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How forward-thinking firms are rewriting the capitalist rulebook

From demoting shareholders to appointing nature to the board, purpose-driven firms are changing the rules of business

From demoting shareholders to appointing nature to the board, purpose-driven firms are changing the rules of business

When Yvon Chouinard (main picture) passed ownership of his billion-dollar company Patagonia over to the planet, he redefined what it means to be a sustainable business.

Now that aiming for net zero by 2050 looks a bit tame by comparison, what are the pioneering shifts taking place in the world of green business?

sustainable business
1. Demoting shareholders

Wouldn’t it be great if firms had a way of doing what they do without excluding the most vulnerable, or overreaching the planet’s finite resources? A team of clever folk over at Doughnut Economics Action Lab (a can-do network inspired by Kate Raworth’s book of the same name) have launched a new initiative to help businesses do just that.

The free-to-use Doughnut Design for Business Tool lays out a workshop-based framework for resolving gnarly questions related to purpose, governance, ownership and finance. A number of forward-thinking businesses, such as the community-powered hospitality startup Fairbnb, have already taken the jump.

The desire to remodel business-as-usual is also at the heart of the Better Business Act. Backed by more than 1,500 firms, the legislative proposal aims to change UK law so that leaders of listed companies can balance social and environmental concerns with their legal duty to shareholders.

The proposed rule change takes its inspiration from the B Corp movement, which sees companies agree to change their founding documents to put shareholders on par (not above, as at present) with communities, the natural world and other so-called ‘stakeholders’.

The Act’s backers are currently working with supportive parliamentarians to get the idea included in the upcoming draft Audit Reform Bill, which among other goals aims to define corporations as ‘public interest entities’.

Image: Rodion Kutsaiev

2. Bringing the birds and (worker) bees to the board

Having no one to speak up for you is a sure way to have your interests get overlooked. Welcome then is Faith in Nature’s decision to appoint nature to its board.

The British haircare brand has issued the great outdoors with voting rights (exercised by a real-life proxy), ensuring its natural-origin, low-waste principles stay centre stage.

Britain’s Trades Union Congress is pushing for similar representation for workers, arguing in a new paper that one third of directors in large companies should be workers elected by their own colleagues (a model already in place in Germany).

Fudge Kitchen, the Kent-based confectioner, has gone one step further by joining the likes of John Lewis and engineering giant Arup in handing ownership of the firm over to its workforce meaning they all benefit from a share in the profits.

Image: Boris Smokrovic

3. Tying bonuses to sustainability targets

Nothing (we’re told) concentrates a business executive’s mind like their end-of-year bonus. Assuming that’s true, the top bosses at Tesco, a UK supermarket, have fresh cause to take issues such as gender representation, emissions reduction and cuts to food waste seriously. Why? Because, from now on, 25 per cent of their performance bonuses will be linked to the company’s sustainability targets.

Pay is also top of mind at Jupiter Fund Management – only, this time, pay to the public coffers. The London-based investor recently joined the likes of cosmetics brand Lush and shoe repairer Timpson in qualifying for the Fair Tax Mark.

With multinational companies shifting an estimated 40 per cent of their profits into tax havens every year (reducing corporate tax payments by £19.5bn in the UK alone), this accreditation is awarded to businesses that “pay the right amount of corporation tax, at the right time, in the right place”.

Image: Jason Goodman

4. Ratcheting up re-use

Buy, use, throw away, repeat. So runs the not-so-secret mantra of almost every high-street fashion brand. But signs suggest things are beginning to change.

John Lewis has recently launched a rental service, allowing you to order an item online, wear it, and return it via prepaid label at a fraction of the cost. A £200 sequinned Whistles dress can be rented from £32.

High-end department store Selfridges is also getting in on the act. Through its ‘Resellfridges’ service, customers can now buy and sell their (designer) ‘pre-loved’ items. The scheme is part of a wider commitment to make 45 per cent of their transactions from circular products by 2030 – via resale, rental, repair, refill and recycle.

Image: Burgess Milner

sustainable business trends
5. Using algorithms to clean up supply chains

Frustrated with trying to work out the merits of this eco-label versus that ethical marque? No surprise, there. On-pack certifications have exploded in recent years (a recent EU study found 198 separate schemes just for foodstuffs). Clarity is now coming thanks to a novel adaptation of blockchain technology.

Tag a fish caught in licensed waters, by a legit boat, with well-paid workers, and all that information stays with that specific fish in its journey from sea to shelf. All it takes is an on-pack QR code which pings all those details to your phone.

One of those pioneering the approach is tech whizz IBM, whose blockchain-powered Food Trust tool is being rolled out by some big-name brands.

Buyers of Mousline purée in France or Zoégas coffee in Sweden, for example – both owned by Swiss food giant Nestlé – can now use the system to trace their purchases right back to source.

Image: Mike Bergmann
Main image: Yvon Chouinard. Campbell Brewer

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