“Governments no longer govern the world, or even their little bits of it. The nation state—yes, even America and China—has been usurped as the pre-eminent unit of power. Save for extreme outliers like North Korea, all governments now share power in a shaky but so far relatively steady balance with the largest of the multinational corporations. No one has asked us, the public, whether we approve of this new arrangement; it happened while we were busy shopping.”—/TheRules, “One Party Planet”
Forum for the Future, WWF-UK, and the Climate Group have recently articulated a new vision that businesses should adopt to ensure that our planet and its inhabitants have a future that provides the best chance for common well-being. They have called this new standard net positive. While embracing this concept, I believe that we have yet to develop the operating principles and metrics required to fulfill this vision. This article aims to set forth a more robust framework for what I believe we need.
The Guardian described net positive this way: “Businesses have impacts on the environment and society. Some are negative, some positive. For a company to be net positive, the latter need to outweigh the former. To put it another way: The natural world and society should be better off with companies than without them ... or so the theory says.”
Less Bad vs. Good
Today, we primarily aspire to decrease pain and inequity, rather than build a world where all have the opportunity to express and experience the full potential of our humanity.
Over the last 30 to 40 years, it has become increasingly illusive to describe the type of future we hope for. Today, we primarily aspire to decrease pain and inequity, rather than build a world where all have the opportunity to express and experience the full potential of our humanity.
The context for net positive evolves out of otherwise conscious businesses that aspire to be “less bad” rather than “good,” having fundamentally confused the two. In fact, we no longer know what “good” even means. A “good” future has primarily become the reduction of the most disastrous impacts of global climate change, moving people out of poverty, reducing waste and inefficiency, and mitigating injustice and inequality. In the net positive framework, “good” means regenerative: providing restorative and positive impacts on people, planet, and society. Our increasing consciousness, and the understanding that more and more “stuff” is unsustainable and unfulfilling must drive this process.
At its worst, business rationalizes its goals and behavior around either the fulfillment of legal and regulatory requirements, or the need to maximize short-term economic gains. However, the growth that short-term economic gains requires fails to account for its full impact on people or the planet. The unmeasured negative impact, or externalities, is off-loaded onto the public who pays for them when they breathe polluted air or drink water contaminated by toxic chemicals.
What is currently required of business to ensure that the future provides the planet and its inhabitants with equity, justice, health, and well-being is totally misaligned with the purpose and objectives of the vast majority of the world’s companies. This misalignment is built into the rules that govern business, and has been designed into the very laws, tax codes, and regulations that govern how the game of business is played. These rules often permit and even encourage the destruction of our planet and jeopardize the future of humanity.
Business has argued that to fail to take advantage of these “rules of the game” is to fail to fulfill their responsibility to their shareholders. Because it’s legal, companies hide profits in countries that they don’t do business in, avoid the payment of taxes in the countries they do, pay wages that ensure employees live in poverty, and use corporate funds to wage campaigns that deprive customers and employees of social liberties.
A New Vision
As individuals and organizations, we need a new vision of the future—a vision driven by what we want rather than what we want to avoid, what we aspire to rather than what we seek to prevent, what is good for “we” rather than “me.” We should base decisions on what will be best for tomorrow, not just today. This is the essence of what it means to be net positive.
Business must discover new possibilities for the role it can play in the fulfillment of this new vision, guided by the following principles. First developed by Corporation 2020, these principles are both more holistic and challenging than those developed by the Forum for the Future, WWF-UK, and the Climate Group (see “The Net Positive Principles,” below):
- The purpose of the corporation is to harness private interests to serve the public good by maximizing the health, well-being, consciousness, and potential of all of its stakeholders.
- Corporations shall distribute the wealth they create equitably among those who contribute to its creation.
- Corporations shall operate in a participatory, radically transparent, ethical, and accountable manner.
- Corporations can earn reasonable profits only by fulfilling long-term objectives, but not by externalizing their costs or using their power at the expense of other stakeholders, which include employees, customers, the community, its supply chains, and the environment.
We are at an inflection point where the way businesses operate requires radical change. To continue down the same path in essentially the same fashion will produce diminishing returns for an ever-greater number of people. Business must become committed to and rewarded for creating a world that is rich in value rather than artifacts. Business must collaborate to create governance and social systems that increase the capacity for understanding differing perspectives and points of view.
Business must also approach everything it does from a systems perspective—a perspective that allows us to see the larger whole. As opposed to our current view of a fragmented, compartmentalized world, seeing just what we want to see, our own point of view, and our own reality, adopting a systems perspective allows us to see a world that is endlessly interconnected, in which everything we do effects everything else.
All business must be sustainable, but we must redefine sustainability to mean that the rate at which we use and consume our natural resources globally is never faster than the rate at which those resources can regenerate themselves. So, for example, we can’t cut down trees faster than new trees grow. Equally important, the products we manufacture and the services we consume must be more than sustainable; they must be restorative. They must enhance the potential and resilience of all life’s natural systems—instead of just repairing our planet’s natural systems, they must make them healthier and stronger.
To participate constructively in the creation of this new vision, business must commit to new operating principles that fulfill the needs of the common good above all else. Morality and ethics cannot remain the province of religion and academics. Morality and ethics must become part of the organizing values of business.
Net Positive Pioneers
Specific companies have detailed the commitments recommended by the Forum for the Future, WWF-UK and the Climate Group (see appendix) as follows.
BT, a major telecommunications company in the UK launched Net Good—its net positive initiative—in 2013. It aims to help customers reduce their carbon emissions by at least three times the total carbon impact of the company’s business by 2020.
For Kingfisher, a home improvement giant in Europe, net positive is about going beyond achieving a zero impact by making positive and lasting contributions to natural and human resources, and playing its part in improving quality of life for all now and in the future. Simply put, Kingfisher believes this means doing “more good” rather than “less bad” to: become carbon positive, waste nothing, restore the environment, make a positive impact on people and communities, and create wealth for all its stakeholders.
Kingfisher has identified four priority areas—timber, energy, innovation and communities—that are closely connected with its business and where it can make a big difference. For each area, the company has articulated a vision; an aspiration for a positive impact by 2050; and targets through 2020, against which they are measuring and reporting progress.
IKEA Group, through its People & Planet Positive strategy, aims to make a positive difference by focusing on three areas: inspiring and enabling millions of customers to live a more sustainable life at home, striving for resource and energy independence, and creating a better life for people and communities.
These are three early-stage, somewhat incomplete examples of how large, multi-national companies are aspiring to move beyond traditional CSR/sustainability and integrating net positive principles to their entire way of doing business. As more companies adopt this framework, we hope that corporations can begin to have a positive impact on the world. The question we face is, does the evolving framework developed for net positive have the integrity to deliver on this critical objective?
CHALLENGING THE CORPORATE BELIEF SYSTEM
Fact: In 2011, 1,101 of the 1,752 largest global economic entities on earth were corporations. The revenues of these mega-corporations—including Royal Dutch Shell, Exxon Mobil, and Wal-Mart—were larger than the GDP of 110 national economies and more than half the world's countries.
Fact: We live in a world where the richest 85 people have the same wealth as the bottom 3.5 billion, a fact Time Magazine once called “one stat to destroy your faith in humanity.”
What I do have something against, however, is the uniform dominance of one ideology over all others, and that is what we are now living under. The ideology in question has variously been called neoliberalism, the Washington Consensus, corporate capitalism, and “free market” fundamentalism.
These terms share three deep beliefs: firstly, that survival of the fittest through eternal competition between self-interested parties is, practically speaking, the only law upon which human society can realistically be ordered; secondly, that, in the moral hierarchy, financial wealth equates with life success which equates with virtue; and thirdly, that man [sic] is, if not an island, then, at most, a part of an archipelago of islands of shared interests, answerable only to himself, his peers and, possibly, his God, in that order.—/TheRules, “One Party Planet”
Several beliefs create a dangerous framework that has become integrally woven with the purpose of traditional business. To date, “responsible” or “sustainable” businesses have shown little interest in or ability to challenge the economics and marketplace engineering that underlies the system in which they participate and from which they profit. Net positive businesses must contribute to the redesign of this belief system. Central among those beliefs:
- The assumption that all material growth, measured as GDP, is good
- That inequality and the unlimited accumulation of wealth by a tiny percentage of society will not pose catastrophic risks to business, social, and environmental well-being
- That technology will rescue us from the impacts of pollution and the unlimited consumption of non-renewable natural resources
- That democracy can co-exist with the unlimited influence of money in politics.
- That a short-term decision-making framework won’t lead to long-term, unanticipated negative consequences
- That capitalism has created a “free” market” that provides a level playing field for all businesses
- That we can and should use corporate power to initiate changes to our system of laws, tax codes, and regulations so that they benefit business, regardless of the impact they have on society and the planet
Without redesigning the field upon which business plays to reflect the new operating principles, we can achieve no meaningful progress.
Businesses with net positive aspirations can only succeed if they are deeply committed to evolving the business context in which they operate. Net positive companies must change the rules of the game and challenge the policy, legislative, tax, legal, and accounting rules that provide the system of incentives and disincentives that guide current business strategies. Without redesigning the field upon which business plays to reflect the new operating principles, we can achieve no meaningful progress.
Some of the solutions that will provide a level playing field for net positive business include:
- Progress toward full-cost accounting, which would immediately include a price on carbon emissions
- Substantial incentives for increased worker ownership, including a minimum wage increase in the United States to at least $15 an hour
- A flat corporate tax that prevents companies from sheltering profits in low-tax nations
- Redefining long-term capital gains over a 20-30 year horizon, with short-term capital gains on profits earned in less than 12 months taxed at more than 80 percent
- An annual wealth tax as Thomas Pikettys suggested in his groundbreaking 2014 book, Capital in the Twenty-first Century: The wealth tax would be paid annually at a rate of 1 percent on individual assets of one million dollars and at 2 percent on assets above five million dollars. Given that assets of the rich grow annually at an average rate of more than 5 percent, this tax would simply slow the rate of wealth accumulation and concentration.
- Limits on market control by any single company to between 15 and 25 percent
- Publically funded elections, term limits, and the elimination of political action committees (PACs)
DESIGNING A NEW BUSINESS TO BE NET POSITIVE
In 2013, we launched a new business with the specific goal of being net positive. My experience as the co-founder and former CEO of Seventh Generation taught me that one of the most powerful ways to create change is to create a model for others to critique, imitate, and iterate on. Deeply concerned about the current state of sustainable and responsible business, I felt that the most positive and disruptive contribution I could make would be to offer up a new model and possibility for the role that business could play in society. That model took the form of a non-toxic, fair trade, sustainable condom brand, Sustain, designed to positively influence the negative attitudes and cultural restraints that lead to dangerously low levels of condom use among young American women.
Sustain’s Vision: We’re here to create a world where women discuss sex, reproductive healthcare, and birth control openly and honestly, and never with judgment. Where women have the tools they need to take control of their sexual health. Where people understand the connection between reproductive health care and hunger, poverty, and climate change. Where we’re all inspired to leave the planet better off than how we found it.
Sustain’s Mission: To celebrate, educate, and support women by providing the products, knowledge, and inspiration they need to proudly take control of their sexual health. Operating at the highest level of sustainability, we will be a disruptive force in the reproductive healthcare industry, driving it toward greater access, safer products, and increased transparency.
The condom business is not one that many people dream of starting as young entrepreneurs. Our highly repressed society and my own lack of reconciliation with Victorian attitudes has even caused me to hesitate in answering questions about what kind of products our new company sells.
However, I chose the condom business for four interrelated reasons:
- Condoms have a very small negative environmental footprint.
- They have a huge positive social and environmental impact. For example, the role we play in helping women plan the size of their families reduces population growth and helps mitigate the impacts of global climate change. It also prevents the spread of AIDs and STIs. Through the purchase of fair trade latex, we mitigate inequity, and ensure increased levels of healthcare and access to education. Because of this, net positive seemed easier to achieve.
- Condoms have huge gross margins. A condom that costs only $0.05 to manufacture is usually sold for more than a dollar, yielding a gross margin of 95 percent and allowing us to more easily invest in the costs of mitigating our externalities.
- There was a huge white space in the marketplace, because no brand was successfully positioned toward women and no brand had established itself as the sustainability leader.
In the vein of transparency, I’ll share some of our unanticipated challenges:
- Marketing was restricted. Our sexually awkward and repressed culture led to limitations on what we could say and where we could say it. Some retailers prevented us from advertising the availability of our products in their stores—and that goes for any condom, not just Sustain.
- Because women feel uncomfortable purchasing condoms and insisting on their use, only 19 percent of single, sexually active women between the ages of 18 and 34 use condoms regularly.
- As a result, the condom category is tiny, with only $750 million of sales in the United States. That means we would need a 5 percent share of the market to create a $15 million business, and there are almost no examples of “natural” or “organic” brands achieving more than a 3 percent share of a category.
- Because the FDA considers condoms medical devices, innovation and marketing claims are highly restricted throughout the FDA approval process.
- Unlike larger industries, few metrics exist that allow us to benchmark our social and environmental performance against industry standards.
As we began to design our roadmap to becoming net positive, we enlisted the help of Tim Greiner at Pure Strategies. He helped us construct an unusual framework for tracking both our positive and negative impacts in four areas that emanated from our mission and vision.
Greiner then proposed a process that was based on three dimensions for each area of focus: the desired “end state,” “major initiatives,” and our “starting point,” which represented the positive design that we had already built into the business at its launch.
In many respects, companies rarely articulate the desired “end state” as part of sustainability strategy development—and if they do, it tends to be boundless and vague:
- Patagonia: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.
- Stonyfield: We’re committed to healthy food, healthy people, a healthy planet, and healthy business.
- Trader Joe's mission is to give our customers the best food and beverage values that they can find anywhere and to provide them with the information required to make informed buying decisions.
- Warby Parker was founded with a rebellious spirit and a lofty objective: to offer designer eyewear at a revolutionary price, while leading the way for socially conscious businesses.
- Tesla: Our goal is to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.
- Applegate: At Applegate our mission is to Change the Meat We Eat.
- Seventh Generation was founded to provide environmentally friendly household products that help consumers lessen their impact on the planet.
Our first challenge was to develop a systems-based, multi-dimensional “end state” that would determine our strategies and priorities. Our goals for this “end state” fall within four dimensions:
- Delivering Health
- Access to reproductive health care and condoms
- STDs, AIDs, and unwanted pregnancies are rare
- Stigma for buying condoms is eliminated
- Improved financial status for women
- Social equality and fair labor
- Stabilized population
- Biodiversity and forests preserved
- Healthy climate
- Zero negative impact
- Industry adopts net positive business model
- Fair Trade is the norm
- All condoms are toxin-free
While we have yet to develop metrics for these “end states,” they are well enough articulated that we can begin to develop the major initiatives required to move toward them. Establishing these priorities was as much intuition as science. Limiting the number and scope of these initiatives is an ongoing process that challenges the resources of any start-up. Here’s where we netted out:
- Delivering Health
- Develop an all natural or organic lubricant
- Develop educational messages and delivery that measure impact behavior and attitudes
- Increase access to reproductive healthcare
- Track outreach outcomes
- Improved financial status for women
- Social equality and fair labor
- Stabilized population
- Biodiversity and forests preserved
- Healthy climate
- Zero negative impact
- Promote fair trade rubber within industry
- Measure impact
- Share business model
- Transparency on toxins
Progress to Date
After about a year in business, as we begin to evaluate the progress we’ve made, it’s uneven at best. We’ve arguably had the largest impact on transforming the condom industry though our campaign to remove nitrosamines, a known carcinogen, from condoms. By participating in the funding of the Reproductive Health Technologies Project (RHTP) Nitrosamine Study, which found that 16 of the 23 condoms tested released at least one type of nitrosamine, we’re confident that we dramatically increased the industry’s focus on the importance of reducing and eliminating these carcinogenic chemicals from the industry.
We also promoted a petition launched by the Campaign for Safe Cosmetics, requesting that the FDA—which currently has no limits on the levels of nitrosamines in condoms—establish a rule disallowing detectable nitrosamines in all condoms sold in the United States. After the first 45 days, the petition had collected over 5,000 signatures.
A successful publicity campaign has also introduced the issue of fair trade rubber to millions of people. Through the fair trade premiums we pay to rubber tappers when we purchase latex, we’ve had a small impact on improving the financial status for women and the social equality for these low-income workers.
We’ve redesigned our packaging to reduce its impact, and while we have yet to begin the FDA approval process for an organic lubricant to use inside the foil of our condoms, we have developed plans to introduce a stand-alone organic lubricant in mid-2015.
We have also created numerous educational messages designed to impact behavior and attitudes about sexual health, though we have yet to begin work on designing tools to measure our impact. Through a series of small donations, we have increased access to reproductive healthcare.
Through these initiatives and more, we’re on track to become the first net positive business in the United States and a model for others to follow.
“Be elegant with what we do know and humble about what we don't. Be unafraid to live in that space between knowledge and ignorance, because that is the most dynamic place of innovation and discovery.”—/TheRules, “One Party Planet”
The Net Positive Principles
Forum of the Future, WWF-UK, and the Climate Group originally recommended these 12 principles for business. I found them inadequate.
- The organization aims to make a positive impact in its key material areas.
- The positive impact is clearly demonstrable if not measurable.
- The organization also shows best practice in corporate responsibility and sustainability across the spectrum of social, environmental, and economic impact areas, in line with globally accepted standards.
- The organization invests in innovation in products and services, enters new markets, works across the value chain, and in some cases, challenges the very business model it relies on.
- A net positive impact often requires a big shift in approach and outcomes, and cannot be achieved by business-as-usual.
- Reporting on progress is transparent, consistent, authentic, and independently verified where possible. Boundaries and scope are clearly defined and take account of both positive and negative impacts. Any trade-offs are explained.
- Net positive is delivered in a robust way and no aspect of a net positive approach compensates for unacceptable or irreplaceable natural losses, or ill treatment of individuals and communities.
- Organizations enter into wider partnerships and networks to create bigger positive impacts.
- Every opportunity is used to deliver positive impacts across value chains, sectors, systems, and throughput to the natural world and society.
- Organizations publicly engage in influencing policy for positive change.
- Where key material areas are ecological, robust environmentally restorative and socially inclusive methods are applied.
- An inclusive approach is adopted at every opportunity, ensuring affected communities are involved in the process of creating positive social and/or environmental impacts.
Business Benefits of a Net Positive Approach
The Net Positive Organizing Group, which was started by three European NGO’s, Forum for the Future, WWF-UK, and the Climate Group, believes that, “Adopting a net positive approach demonstrates leadership and commitment to enhancing natural and social capital. It helps create organizational resilience and success in the long-term, and delivers business benefits in the short-term. These include standard business benefits usually associated with a sound sustainability strategy: enhanced reputation, increased sales, cost reduction, competitive advantage through differentiation, engaged staff, supply security, and a better license to operate.”
Additional business benefits that a net positive approach delivers as defined by the Net Impact Organizing Group include:
- Supply security is enhanced when the organization does less harm and seeks positive impacts on key natural assets instead.
- Opportunities to invest in radical innovations that generate benefits for customers and/or suppliers are created.
- Organizations take a systemic view and look further into the future, which opens up space for innovative new products, propositions, business opportunities and sectors. This not only creates competitive advantage and increases commercial returns, but also helps identify current investments, products and markets that are not fit for the future.
- The scale of net positive commitment means it cannot be achieved by a sustainability team alone. Integration of sustainability into core business functions delivers the most effective coherence and focus, which could help improve overall collaboration in the business.
- The organization is forced to look beyond its own operations to work on shaping the context that it operates in. That means working with supply chains, customers, and the private, public and third sectors, allowing it to make step-change reductions in its impact.
- Working toward outcomes that are positive for the environment and society, as well as shareholders, helps the business develop new relationships with policymakers, customers, staff, and suppliers.
- A public net positive commitment moves an organization into a leadership space, sending a clear message that it takes sustainability seriously.