Why does business exist? Why do we do business? You will hear in many boardrooms and still taught in many business schools and curriculums as was declared by American economist Milton Friedman Fifty years ago, “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.”
According to Friedman, the purpose of business and its role in society are limited to increasing earnings for directors and shareholders — the business philosophy known as shareholder primacy. Previously, business had no role to play in addressing social and environmental challenges despite being the largest consumer of resources and human capital. These challenges were often left for government and civil society. As we’ve seen in the years since — augmented in recent months — this dominant economic model has led to global inequities and a looming climate crisis, with the least fortunate among us bearing the heaviest burden.
In the face of these converging crises, the Certified B Corporation’s stakeholder governance model serves as a roadmap to a different future. B Corps in Africa are driving change, demanding better, and demonstrating that doing better for all is possible. B Corps want to shape a better world, now and for the future. A new impact economy is being built, one where businesses prioritize and consider their impact on all the stakeholders they impact — including communities, workers, customers, and the environment.
Business now recognizes that despite massive prosperity and technological innovation, globalization intensifies and huge global issues still exist. Businesses needs to work for everyone; business must consider their impact on the environment that has suffered massive reduction of core resources due to decades of extractive practices without replenishment. This is also in response to growing consumer demand for socially responsible brands as well as workers wanting to work for socially ethical companies – according to a study, millennials are willing to take less compensation in exchange for a purpose driven and positive work environment. Additionally, development agencies are now engaging for profit companies in development programs. The United Nations launched the Sustainable Development Goals in 2015 calling on private for profit companies to participate in achieving the 17 goals; a major shift from the Millennium Development goals.
Learn more from B Lab’s new report, “Stakeholder Capitalism: The System Change Our Economy Needs.” It highlights what stakeholder capitalism looks like in practice — and why more researchers, experts, and thought leaders are pushing for this systemic change. This report shares why these leaders believe in the stakeholder model and how the B Corp community demonstrates the impact economy in action. Additionally, you can also learn from the newly released book by professor and author Christopher Marquis on how the interdependent community of B Corps is building a more sustainable and resilient system of capitalism that serves a broader set of stakeholders. This growing movement of people — including business leaders, distinguished academic researchers, policymakers, and lawyers — recognizes the current economic system cannot continue its never-ending need for growth and survive into the long term. There is need for an economic revitalization, a new model that redefines success in business to include positive impact across all stakeholders.