Yes, companies can save capitalism and the planet: this week's Great Reset podcast

It was half a century ago - in 1973 - that the head of the World Economic Forum, Klaus Schwab, issued the Davos Manifesto - with the idea that companies must not only serve their shareholders - but all ‘stakeholders’ - everyone their actions might affect.

In 2019, the Business Roundtable, America’s most influential business lobby group, formally embraced the idea - with 181 chief executives signing up to a Statement of Purpose saying companies must benefit all stakeholders – customers, employees, suppliers, communities and shareholders.

But how can we ensure companies live up to their promises to make the world a fairer, greener place and avoid exploiting workers and the environment?

That is the question that a new book, Accountable, seeks to answer.

With MBAs from Harvard and Stanford and a background in private equity investment, authors, Michael O’Leary and Warren Valdmanis write: "We can debunk the myths of capitalist reform from the inside."

"Our book isn't a naïve plea for corporations to be more responsible; it's an unsentimental blueprint for how to build an economy that generates prosperity without peril."

"Thinking longer-term makes for more valuable companies and better outcomes for stakeholders at the same time," Valdmanis told the Great Reset podcast.

"It's when you look for the short-term 'sugar high' of short-term profits - that's when trouble happens."

While most companies and their shareholders - represented primarily by a small number of institutional investment companies - focus on quarterly results, real people would be much better served if they took a much longer-term view.

"What we found is the median shareholder in America - the typical shareholder - they're something like 50-years-old with $60,000 in a broadly diversified retirement account. They can't even access that capital for the next 20 years," O'Leary said.

"So you can know what is in their best interest. Their best interest is not in maximizing share price that is specific oil and gas company today. Their best interest is in the long-term sustainable development of the global economy."

So how can things change? The key, the authors say is for companies to quit using 'corporate social responsibility' and 'environment, social and governance' - CSR and ESG - as handy buzz phrases, and put those aims at the heart of what their businesses do.

And once they have done that, to report publicly on their progress. The authors endorse the work done by the World Economic Forum and the 'Big 4' accountancy firms on creating standardised metrics that would do this.

And if companies don't go down this route?

"If we can sit here as capitalists and say ‘we believe in capitalism, we believe capitalism can be good [but] we need to reform it’ - and then all of our pronouncements turn out to have been hollow, I think that might be our last great shot and ever reforming it," O'Leary said.

"I don't think we can survive another cycle of wishful thinking."

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