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The Future of Capitalism: A New World View of Success
Corporations are in a position to transform the world through the adoption of social response business practices, according to international management consultant Bruce Piasecki, PhD. In this way, the modern global firm changes the world by evolving corporate strategies that impact families, firms, and the future.
In his latest book, NEW WORLD COMPANIES: The Future Of Capitalism – Learning From The Best Companies In Our Growing Global Economy, Piasecki outlines a new form of capitalism, which he terms “social response capitalism.”
In this new century form of global competition, now only possible in an innovative world network, firms compete not only on price and quality, but also on environmental, social, and governance (ESG) issues. This is all the more timely and impactful in light of the new Paris Climate Accord, which raises the issue of how corporations can remain competitive in a carbon- and capital-constrained world.
Social response capitalism is based on a commitment by companies to broaden their exclusive focus on the bottom line to include quality, social response, innovation, and sustainable value. Piasecki traces these new higher trends from the board level down into their operations, offering new ways to make uniform the design, manufacture, and marketing process.
Piasecki, who is president and founder of AHC Group, Inc., has helped international companies such as Toyota, Suncor, Siemens, and FedEx transform themselves into “new world companies” – companies that have embraced social response capitalism. This is a form of what Piasecki calls “competitive frugality,” where doing more with teams and doing more with less are the central mantras of competition in a world of seven billion consumers.
NEW WORLD COMPANIES explores how capitalism has evolved in response to corporate needs for water, land, energy, and innovation. New world companies are much more likely to prosper and grow than firms that ignore them. “Although still in an early stage of development, this new world manner of doing business is on its way to becoming a
permanent force for good,” says Piasecki, who advises companies on corporate governance, energy, environmental strategy, product innovation, and sustainability strategy.
New world companies share three important characteristics:
- They incorporate socially responsible values into their business models.
- They bring customers, employees, and key stakeholders at every level into the decision-making process, effectively democratizing the way they conduct their affairs.
- They are committed to long-term growth and sustainability.
Businesses must focus on ESG metrics if they are to succeed in the global business community. Since 1981, more than 60 percent of Fortune 500 companies have either gone out of business or have been significantly downgraded in size, influence, and / or governance structures. The reason these corporations failed is because they did not adapt to the global corporate culture that was becoming more aligned with ESG principles and practices. “The fact that the majority of these once vibrant Fortune 500 companies have lost so much ground clearly demonstrates that the critical elements of social response capitalism impact the people who work for and patronize these companies,” Piasecki says.
With the emergence of MSCI and Bloomberg as leading ratings agencies in the ESG sector, investors can now answer the question: “Is investing in companies based on ESG metrics less risky than investments based on speculative capitalism?” That answer is yes.
Assessing a company’s value on the basis of ESG metrics provides a better measure of its worth and prospects for success than focusing exclusively on its short-term balance sheet. ESG metrics are not only the keys to sustained value but to compounding financial value as
well. They provide a critical lens through which to calibrate the value and success of investments by:
- Analyzing ESG risks across asset classes and integrating the results into the evaluation of portfolios.
- Understanding the physical risks to infrastructure, real estate, and supply chains based on forecast environmental impacts.
- Preparing for new regulatory frameworks that may impact traditional industries and energize new emerging industries.
“The popularity of ESG metrics – the growing awareness of what they stand for and what they mean to investors, customers, and clients – has widened what was once a narrow avenue into what is fast becoming a superhighway,” says Piasecki.
NEW WORLD COMPANIES provides executives, investors, analysts, and consumers with the knowledge needed to identify companies that can, and will, deliver sustainable value.
About the Author
Bruce Piasecki, PhD, is president and founder of AHC Group, Inc., a management consulting firm specializing in energy, materials, and environmental corporate matters, whose clients range from Suncor Energy and the Warren Buffett firm Shaw Industries, to Toyota and other global companies. For thirty-one years, Piasecki’s team has held leader-to-leader workshops with hundreds of the Fortune 500.
Piasecki holds a doctorate from Cornell University and is the author of several seminal books on business strategy, valuation, and corporate change, including the Nature Society’s book of the year, In Search of Environmental Excellence, as well as the New York Times, USA Today, and Wall Street Journal bestseller Doing More With Less.
Since 1981, he has advised companies about the critical areas of corporate governance, energy, environmental strategy, product innovation, and sustainability strategy.
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