Capitalism as a Force for

Good
Capitalism- an economic
system in which private
individuals or businesses own
capital goods.
Capital Goods-
 Why do organisations exist?

Value = Benefits - Costs

• Organisations exist to create value by producing goods and services that customers want. They 2
compete with other organisations on the basis of these goods and services.
• Customers make choices by weighing up the costs and benefits of the available alternatives, and
selecting the option that offers the best value.
 Organisations strive to produce value
by operating their value chain.

Value = Benefits - Costs

• If the good or service they produce is attractive and unique, and their particular value
chain gives them an advantage in producing it, the organisation will be able to
compete successfully, and make a margin.
3
The value that the organisation creates is
split between customers and
shareholders.

Value = Benefits - Costs

4
 When many organisations come together
in a network, it creates a value system.

• This system creates wealth for its participants, and (in theory), via the notion of the “invisible hand”, for society.
• It is the basis of capitalism, where the means of production are privately owned.
• Within this system, business is regarded as solely an economic institution, whose purpose is to create more and more
economic wealth.
• The success of society as a whole is measured by an increase or decrease in GDP.
Wealth is created via a linear flow of
production and consumption.

6
Which would be fine if we had an
infinite planet.

7
 But we don’t.

• So if we run a linear system that converts natural resources into goods for consumption
and disposal indefinitely, we will eventually deplete all the available natural capital.
• In fact, ecological footprinting analysis reveals that 1.5 planet Earths are needed to cope
sustainably with the world’s current levels of consumption and waste.
• If everyone in the world enjoyed the same lifestyle as the average Australian, more than 5 planet
Earths would be needed. 9
Wealth tends to accumulate to those
who own or control capital.
• Unfettered capitalism leads to inequality.

“We thought that markets work. They are not working, and
what’s individually rational… [is] a self-destructive process.”
- Nouriel Roubini

10
• So we can begin to plot shareholder capitalism against a few key
dimensions (see overleaf).
• But societies need more than wealth to thrive – people also need
culture, meaning, identity (as more than just a consumer),
connection with the natural world… and social services beyond
those provided by the government.
• Also, by making the individual the focus, capitalism can isolate
us
and disempower us by weakening our sense of community.

11
 MORAL INTENTIONS
& OUTCOMES

DIMENSION UNIT OF
OF CSR VALUE

Self-interest
d (good for me) (e Indi
an go vid
ic ce u
om gal nt al
n
o e l ric
Ec )
Profit before

inequality
Survive
planet

Social
ENVIRONMENTAL LEVEL OF
and
IMPACT EQUALITY
thrive

ec Gr on
de ono owt asis de
a
co my h ph n-m al
up ( m a
lin no E it
m p
g) Competition hu ca
(survival of
the fittest)
Human instinct

Shareholder capitalism
VALUE
ECONOMIC GROWTH
CREATION
ASPIRATIONS
FOCUS
Shared value capitalism

MARKET Sustainable capitalism

DYNAMICS
Social and eco entrepreneurship offer
solutions to some of these problems via
the notion of creating shared value
• The pollination service provided by bees as they go about
collecting nectar and pollen from flowers is a wonderful example
of how shared value can be created during the execution of day-
to-day work.

13
• The symbiotic relationship between bees and flowering plants creates benefits for the bees,
benefits for the pollinated plants and benefits for humankind.
• Thus, bees create outcomes for people and planet via their core business.
• Nature is incredibly adept at evolving value-creating, symbiotic systems.
Social and eco entrepreneurship is the
use of entrepreneurial principles to
create outcomes for people and planet.
• An entrepreneur is someone who
creates value via their own
willingness to pursue opportunity
and take on risk.
• While a business entrepreneur
typically measures performance in
terms of profit (honey), a social
or eco entrepreneur focuses on
using a viable business model to
create social or environmental
returns (pollination service) as
well.
• To be viable, the business model is
still compelled to deliver
something of value, so that it can
attract the financial fuel required
to operate.
• Thus, social and eco
entrepreneurship is about evolving
the traditional profit-centric
business model to leverage new
value, preferably via a systems
approach.
• The following options for additional value creation are available to social and eco entrepreneurs:
• Integrate outcomes for people and planet into their organisation’s value chain,
• Or into the value of the goods and services produced,
• Or by collaborating to drive change within the whole value system (e.g. local cluster
development to increase innovation),
• Or via philanthropy.
• The best possible outcome is that in doing this, we actually create additional value for all the
organisation’s stakeholders: its owners, its customers, our environment and society. 16
 Social and eco entrepreneurs carefully
manage the balance between people,
planet and profit.
$
Planet People
Profit

• The most effective business models have social and environmental objectives at the core, not the
periphery.
Businesses can be plotted according to their
“business model” and “the importance of social and
environmental outcomes to their core purpose”.

$ Business Model
Greenwash zone

Insulation installers Origin Energy e Body Shop

Th

For profit

Tom’s Shoes
Profit for

purpose

The Big Issue

Increasing emphasis on profitability

NFP:
commercial

NFP: no
Australian
commercial Conservatio
n
Foundation
Importance of
Increasing importance of environmental and social outcomes to core purpose outcomes to
core purpose
Low importance Medium importance High importance Very high importance
 Not values-based  Not values-based  Values-based  Values-based
 Not core activity  Core activity  Not core activity  Core activity 18
Social and eco entrepreneurship often involves
creating links between the for-profit and not-for-
profit sectors.

$ Business Model
Greenwash zone

Insulation installers Origin Energy The Body Shop

For profit

Profit for Tom’s Shoes

purpose
Increasing emphasis on profitability

The Big Issue

NFP:
commercial

NFP: no

commercial Australian
Conservation
Foundation
Importance of
Increasing importance of environmental and social outcomes to core purpose outcomes to
core purpose
Low importance Medium importance High importance Very high importance
 Not values-based  Not values-based  Values-based  Values-based
 Not core activity  Core activity  Not core activity  Core activity 19
What might the world be like if all organisations
were based on a social or eco entrepreneurship
model?
Perhaps
…
• Society with the possibility of being more equitable.
• Greater community focus.
• Investment in social capital.
• Environmental harm minimisation via some relative decoupling.
• Cooperation between for-profit and NFP.
• (See overleaf)

21
 MORAL INTENTIONS
& OUTCOMES

DIMENSION UNIT OF
OF CSR Reciprocity VALUE
(good for
society) (a
nt Com
hr
l op mu
ca oc ni
hi en ty
Et Self-interest
tr
ic
)
d (good for me) (e Indi
an go vid
ic ce u
om gal nt al
n
o e l ric
Ec )

Social equality
minimisation

Profit before

inequality
Survive
planet

Social
Harm

ENVIRONMENTAL LEVEL OF
and
IMPACT EQUALITY
thrive

ec Gr on
de ono owt asis de
a
co my h ph n-m al
up ( m a
lin no E it
(re Gro m p
la wt
g) Competition hu ca on
tiv h (survival of sis de
e e a a
de co
co no the fittest) ph n-m cial
up m
m a
E m so tal
lin y Human instinct
hu nd pi
a ca
g)
Cooperation
(creating Shareholder capitalism
shared value) VALUE
ECONOMIC GROWTH
CREATION
ASPIRATIONS
FOCUS
Shared value capitalism

MARKET Sustainable capitalism

DYNAMICS
Case Studies

• The following slides present five case studies of Western

Australian businesses using an eco or social entrepreneurship-
based business model.

23
1. BenchAD

• “In all that we do we

look to innovate and
re-use.”
• BenchAD is a local
innovator in
advertising-funded
street furniture.
• The organisation provides street furniture at no cost to councils and
communities while creating affordable access to the 'main street'
for local businesses. They are committed to sustainability - both
environmental and social - and reflect this in the design of
their street furniture and promotion of the positive in the
community.
• BenchAD recycles the majority of advertising posters, and works to
reduce their carbon footprint through initiatives such as eWood bus
shelters and street furniture (made from recycled print
cartridges). They are in the process of developing Australia’s most
sustainable bus shelter.
• BenchAD donates thousands of dollars worth of media space
annually to support not-for-profit organisations, charities and
2. Force
• Force is a leading mobile phone
accessories distributor, supplying
a wide range of mobile and
technology brands through a
network of Australia’s premier
retail and operator channels.
They are a rapidly growing
business, with a high volume of
transactions, distributing
thousands of products every day.
• Force donate a percentage of
their margin to Carbon Neutral
for every Force branded product they sell. Their donations to Carbon Neutral have
resulted in over 19,000 trees planted and Force being recognised as a Gold Supporter.
• Force promotes their Gold Supporter status and the Carbon Neutral logo on all their
Force branded packaging and marketing collateral, including their website. This not
only differentiates their range from alternative products, it also offers their customers
and end-consumers the chance to feel they are contributing to Carbon Neutral too.
• Force have created a tool that allows their customers to further support Carbon
Neutral via their e-commerce portal. Customers now have the option to donate a
‘carbon neutral fee’ when they proceed through the website checkout process. The
fee is calculated based on units of Force branded product ordered or can be
overridden to apply a voluntary fee.
• This has resulted in a very positive response from customers. Force has demonstrated
their commitment to Carbon Neutral without passing on any costs to their customers
and end-consumers and have had a number of customers voluntarily donate to Carbon
Neutral via their e-commerce website.
3. AIM
WA
• AIM is Western Australia’s leading
private provider of management,
learning and development
services. It is a private not-for-
profit membership based
organisation, and is committed to
raising the standards of
management and leadership in the
Region.
• As the peak professional body for managers and
leaders, AIM strives to be a role model for
West Australian organisations.
• In recognition of this responsibility, AIM recently
completed construction of the Katitjin Centre, the
first 6 Star educational building in WA. The new
facility achieved the third highest sustainability
design rating of any building in Australia.
• AIM CEO Patrick Cullen said “The building not only
significantly increases the Institute’s capacity to
offer more learning and development initiatives in the market place, but also
recognises our commitment to sustainable development including the
management of people, resources, and the environment.”
• The centre is emissions-neutral, meaning it produces as much energy in
as it consumes.
operation 26
4. Dismantle
• Dismantle is a project aimed at
encouraging people of all ages and
backgrounds to create long-term
social change and feel a sense of
belonging through the simple
activity of cycling.
• Dismantle believes in a world
where bicycles are the preferred
vehicle of transport resulting in
healthy people, connected
communities and a thriving
environment.
• Their first challenge is a recycling and education venture called the Bike
Rescue Project (BRP), that gives people the opportunity to rebuild and repair
old bikes for reuse in the community.
• Dismantle have recently opened their first bicycle recycling workshop on the
esplanade in Fremantle, which is used as a launching pad for education and
engagement programs with a focus on disadvantaged groups.
• To cover the program’s costs, Dismantle uses a number of fundraising
initiatives, including selling a range of memberships (which give 12 months’
access to the workshop), charging a small cover fee for bicycle repair courses
and selling a range of branded cotton T-shirts. The shirts are WRAP certified
(Worldwide Responsible Apparel Production).
27
5. Pollen Strategy

• Pollen Strategy is a boutique

management consultancy that offers a
range of strategic planning services
“to help organisations improve their
performance and increase their
contribution to our world.”
• The firm encourages clients to view performance not only from the point of view of
profits and growth, but also in terms of the social and environmental capital these
companies return to society.
• Pollen Strategy’s business model sees it allocate 25 per cent of revenue to various
charitable, social and environmental projects. The consultancy regards the total
funds contributed to these projects as an important measure of its performance.
• The charities supported by Pollen Strategy are split between those that are
important to the firm and those that are nominated by clients.
• In the future the organisation plans to establish an independent foundation to run
creative campaigns that inspire a sense of custodianship for the planet and that
empower people to drive change in the capitalist system.
• The campaigns will link to a website that sets a compelling vision of the
“sustainable future” and provides case studies of local and global businesses that
are leading the way. As the foundation brand grows, Pollen Strategy will seek
partnerships with aligned businesses, with the ultimate goal of creating a national
call to action for a sustainable economy, and a roadmap to show the way. 28
 These organisations are striving to make
a difference via the process of creating
shared value.
• But despite their best efforts, many social and environmental
businesses are still contributing in one way or another to resource
depletion.
• This is because most businesses’ operations are still “coupled”
to resource use.

“Being less bad is not being good.”

- William McDonough, author of
Cradle to Cradle

29
Decoupling compares resource use to
economic growth.
• Relative decoupling means resource use may increase, however,
at
a slower rate than economic growth.
• Absolute decoupling is achieved when resource use declines over
time while the economy grows.

30
To keep economic activity within
ecological limits, we must achieve
absolute decoupling.
• There is some limited evidence of relative decoupling occurring
thanks to efficiency gains over the last three decades.
– This means that economic growth has outpaced efficiency
improvements, and there has been growth in resource use overall.
• There is little to no evidence of absolute decoupling.

<
Our imperative is therefore to evolve our economy to a truly
sustainable model where our ability to survive and thrive is
actually maximised – but what will it take to get us there?

• It will require a new moral philosophy, a reassessment of where

humans fit in the world, and a redefinition of the core purpose of
business: corporations must reimagine themselves as vehicles
for creating true social and in particular environmental value, in
addition to profit.
• For a sustainable economy we may need to accept some one-way
value transfer to the environment. This requires a more altruistic
approach – giving without expectation of return. But of course, we
do get the ultimate return – which is a habitat we can live in and the
rewards that a thriving natural world brings.
• (See overleaf).

32
 MORAL INTENTIONS
& OUTCOMES
Altruism
(good for the
planet)

DIMENSION B UNIT OF
c (e ios
OF CSR pi Reciprocity co ph VALUE
ro ce e
h (good for nt re
nt r ic
ila society) )
Ph (a
nt Com
hr
l op mu
ca oc ni
hi en ty
Et Self-interest
tr
ic
)
d (good for me) (e Indi
an go vid
ic ce u
om gal nt al
n
o e l ric
Ec )
Environmental

Social equality
regeneration

minimisation

Profit before

Ecological
inequality
Survive
planet

Social
Harm

ENVIRONMENTAL LEVEL OF

justice
and
IMPACT EQUALITY
thrive

ec Gr on
de ono owt asis de
a
co my h ph n-m al
up ( m a
lin no E it
(re Gro m p
la wt
g) Competition hu ca on
tiv h (survival of sis de
e e a a
de co
co no the fittest) ph n-m cial
up m
m a
E m so tal
lin y Human instinct
(re eco w/
Lo
hu nd pi
a ca
n
la om no
g) en l
tiv g twe ocia l
e y: row Cooperation be s ta
de “s e de, api
co as th
t (creating nc a c Shareholder capitalism
up is ala n-m ral
lin ” shared value) B a at u VALUE
ECONOMIC GROWTH g) um n
h nd CREATION
ASPIRATIONS a FOCUS
Symbiosis (harmony Shared value capitalism
between people,
planet and profit)
MARKET Sustainable capitalism
DYNAMICS
Interface Global Case Study

• Interface Global are a company demonstrating how to operate in the

outer green ring of the schematic, and do so while increasing
profits.
• So far their experience is that investment in environmental
outcomes brings enormous financial benefits, the value transfer
for them has not been one-way.

34
 Interface Global

• Interface manufactures
carpets, textiles, chemicals,
architectural products and
access flooring systems. The
company supplies more
than 40 per cent of all new
carpet tiles fitted in
commercial buildings world-
wide.
• Interface aims to be the first company that, by its deeds, shows
the entire industrial world what sustainability is in all its
dimensions - people, process, product, place and profits – and in
doing so will become restorative to nature (putting back more than
it takes) through the power of influence.
• The company calls this Mission Zero® and aims to achieve zero
negative impact on the environment by 2020.
35
Source: Interface Global
 Interface Global – Policy Drivers

The following drivers motivate Interface’s sustainability policy:

• Believing it is the right thing to do. "For the sake of humankind's
continued survival, enjoying acceptable and healthy life styles for
all, industrialised civilisation must recognise and accept an
imperative" Ray Andersen.
• Increasing the company's competitiveness through “sustainability
innovation” of products, activities and services, both through
improved efficiency and by reflecting the consumer's increasing
desire for greener products.
• Improving efficiency and achieving cost savings through waste
minimisation and reduction programs.
• Improving the company's image and reputation to gain market
place advantage - setting Interface apart from the rest of the
pack by embracing sustainable development.

36
Source: Interface Global
 Interface Global – Social
Sustainability
• Interface’s social sustainability policy focuses on the development
of programs and processes that promote social interaction and
cultural enrichment. It emphasises protecting the vulnerable,
respecting social diversity and ensuring that all staff put priority
on social capital.
• “Social sustainability is related to how we make choices that
affect other humans in our "global community" — the Earth. It
covers the broadest aspects of business operations and the effect
that they have on employees, suppliers, investors, local and global
communities and customers. Social sustainability is also related
to more basic needs of happiness, safety, freedom, dignity and
affection.”

37
Source: Interface Global
 Interface Global – Sustainable
Development
• Interface believes that recycling alone is not enough - it is one-
dimensional. The company has expanded its concerns to the Seven
Fronts of Sustainability and is determined to:
1. Eliminate Waste: Eliminating the concept of waste, not just incrementally
reducing it;
2. Benign Emissions: Focusing on the elimination of molecular waste
emissions. Eliminating waste streams that have negative or toxic effects on
natural systems;
3. Renewable Energy: Reducing the energy demands of Interface processes
while substituting non-renewable sources with sustainable ones;
4. Closing the Loop: Redesigning Interface processes and products into cyclical
material flows;
5. Resource-Efficient Transportation: Exploring methods to reduce the
transportation of molecules (products and people) in favour of moving
information. This includes plant location, logistics, information technology,
video conferencing, e-mail, and telecommuting;
6. Sensitivity Hookup: Creating a community within and around Interface that
understands natural systems and the firm’s impact on them;
7. Redesign Commerce: Redesigning commerce to focus on the delivery of
service and value instead of material. Encouraging external organisations to
create policies and market incentives promoting sustainable practices.
38
Source: Interface Global
 Interface Global – Biomimicry

• The core idea behind biomimicry is that nature has already solved
many of the problems designers are grappling with.
• As a direct result of practicing biomimicry, Interface developed a
carpet called Entropy, that mimics the random patterns of the forest
floor. Because the subtly-shaded carpet tiles blend together like
leaves, without strict patterning, there is easier matching of
replacement tiles, fewer discards and easier installation, all resulting
in waste reduction.
• In another example of biomimicry, inspired by the many examples of
adhesion without glue in nature, Interface developed TacTiles, a
carpet tile installation system that uses small adhesive squares to
connect carpet without the need for glue.

39
Source: Interface Global
 Interface Global - Business Benefits

• “We have found Mission Zero to be incredibly good for business, a

better business model, a better way to bigger profits. This is the
business case for sustainability. From real life experience, costs
are down, not up, reflecting some $400 million of avoided costs
in pursuit of zero waste.” Ray Anderson.
• Other benefits include:
– Use of water down significantly.
– Perception of Interface and its products as "green" and
environmentally responsible.
– Inclusion in socially responsible investment portfolios.
– The corporate philosophy has served as tiebreaker in numerous
commercial contracts.

40
Source: Interface Global
Where to from here?

• Educate yourself – read widely.

• You do have the power to make a difference:
– As individuals – “be the change you want to see in the world”.
– As consumers – create green markets, reward socially and
environmentally responsible businesses.
– As future decision makers – help the organisations you work for to do
good.
– As entrepreneurs – be part of a new movement to transform the way
we do business.

“Find the thing that you are

passionate about, do it to the
best of your ability, and in the
process make positive change.”
- David Suzuki
Recommended reading

• Prosperity Without Growth – Tim Jackson

• Rethinking Capitalism – Rogene Buchholz
• Biomimicry - Janine Benyus
• Cradle to Cradle – William McDonough & Michael Braungart
• Confessions of a Radical Industrialist – Ray Anderson
• The Ecology of Commerce – Paul Hawken
• Natural Capitalism: The Next Industrial Revolution – Hawken, Lovins
& Lovins
• Screw Business as Usual – Richard Branson

42
 Pollen Strategy
PO Box 5363
East Victoria Park
Western Australia
6981
M: +61 419 923383
E:
info@pollenstrategy.com.au