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Sustainable Solutions for Business - September 2015 - by Sam Euston

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Sustainable Solutions
September 2015 - by Sam Euston
Capitalism, Business, Sustainability and Future Generations - Part 1

 

 

by Sam Euston

At the recent Sustainable Enterprise Conference, Blair Kellison (CEO of Traditional Medicinals) discussed Traditional Medicinals very successful sustainable business practices.

Blair’s SEC presentation is available at: https://youtu.be/gURdyTRSlKU  It both inspires and demonstrates how business practices can be both profitable and sustainable for “shareholders”.  Blair and his colleague Ben Couch, explain their approach toward sustainable business.

During the presentation Blair made an interesting remark:
“Capital wasn’t created to exploit people and the environment, capital was created to uplift our society.”  This prompted me to research Adam Smith’s fundamental elements of pure capitalism, which states:

  • Private property.  Critical to the success of a capitalist system is the adherence to private property rights.  Although many Americans take property rights for granted, the lack of well-defined property rights in developing countries inhibits economic growth and prosperity. 
  • Self-interest.  It is observed and assumed that people want the best possible outcomes for themselves and their family.  Smith’s hand doctrine describes how the pursuit of self-interest leads not only to individual success, but contributes to the well-being of society and the wealth of the nation.
  • Freedom of choice.  Capitalism is characterized by the freedom to pursue one’s self-interest, and respond to the demands of the market.
  • Market prices.  Market prices signal the value of goods and services and direct the actions of individuals and firms in the economy.
  • Competition.  Smith emphasized that to translate selfish motives into socially optimal outcomes, firms must be constrained by competition.  It is only when producers face the competitive forces of other sellers, that it is in their self-interest to provide those products and services that are most desired by consumers.

(Description excerpt from: http://www.uncg.edu/bae/bbt/capitalism/adam_smith.html)

I was further encouraged to look up the etymology of sustain and sustainable (from Latin sustinere "hold up, hold upright; furnish with means of support; bear, undergo, endure," from sub "up from below").

So are Capitalism and Sustainability compatible?  The model of “capitalism” adopted in my lifetime, and its current results, indicates a disconnect regarding sustainability.  Chris Hedges (whom I encourage you to research), also provides some very compelling arguments and facts regarding our current form of capitalism.  This is the subject for a future column series.

Blair presented what he thought were “Our Two Major Issues: income inequality and climate change.

His remarks continued: “We’re presently exploiting: natural resources and people. We’re polluting our water, soil & air. We’re creating excessive waste”. “Some part of the money (in our pocketbooks) contributes to the exploitation.”

Blair, Drake Sadler and Traditional Medicinals are building a business model that widens the focus of the traditional capitalistic business model, and they have the help of consumers who are supporting a trend that considers the following:

Flight to quality products · Higher quality food · Company transparency · Who are these people? · What are the ingredients? · How are their employees treated? · Do employee’s earn a living wage? · What is the supply chain of the company? · What’s going on behind the scenes?

These consumer trends, Traditional Medicinals has been utilizing in its business model, pioneering a wider focus regarding business, profitability and sustainability. Blair reinforced that companies can make money and utilize sustainable principles.

“Human and investment capital can be put to work to do social good,  and make the same kinds of returns that, the human and investments capital put to work today (exploiting labor and the environment) to make profits.”

Blair went on to reinforce that “for the last 41 years Traditional Medicinals has been trying to figure this out.“  Other local companies such as; Straus Dairy and Indigenous, are also pioneering sustainable business models. Businesses (Local and international) are also exploring the utilization of the B-corp model.  B-corps are certified to meet rigorous standards of social and environmental performance, accountability, and transparency.

The B-Corp Declaration of Interdependence includes:

  • That we must be the change we seek in the world.
  • That all business ought to be conducted as if people and place mattered.
  • That, through their products, practices, and profits, businesses should aspire to do no harm and benefit all.
  • To do so requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations.

(Part 2 next month)