chris Pinney

Corporation 20/20’s second annual conference on the future of the corporation took place in Boston last week. Chaired by Allen White, founder of the Global Reporting Initiative and head of Corporation 20/20, the conference brought together a small and eclectic group of experts, pundits and business leaders, both domestic and international, to address the challenge of how to restore sanity to our economic system and create the foundation for a sustainable economy. The conference covered a breathtaking range of subjects, from the chartering of companies and regulation, to whether companies can have a “soul,” to the limits of modern portfolio theory.

The starting place for our conversation was a keynote address by Robert Johnson, former chief economist of the U.S. Senate Banking Committee, who set a sobering stage.  He detailed the difficulties of trying to create a sustainable economy in a world where the traditional role of finance and economy has been turned on its head and the economy is now hostage to an out-of-control  financial system.

Johnson pointed out that in 2007, 45 percent of corporate profits came out of the financial sector, which created little “real” economic value and employed less than four percent of the workforce. He described the challenge in trying to drive meaningful reform of this system in a political environment where financial services firms have enormous political influence, and there is a revolving door between financial institutions and the government departments now charged with reforming it. By way of example he pointed out that treasury secretary Tim Geitner’s chief of staff is the former chief lobbyist from Goldman Sachs, and that 10 of the top 20 donors to both political parties in the last election were financial service companies, many of whom are now recipients of massive government bail outs.

Much of the discussion at the conference focused on how we can best create change in this kind of environment. Among the key debates was one about “rules vs. culture”: whether tightening up rules and regulations is the best way forward, or if culture and enlightened voluntary CSR leadership by business is equally important.

Ideas put forward by the “rule” advocates included reform of corporate chartering, which is under active development by a coalition of legal firms in California; board reform to include independent stakeholders; and creating public licensing commissions for all industries similar to those currently governing the utility industry.

Those arguing for culture pointed out that government regulation alone can’t possibly keep up, and the leadership and innovation we need to address our sustainability challenges must come equally from the business community and not just from government.

Andrew Kassoy from B Corporation; Jeffrey Hollender, former CEO of Seventh Generation; and Peter Blom, CEO of Triodos Bank, Netherlands, all provided powerful examples of how business can take leadership in driving transformative change and create the foundation for a sustainable economy. Others pointed to the role Wal-Mart and GE are playing in demonstrating that even the largest firms can “voluntarily” play a critical role in transforming the business model to support a sustainable economy. Many argued that the best way to support business leadership is through the right market incentives, such as tax breaks for green business and consumers who buy green products. This kind of market support, it was argued, will have more influence on changing business behavior than Sarbanes Oxley type regulations and other punitive measures.

Another area for exploration was the role of the investor and how to create a more responsible investment marketplace. This conversation focused on how we move from concepts of socially responsible investment based on risk management to a model that rewards innovation and long-term value creation.

Perhaps the most interesting and out-of-the-box conversation revolved around the issue of language and our willingness to put human aspiration language into business vocabulary. As one participant, noted the definition of evil is lack of empathy. In this context our challenge is to ensure the business is not only profitable but equally empathetic.

The challenges addressed by the summit are also the subject of a new Boston College Center research initiative, the Corporate Responsibility Roundtable, which the Center is currently launching with the Boston College Law School, in partnership with other organization such as 20/20. Click here for more information on the Corporate Responsibility Roundtable.

Tags: Corporate 20/20, Corporate Responsibility Roundtable
This entry was posted by Chris Pinney on Monday, June 15th, 2009 at 2:10 pm, and is filed under Center News & Features. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.