Business is the most effective way to address some of the world’s most difficult problems.
For how many years have politicians fought about issues such as carbon emissions, greenhouse gases, and deforestation, among others? With how much progress? Not much, we fear. But now that we are at a tipping point, corporations are creating practices and products to drastically reduce greenhouse gasses, work with renewable resources, and not pollute the water or the air. Companies do this not out of the goodness of their hearts, but because they can make money at it.
Business can be a solution if four requirements are met: markets, ethics, action and leadership.
• Markets. Markets must be fair, open, and robust. This means equal access to accurate information. Markets drive quality and innovation up and cost down — if they function properly. Corruption, low quality, and obsolescence thrive in planned, regulated, non-market economies.
• Ethics. Economic activity must be guided by an ethical framework. Without a common understanding of the ethical rules of engagement, markets do not work. We have the rule of law. We respect property rights. But we also “get it in writing,” and we sue if we don’t get what we want One of the most common slogans is “buyer beware.”
What if we had a different ethical framework? What if we believed that fair market activity was the most efficient way to conduct business and we did everything we could to make markets work? Insider trading would disappear. Industries would have multiple competitors. We would align our legal and regulatory frameworks to support competition, not protectionism.
What if one of our most deeply held values was to leave the planet healthier than when we found it? Carbon-neutral activity would be the norm, not the exception. Car manufacturers would compete on the basis of lower emissions and greater fuel economy rather than lobby Congress against them.
What if part of our ethical framework was to address social problems through business? Could we find ways to make a living and make the world a better place in which to live? We think so.
• Action. Micro finance is an example of making a profit while acting to make life better for large numbers of people. Grameen Bank has loaned over $6 billion since its founding in 1976. With these loans, countless businesses have been started, 650,000 homes have been built, and 50,000 students have received scholarships for their education.
In our own backyard, Xcel is devising ways to align incentives and investments so consumers can pay less for energy through conservation and Xcel can save money by not having to build new power plants, yet successfully meet our needs for energy.
Colorado State University has used some of its own faculty’s inventions to solve social problems. Through ENVIROFIT, CSU makes retrofit kits for two-stroke motorbike engines for sale in countries like the Philippines. These retrofitted engines cut carbon monoxide emissions by 76 percent.
Students at the Daniels College of Business partner with Deutsche Bank’s micro finance program on needs analyses of various countries, including the social impact of micro lending on a country and its development. Then, students complete a loan package analysis, including making an accept/reject decision.
• Leadership. It is up to us to lead the way through education and example. Judith Samuelson of the Aspen Institute said it best. “The fact is that ultimately business — big, audacious, profit-hungry, globetrotting business — will unlock the solutions to our most complex problems as a society. It is business that has the resources, the talent, the problem-solving skill, the distribution systems, and increasingly, the motivation to act.”
Let’s make it a priority in the new year to act, to make the world a better place through business.
Karen Newman is a professor and Bruce Hutton is dean at Daniels College of Business at the University of Denver. The Denver Post.
