Corporation 2020 - Transforming Business for Tomorrow's World
"Corporation 2020" by Pavan Sukhdev describes in pragmatic terms the corporation’s path of transformation from today’s cost externalizer to tomorrow’s value optimizer. It envisions the necessary milestones we must meet and explains their timeline. It presents new research on how to deliver tough solutions which cut across the spaces of policy, selfregulation, and legislation—including disclosing corporate externalities, setting limits to corporate leverage, replacing taxes on corporate profits with resource taxes on extraction, and setting ethical standards in advertising.
Yale, 14 August 2012: There is an emerging consensus that not all is well with today’s market-centric economic model. Although it has delivered wealth over the last half century and pulled millions out of poverty, it is recession-prone, leaves too many unemployed, creates ecological scarcities and environmental risks, and widens the gap between the rich and the poor. Around $1 trillion a year in perverse subsidies and barriers to entry for alternative products maintain "business-as-usual” while obscuring their associated environmental and societal costs. The result is the broken system of social inequity, environmental degradation, and political manipulation that marks today’s corporations.
We aren’t stuck with this dysfunctional corporate model, but business needs a new DNA if it is to enact the comprehensive approach we need. Pavan Sukhdev lays out a sweeping new vision for tomorrow’s corporation: one that will increase human well-being and social equity, decrease environmental risks and ecological losses, and still generate profit. Through a combination of internal changes in corporate governance and external regulations and policies, Corporation 2020 can become a reality in the next decade—and it must, argues Sukhdev, if we are to avert catastrophic social imbalance and ecological harm.
Corporation 2020 presents new approaches to measuring the true costs of business and the corporation’s obligation to society. From his insightful look into the history of the corporation to his thoughtful discussion of the steps needed to craft a better corporate model, Sukhdev offers a hopeful vision for the role of business in shaping a more equitable, sustainable future.
Four Essential Planks of Corporation 2020:
Accountancy bodies will have to research and evolve methodologies for measuring the most material corporate externalities (negative externalities such as GHG emissions, water use, pollutants, etc., and positive externalities in the area of employee education & training, etc.) and then formulate guidance and standards for disclosing them in the annual financial reports of corporations.
Advertising associations, encouraged by consumer protection agencies and NGO’s, will have to create more "information” value in their advertising as against "selling” value. Penalties and incentives need to be considered to promote "selling good, not just good selling”.
G-20 Governments and Central Banks will have to monitor and limit the leverage of major corporations. This is not just for banks, but also any other "too-big-to-fail” companies with recourse to public funds in times of crisis: insurers, mortgage originators, carmakers, airlines, etc.
G-20 governments must implement changes in the life-cycle incidence of taxation: much more at the point of resource extraction (i.e. mining of fossil fuels and minerals) rather than at the point of sale (VAT) or of capital formation (Corporation Tax on profits).
Pavan Sukhdev will be launching his book Corporation 2020: Transforming Business for Tomorrow's World
at the SusCon conference in Bonn on November 27th.