Hey Legacy Makers! Welcome back to Profit Month, and with this weeks installment of our CSRS blog, we are proud to present to you the idea of responsible capitalism, and how businesses are changing their operations for a greener business model.
What is “Traditional Capitalism”?
According to Webster's Dictionary, capitalism can be defined as an economic system characterized by private or corporate ownership of capital goods.
Throughout much of the 20th century, the traditional model of capitalism where “Profit Trumps All” has been the overarching theme for many business decisions. The blind pursuit of profit, with little concern on the environmental impact created, has only been accelerated by the views of economists such as Milton Friedman who claims that “the social responsibility of business is to increase its profits”, a view which can be interpreted as “pure capitalism”. From this, a stigma has arisen that businesses who wish to be socially responsible due so at the sacrifice of maximizing profit. However, at a time where being socially responsible is of utmost importance, many businesses have taken strides to break this stigma and implement the practice of responsible capitalism for their 21st century operations.
What is "Responsible Capitalism"?
At the get go, responsible and capitalism are seemingly two contradictory terms which have no business being used in the same sentence. However, with consumer perceptions and demands shifting, businesses are acting quickly to be more responsible with their practices.
At the surface, responsible capitalism can be seen as simply integrating corporate social responsibility into a business. However, the concept dives so much deeper than that. Responsible capitalism requires integrating the communities needs, and caring for those needs no matter the scale. This ultimately involves aligning the business’ core values and maintaining a philosophy which is not only concerned about what’s produced, but how it’s produced. Overall, responsible capitalism is not blindly pursuing profit, but rather taking into account the interests of stakeholders, which includes the environment.
How have companies been breaking down the profit stigma?
The argument on whether the environment should be considered a stakeholder or not can be debated for hours. However, it comes with no debate that traditional business operations have negatively harmed the natural environment around us. From the 5% decrease in stratospheric ozone since 1970, the growth of the Pacific plastic patch, or the 18% increase of CO2 in our atmosphere since 1977, businesses haven’t treated our environment with much respect over the past few decades. Businesses who tried to reduce their environmental footprint were seen as “foolish and idiotic” as they were supposedly sacrificing their bottom line. However, businesses have since debunked this myth, being able to achieve incredible levels of profitability while minimizing their environmental footprint.
We discussed fast fashion in a previous blog post, along with the destructive nature of the fashion industry. TenTree Apparel is a Canadian company who is trying to replace some of the damage caused by the garment industry. With the company’s dedication to planting 10 trees for every article of clothing purchased, they have successfully planted 25 676 890 trees to date. Accomplishing this while remaining committed to having a transparent manufacturing process and be profitable proves that profitability doesn’t have to be sacrificed to do good for the environment.
The state of California is a perfect example of taking action towards a more sustainable future with economic growth still in mind. California is a leader in the United States when it comes to state initiated climate control acts. With initiatives that promote renewable energy use or regulate vehicle emissions, California has been able to reduce greenhouse gas emissions to 429.4 million metric tons, lower than the 431 million metric tons recorded in 1990. All these emissions control comes at a time where California has maintained an economy larger than that of the United Kingdom. These reductions have come at a time where California has seen an average annual growth of 2.54% since 2000. California flourishes to this day and are continuously making strides to reduce their emissions even further, demonstrating what responsible capitalism represents.
What can I do to support this movement towards responsible capitalism?
With many businesses taking strides to be ethical in their operations and carry out responsible capitalism, consumers have more of a choice than ever to support companies whose values align with our own. There are many things you can do to aid in this movement.
Support businesses who are actively trying to make this change. Remember, we can vote with our wallets.
Do your research. Look in depth on how exactly businesses are try to be more sustainable. Ask questions like, where are they sourcing their materials? Do they have a transparent supply chain?