Defining the Business Ethic of Tomorrow New Assumptions for Business

Vermont Businesses for Social Responsibility is 18 years old but these days we’re feeling like a kid.  When publications like Strictly Business dedicate whole issues like this one to Social Responsibility, the heart and soul of our organization, we are pleased.  It was not too long ago that “social responsibility” and “business” were oxymoronic.  

Classic business strategy has historically been silent on social issues like the environment, health care and community welfare.  Indeed, fiduciary responsibility, growing wealth for shareholders, is the sole legal obligation driving most business decisions today.  

A new economy is emerging and as usual, Vermont is ahead of the curve.  VBSR’s 600 members are collectively defining how business will thrive in a rapidly changing era.   

A singular focus on fiduciary responsibility is no longer serving the needs of business or the nation.  It assumes an endless supply of inexpensive fossil fuels and a surplus of low cost labor.  It assumes that natural resources are inexhaustible and can be consumed with abandon.   These assumptions are obsolete.

Here at VBSR with the leadership of our member businesses, we are defining the new assumptions that will guide the business ethic of tomorrow.   Here are five to start with:

1.  A healthy social infrastructure is essential to a healthy economy.  High quality and affordable health care and childcare and strong communication and transportation networks are part of a healthy business environment. Public investment in our social infrastructure is an investment in economic development.   

2.  An underpinning assumption of the Industrial Revolution was the doctrine that if the “hidden hand” of self- interest were left alone it would create enormous wealth, that business should be unfettered by government regulation.   Today’s crises in energy, health and environment are impeding business growth and must be confronted and resolved by government.  Business needs an activist forward- looking government to create business-friendly social infrastructures.

3.  If a business-friendly state needs an activist government to improve social infrastructures, the tax paradigm must be confronted.  No one likes taxes; no one likes crumbling bridges.  Taxes need to be viewed as investments, not penalties, and should be judged by the benefits they deliver.

4.  Vermont’s economic development planning has been done in 5 year increments.  It is reasonable to expect that subsidizing business expansion or offering tax incentives will generate new jobs and tax revenues within a 5-year window.  Building a financially stable health care system, an efficient transportation network or affordable housing options will not be completed in 5 years.  Vermont’s strategic planning and economic development investments must envision the next 50 to 100 years and calculate return on those investments over that time span.

5.  Finally, if an activist government is making long-term investments of tax revenues in social infrastructures because it is good for business, it is reasonable to expect something from business in return. Vermont should encourage a simple change in corporate charters that empowers directors to act for the benefit of the environment, the community and all stakeholders of the business in addition to the wealth of the shareholders.

A new business model is emerging in Vermont, a model that many VBSR members are proving to be quite successful.  Expanding this model is going to require some fresh thinking.