Conglomerates Abound There is no shortage of conglomerates whose purpose is to maximize profit, at any cost, provided that no laws are broken (of course, we all know that laws are stretched and often broken). In fact, publicly traded companies have a fiduciary duty to their shareholders to maximize profit; that is, they are required by law to do so. What this means is that a company cannot focus on social or environmental goals unless working towards those goals somehow helps the bottom line. As a result, the traditional approach taken by corporations with respect to social and environmental goals has been to 1)influence laws to their benefit, 2)avoid litigation, and 3)lower operating costs (e.g., by installing CFL light bulbs, cutting wages or benefits, or reducing packaging waste).
A consequence of this paradigm is that, at least in an industrialized country such as America and Europe or an emerging one like us in Indonesia, public policy is too often shaped by what benefits corporations rather than individuals; getting corporations to follow the law is time-consuming and expensive, since large companies have a fleet of high-powered attorneys at their beck and call; and only limited inroads have been made on fair trade, environmental sustainability, and other important issues.
The Limited Success of Corporate Social Responsibility Some companies have embraced the concept of Corporate Social Responsibility (CSR), defined as “a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment. This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organizations voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large.” (source: ) However, the problem with CSR is that it is only adhered to so long as a company is making a healthy profit; the moment financial difficulties arise, CSR is dropped as “costs are trimmed” and “belts are tightened.” So, what’s the answer to all this? Obviously, policy makers need to free themselves from the grip of corporate influence, and corporations needs to find better ways to incorporate CSR, the Triple Bottom line, and other approaches into their day-to-day operations. But I would like to propose another solution: I’ll call it A Conglomerate for Good.
A Conglomerate for Good !
The basic idea is simple: to create a conglomerate (that is, a large organization) whose mission is to maximize social and environmental return on investment. To put it another way, the bottom line will not be measured by profits, but rather by how effectively the organization invests money--be it from donors or investors--into solving social problems. And just as McDonalds, Nike and Coca-Cola have extended their reach and influence to every corner of the globe in order to maximize profits, the Conglomerate for Good will touch the lives of as many people as possible in as positive, sustainable and just manner as possible. The impetus and the visions behind Darmawan Kapital Good Fund, is to be just such an organization.
Start Dreaming--Then Start Doing Imagine a company that lobbies politivs for stricter laws and enforcement on everything from wages to carbon dioxide emissions. Imagine a company that treats its workers fairly and with dignity, provides products and services that are restorative and regenerative to ecosystems, safe for consumers, recyclable and serve a real, rather than manufactured, need. Imagine a company whose reach is global, but whose various branches and subsidiaries understand and respect regional, local and cultural differences. Imagine a company whose profits are reinvested in communities rather than in wealthy investors. Imagine a company that revolutionizes how wealth is generated and defined. Imagine. And then start to bring that dream to fruition.
Think about this: without capital, oil companies can’t drill for oil, but neither can solar panel manufacturers enable us to harness sunlight for clean, just energy. Capital is not the problem. Muhammad Yunus has shown us that access to capital is an essential tool for helping to rid the world of poverty. But what we see today is that capital is used to generate more capital, without consideration for what happens in between. For those that want a secure investment that provides a healthy return and returns health and prosperity to the world, there are very few options. Yet everyone knows that it takes money--and a lot of it--to finance the energy and social revolutions that we need. After all, we already have the technology to generate clean energy, and the energy of human beings to lift themselves out of poverty is boundless; solving both problems requires innovative investment strategies.
Yet when we put our money into a bank account at Citibank or Bank of America, we have no idea what the bank is doing with our money. They could be financing a massive damn in Brazil that is displacing native populations, or a coal-fired power plant in China, or a wind-farm in India. Chances are, however, that we wouldn’t feel very good about what the bank is doing with our money. Same goes for much of the consumer products we buy: chances are, we wouldn’t be in agreement with the ethics of the company with which we are doing business.
The great thing is that people from all walks of life--conservatives, liberals, and political agnostics--can agree that it would be better to have a just economy. What’s more, the rise of global problems--poverty, terrorism, climate change, energy wars, to name a few--have highlighted the need for new approaches to emerging challenges.
For all the above reasons I hope to turn Darmawan Kapital Good Group of Funds into a conglomerate for good. We hope to franchise our models for solving problems in much the same way that McDonalds franchises its model for selling fries and hamburgers. The idea is to conspire to change the world, to unlock the potential of human beings, to protect the beauty of the natural world, to fight against entrenched interests, and to permit goodness to flourish. If it sounds lofty, we are keenly aware of that; the fact of the matter is that these are lofty times, and lofty ideas are needed to steer the world in the right direction.
Date : Mardi 19 and Mercredi 20 octobre 2010
