The New Capitalists

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Because they are guided by a mission of change, unfettered by corporate legal structures, and agile in their response to changing customer demands, socially minded entrepreneurs running small-scale businesses are the natural leaders of the new capitalism of reciprocity. They have "helped initiate a fundamental shift in the way private enterprise is conducted," writes the founder of the green cleaning products company Seventh Generation, Jeffrey Hollender, in What Matters Most (Basic Books, 2003). "Big global companies have begun speaking our language and even emulating some of what we've done."

There is at least one major obstacle to corporate America's getting a conscience: the legal structure of the corporation itself. "It is set up by statute to serve the best interest of the shareholder, and that's creating wealth," says Joel Bakan, author of The Corporation (Free Press, 2004) and collaborator on the recent film by the same name. "Any manager or director who actually pursued the triple bottom line at the expense of shareholder interests would be acting illegally." (To read a Q&A with Bakan, see page 48.)

One fix to that problem is to expand the notion of "shareholder interests." Since the 1960s, coalitions of activists, religious groups, and investors have introduced shareholder resolutions to denounce corporate misdeeds and demand reform. The proliferating social investment funds, which screen corporations for various ethical practices, frequently hold stocks in "bad" companies for this very purpose. Since the Wall Street accounting scandals, the number of these resolutions has reached record levels, and votes in their favor are on the rise. Thus far, actual reforms have been relatively modest, tending toward negotiations and releases of reports, not shifts in conduct.

Another reform strategy is to change the legal definition of corporations. Businesspeople and reformers in several states, including Minnesota, California, and Missouri, are attempting to craft legislation that would do so. One such group is the Boston-based Corporation 2020, an organization founded by Business Ethics magazine and the Tellus Institute, which proposes a new kind of charter that balances profit margins with environmental stewardship, human rights, and ethical practices.

There will probably always be an inherent contradiction between making a buck and making a difference. Enron itself, in the year before its collapse, released a triple bottom line CSR report that promised to slash greenhouse emissions, honor global human rights, and strive for honesty and transparency. Certainly until corporations are legally compelled to expand the notion of shareholder value from its current narrow focus on profits, environmental and social justice policies will have to be justified in terms of making money -- whether by direct savings or through the indirect rewards of marketing and public relations.

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