The transformational power of multinational business | Colin Mayer | TEDxEastEnd

I'm going to build on those wonderful talks that you've just heard from Emily precious and Diane by talking to you about the most important institution in our lives I'm not talking about the state religion or TEDx I'm talking to you about an institution that clothes feeds and houses us that employs us and invests our savings it's the source of economic prosperity and the growth of nations around the world but at the same time the corporation has been the source of terrible deprivation poverty and environmental degradation and it's destroying our systems it's destroying our environmental systems as we saw in the case of Fukushima and the Gulf of Mexico it's destroying our financial systems as we observe during the financial crisis and because those bankrupt banks them had to be bailed out by the rest of the economy it's also been destroying our economies but the multinational corporations are worse they're exploiting us by paying a pittance to the poorest people in the world by employing them in sweatshops that turn into infernos and by then paying virtually no taxes on the huge profits that they make but worst of all of course are the banks they do fraud by selling us products we don't want such as payments protection insurance or don't need they manipulate our markets like the foreign exchange markets and libel and then they pay themselves outrageous salaries egregious salaries for the good work that they're doing the corporation is inherently evil and we the customers employees and communities of the world are the victims of it we have no control on the economic forces that give rise to this and we are as powerless as we are over the laws of motion and the seasons of the year well I'm going to suggest you that view that the corporation is inherently evil is fundamentally wrong it hasn't always been so it needn't be so and it will not be so provided that we recognize that we have to reinvent the corporation for the 21st century and provided that you realize that we can all bring about that transformation some of the most successful corporations in the world are Bertelsmann the media company Carlsberg the brewery IKEA the furniture retailer veal up the window manufacturer Tata the Indian conglomerate all of them have one thing in common they are all owned by industrial foundations those foundations give a majority of their profits to charities but it's not that philanthropic element that I really want to emphasize now more significantly the balls of those foundations are responsible for ensuring that the companies below them like Carlsberg uphold the values of the founders and if they fail to do so then it's the directors of those boards who take responsibility for it they are not the only of enlightened corporations in 1947 Forrest Mars the son of Frank Mars the founder of Mars Incorporated the chocolate manufacturer lay down a set of principles by which the company should be run included in them was the notion of mutuality that the benefits of the business should be shared between all parties from the producers the cocoa producers through the employees to the distributors and it's a principle of mutuality that the company is now firmly pursuing and of course Britain led the way in this regard of companies like Bournville Cadbury boots Beechum Roundtree's terry's fries Mackintosh mainly Quaker companies that had strong underlying principles as to how those companies should be run we may have led the way but we've lost the way and to companies that illustrate this particularly well Barclays Bank and Lehman Brothers not the Barclays bank and Lehman Brothers of today but their 17th century and 19th century versions respectively now layman the founder of Lehman Brothers would take his children every weekend to the Mount Sinai Hospital to show them the worst of members of New York society John free who founded Barclays Bank in 1690 wrote Scripture instruction a text that was used for more than a hundred years in Quaker schools those corporations that were founded by entrepreneurs with real strong principles and values have over time come to be owned and controlled by shareholders and executives who are interested in one thing and one thing alone making money for what should we do about it there are three things that I think we should do about it the 3 R's we should reinvent the corporation we should redesign regulation and we should re-establish the corporate contract between government and business one feature which unified those successful enlightened corporations of yesterday and today was the fact that they had strong underlying purposes and those purposes were not to produce profits their purposes were to do things to make goods and services that benefit us as customers and communities and to look after the welfare and well-being of their workforce and in the process of doing that they thereby generated profits but profits were not the purpose of those corporations and any successful corporation knows that to be the case but we've lost the way with too many of our corporations and we need to transmit that message through public media and social media and we need to transform the types of institutions in which I work in a business school in Oxford because typically the first course of an MBA program will tell students that the purpose of a corporation is to maximize shareholder value and everything else in the rest of the course then flows from that well that is not correct the first course should be what are the purposes of the corporation and what should its values be and then the rest of the course should flow from that now unfortunately not all corporations are that enlightened and we should not find ourselves abused by those that are not we might we should have much tougher enforcement of public laws regarding bribery corruption market manipulation and environmental degradation but we should also expect much more from our corporations than they just meet those minimum standards I sit on a government committee called the natural capital committee and the purpose of that committee which was established by the Chancellor of the Exchequer is to try and enhance not degrade our natural capital so that for the first time we leave it in a better State for future generations than we found it now one of the key elements of that is to measure performance appropriately at the Rio summit in 2013 the British government committed to producing national accounts which incorporated natural capital and the environment in them because the underlying problem is that at present we are failing to take account of the way in which we are degrading our environment in the form in which we measure income we should take account of the cost of sustaining and maintaining our natural capital and that should not only apply to corporations and the nation it should apply to business as well because business is as much miss stating its profits and income as the nation is in terms of its national income companies should only be able to declare profits net of the cost of them maintaining the natural capital for which they are responsible but it doesn't just apply to natural capital Britain also led the way in terms of social reform at the beginning of the 19th century in terms of protecting workers in factories through for example the factories act at the beginning of the nineteenth century but now what's happening is that corporations are circumventing that regulation by employing people in countries where such legislation does not apply through for example outsourcing to other parts of the world well that's outrageous and they shouldn't be able to state their profits as being net of the pittance that they pay to people in such countries they should state their profits net of paying a true living wage throughout their supply chain and they should refer to their course as the costs of employing people in factories with Senate Airy and safe conditions by so redefining the profits and performance of companies and then requiring camp is to uphold proper living standards for their workers throughout their supply chain we can transform the nature of the corporation in the 21st century now of course it will be argued that this will undermine the competitive position of British companies in the world well that view is about as persuasive as the notion that the factory Act was going to kill off British manufacturing at the beginning of the 19th century it didn't no such thing of course in fact it was the prelude to the emergence of those enlightened corporations to which I referred a bit earlier on but we can go even further than this through reaffirming the nature of the corporate contract between government and business one of the most interesting legislative developments that is currently going on is the emergence of what is termed the public benefit corporation in the United States it's now swept across some twenty eight states in the United States public benefit corporations are required to state what is their public purpose and their social purposes alongside their commercial objectives companies like Ben & Jerry and Patagonia are public benefit corporations and the directors of those companies are responsible for ensuring that those companies uphold those public purposes and if they fail to do so then the investors can sue them for failing to do so and take out injunctive relief to stop them doing things that abuse their public purposes now one area where this is particularly relevant in the context of the UK economy is in relation to its commanding heights like it like its banks and its utilities its airports and energy companies telecom transport companies and water companies now present the only way we have of aligning the interests of those companies with a public purpose is through regulation but the objectives of the regulator in upholding those public purposes is an exact contravention to what the companies are seeking to do in maximizing their profits well transform them into public benefit corporations and make their public benefits the license conditions that they are required to fulfill as utilities all banks and then you align the interests of those corporations with the public purpose as pursued by the regulator's now these are examples of the way in which not just companies but regulators politicians and civil servants can transform the nature of the economy in which we are operating and we need to inspire them to do exactly that because this is the most important issue of the current decade without it our economies will go on collapsing our financial systems will continue to fail and our environment will continue to degrade with it we can achieve higher levels of both economic and social well-being than has been possible to date because ultimately a moral corporation is a commercially successful corporation and the competitiveness of nations depends on the moral fiber of its corporations thank you

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Keywords: tedx talks, TEDxTalks, Environment, ted talk, English, ted, Law, Ethics, ted x, Reform, United Kingdom, ted talks, Business, Corruption, Social Entrepreneurship, tedx talk, tedx

Id: XLdiBNYGd-Y

Length: 17min 55sec (1075 seconds)

Published: Fri Feb 20 2015