In a matter of months, COVID-19 changed life as we knew it. It has triggered the worst public-health crisis in recent history, and magnified the shortcomings of our existing global systems. At the same time, it has exacerbated the climate and social crises that were already underway as a result of our existing shareholder-primacy model of capitalism. The challenges facing humanity at this moment are far from trivial, but they also represent a great opportunity to move from recovery to reimagination.
As countries around the world begin to ease restrictions and take the first steps towards recovery, a new question emerges: what will our “new normal” look like on the other side of this crisis?
There is no clear answer to this “new normal” question right now, but what is clear is that we are at a defining crossroads when it comes to our collective future: we can either maintain the pre-COVID status quo of shareholder capitalism (and the worsening inequality, environmental degradation, and instability that comes with it), or we can seize this moment to shift towards a regenerative model of stakeholder capitalism that can build back better for people and planet.
If COVID-19 has a silver lining, it’s that we’ve seen how quickly we can make drastic changes in our lives. In some ways, stakeholder capitalism is already taking shape — governments are funding social safety nets, businesses are stepping up to support employees, and communities are coming together to protect essential workers and vulnerable populations. In fact, on the day we published this, yet another longtime hedge fund manager spoke out against the long-held belief that companies should exist for the sole purpose of generating profits, stating that “it gives [companies] a pass not to pay attention to pay equity, not to pay attention to gender equity, not to pay attention to racial equality. Not to pay attention to a whole host of social factors that at the end of the day are the basis and the foundation of a strong, vibrant society.”
If we can harness the energy of this moment, we can build on this momentum to ensure that long-term change is sustained. In analyzing what makes movements lead to lasting change in global systems, there are three key themes:
- Changing governmental policies
- Evolving business practices
- Empowering individuals
Changing Policies: Moving Away from A “Winner Take All” System
In today’s economic system, those with the most money have the closest access to law makers. This relationship is inherently undemocratic. Once you combine corporate efforts to evade taxes and sacrifice employee benefits to increase wealth for shareholders, an irony starts to develop: Companies accrue wealth at the expense of society, and then undemocratically decide how to donate money to maintain their own interests rather than paying into the democratic system designed to support society as a whole.
The rise of “billionaire philanthropy” isn’t the solution either. In his book, Winners Take All: The Elite Charade of Changing the World, Anand Giridharadas argues that those who generate the most wealth use philanthropic tools as a way to maintain their power (while doing just enough to not be regulated). As Anand shares, “by refusing to risk its way of life, by rejecting the idea that the powerful might have to sacrifice for the common good, [the wealthy] cling to a set of social arrangements that allow it to monopolize progress and then give symbolic scraps to the forsaken—many of whom wouldn’t need the scraps if the society were working right.”
Part of reimagining a “new normal” involves leveling the playing field at the systems level to steer the market towards fairer outcomes for all stakeholders, not just those at the top. Systemic changes need to be supported by policy changes. Governments can foster the conditions for a true stakeholder economy by implementing long overdue reforms and ensuring that investments, like the large-scale spending programs to stimulate economic recovery, advance shared goals like sustainability and equality. This means incentivizing “good” behavior by, for example, building “green” urban infrastructure and creating incentives for industries to improve their track record on environmental, social, and governance (ESG) metrics. It also means disincentivizing “bad” behavior, like tax evasion, runaway compensation for executives, efforts to block unions and collective bargaining, and the use of power and influence to put undue pressure on other entities.
Some countries have taken encouraging steps in this direction. Germany, for example, unveiled a 130 billion euro ($145 billion) recovery budget earlier this month that “puts the focus on climate-friendly industries and technologies, underscoring Chancellor Angela Merkel’s pledge to reboot the economy and wean it off fossil power and cars that laid the foundation of the country’s export prowess.”
Evolving Business: Fostering Widespread Adoption of More Sustainable Business Practices and Products
To reimagine a new normal that is sustainable and better equipped to handle future crises, we must stop harming the environment and propagating inequalities with the way we operate our businesses. As Paul Polam shared: “Runaway climate change would condemn millions to a life of poverty and cause us to fail to meet the Sustainable Development Goal of eradicating extreme poverty by 2030. This is not an acceptable outcome.”
This point is echoed by the World Economic Forum, which stated, “Businesses must accept that in a world of finite resources, maximizing private gain inevitably leads to collective loss – that is, the loss of common goods, a phenomenon known as the tragedy of the commons. For example if, in a bid to boost profits, global multinationals build and run factories but do not pay for the pollution they create, we get global warming. The collective is more important than the individual.”
Prioritizing the collective means moving away from our current take-make-waste extractive industrial economy towards one that is restorative and regenerative by design. A promising model that has recently gained traction is that of the circular economy, which as the Ellen MacArthur Foundation explains, “aims to redefine growth, focusing on positive society-wide benefits. It entails gradually decoupling economic activity from the consumption of finite resources, and designing waste out of the system. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural, and social capital. It is based on three principles:
- Design out waste and pollution
- Keep products and materials in use
- Regenerate natural systems”
Similar alternatives to growth economics, like ”Doughnut Economics” are already being put in place by public-private partnerships, like in Amsterdam.
A good example of what that looks like in practice is global outdoor lifestyle brand Timberland. Rather than sourcing the cheapest raw materials (which often are produced at the expense of farmers and the environment), Timberland has invested in the communities producing the materials to ensure that they are sourced sustainably, ethically, and transparently. You can learn more about its award-winning partnership with Smallholder Farmers Alliance to bring sustainable cotton farming back to Haiti here, and its partnership with Other Half Farmers to source leather from ranchers and farmers using regenerative grazing practices here.
Big tech is turning onto the trend as well. Our partners at Microsoft, for example, have launched an aggressive program to become carbon negative by 2030 through carbon fees across its entire supply and value chain and increased investment in a new Climate Innovation Fund to accelerate the development of carbon reduction and removal technologies that will help the world follow suit. More insights into how companies — big and small — can respond during the COVID crisis is available here.
Empowering Individuals: Supporting Grassroots Efforts to Accelerate Systems Change
As an individual, it’s easy to feel like the choices you make don’t matter in the bigger picture. But the reality is that our individual actions, particularly when taken together, have the power to affect the changes we want to see across all levels of society.
To start, we can take this time to reflect and do the self-work needed to educate ourselves about the policies, practices, and norms that perpetuate inequality, like systemic racism and extractive use of resources. We can then affect the policy changes we want to see at the governmental level by registering and exercising our right to vote. As Defend Our Future points out, voting represents “a chance to say to policy makers ‘Hey, we don’t like what you’re doing’ or ‘Great job, but let’s tweak this’. Democracy is an endless experiment. This means voting with your unique voice. But, if you don’t show up to vote, your voice isn’t heard.“
To drive more sustainable business practices, we can use our purchasing power to support companies that have sustainability and equity built into their business models — and to speak out against companies doing harm. “Corporations are listening to where consumers put their dollars, and as buyers invest their money into eco-friendly products and brands, companies are changing practices to meet their demands,” according to Green Matters. For example, major companies like Nestle, Kimberly-Clark, and Nike have all been pressured into making sustainable changes in the face of consumer demands and activism.
We can also use our careers to drive change from within companies as employee activists, or at new companies where our unique talents and strengths can contribute to greater social impact. For example, WalMart stopped selling ammunition and handguns in its stores after an employee walkout protesting gun violence.
The bottom line is: while people in positions of power at the governmental and company levels ultimately have the ability to change certain policies and practices, we as individuals have the ability to influence what changes get made. It’s a common quote, but it continues to ring true: “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.”
In Summary: Where to Go From Here
Reimagining a more equitable and sustainable “new normal” is a complex challenge with overlapping economic, social, and environmental dimensions. It’s what Steve Schmida, Founder & Chief Innovation Officer of Resonance, would call a “wicked problem,” which as he shares in Partner with Purpose, “is impossible for a single actor — whether a company, government agency, or community — to solve on its own.” Tackling wicked problems requires a different approach, one in which multiple entities across sectors are engaged in partnership to develop solutions that draw on their individual areas of expertise while generating shared value for the whole.
As daunting as this work may look, it’s important to remember that systems change will only happen if people change. Together, we harness the energy of this moment to:
- Drive policy changes at the governmental level to move away from a “winner take all” system
- Evolve the role of business in society through widespread adoption of more sustainable business practices and products
- Support grassroots efforts that accelerate systems change
Movement building is long, hard work, but as Derek Sivers shares in the TED Talk below, “If you really care about starting a movement, have the courage to follow and show others how to follow. And when you find a lone nut doing something great, have the guts to be the first one to stand up and join in.”