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Governments, NGOs Must Help Corporations Save the World

June 26, 2014 By Lee Egerstrom, Economic Development Fellow

Alice Korngold, a business consultant and author, has an article published by the University of Minnesota’s Ensia online magazine that matter-of-factly states that the same power source that creates so many of the world's environmental and human rights problems has the power and resources to bring about change and save the world: multinational corporations.

It's worth exploring the potential corporations and their business allies up and down the supply chain and in governments have to do good, while recognizing the internal divisions and competing interests that make these institutions living contradictions here at home and in the global economy. While some companies exploit workers and add to climate change and environmental degradation, other companies are going green, find ways to fight hunger and are reforming business practices that endanger workplace health and safety. They need consumers, governments, nonprofit advocacy groups, and stakeholders to offer guidance and rewards.

Minnesota is no different. Given how business, government and nonprofit organizations occasionally coalesce for the common good, Minnesota should offer the world a global test laboratory even though much collaborative work remains.

Korngold makes the point, “Governments are limited by borders, and the international community has failed to come to binding and actionable agreements. Non-governmental organizations and nonprofits have made great strides in advancing the human condition, but lack the resources and scalability sufficient to make transformational progress.”

And government, limited by the boundaries Korngold cites, is also held in check by the undue influence of special interests that results in the stalemates we witness in Congress.

A second key point she makes holds that governments and the nonprofit advocacy realm, through raising public awareness of issues and bringing pressure to bear on corporate boards and managers, play a key role in guiding the international business world to operate sustainably and humanely.

It has been Minnesota 2020's contention that Korngold's practical global economy is undermined when special interests hold oligarchy powers over lawmakers, regulators and trade agreement negotiators, and that significant public policy intervention is required to ensure the potential for Korngold’s vision. Still, there are glimmers of hope.

Korngold is a New York City-based business consultant and author of a new book, A Better World, Inc.: How Companies Profit by Solving Global Problems (Palgrave Macmillan, 2014). She admits that corporations are responsible for human rights abuses, environmental degradation and economic injustices that linger and threaten us to this day. At the same time, she points to enlightened corporations she feels are finding ways to use capital, human capital and technology to overcome problems such as climate change, ecosystem degradation and poverty.

In an exchange of notes on Monday, Korngold said she is personally aware of what a heresy it is in some circles to place hope in corporations to drive social change. “I myself am a ‘child of the 60’s’ who grew up as an activist and have also been a highly involved volunteer since the age of nine,” she said.

Korngold, through her Korngold Consulting firm, helps companies poke through the glass ceilings, reach out for minorities and women on boards of directors, adopt sustainable and socially responsible business behaviors and seek the same through their supply chain systems.

This emphasis on equity and sustainability is partially a response to the growing interests and power of Socially Responsible Investing (SRI) groups and individuals that have an estimated $3 trillion placed in domestic and multinational corporations’ stock.

Minnesota 2020 has called on individuals, NGOs, nonprofit advocates and stakeholder groups to band together to use the tools SRI fund managers are using to encourage more socially responsible business behavior. A November report, Made in Minnesota 2013: Fair Retail Wages Strengthen Local Economies called on Minnesota shoppers last fall to employ social screens when making holiday purchases.

While this helped consumers consider where, and not just what, they were buying, the report also helped groups work with the Minnesota Legislature this year to fight poverty by raising the state’s minimum wage.

A related paper from the same research prepared for a national conference looked across the wide spectrum of social screens SRI and faith groups use to encourage socially responsible and environmentally sustainable business behavior.

That paper, Marshaling Market Power Among Communities of Faith, Labor and Nonprofit Advocacy Groups, proposed that collaborating people of conscience and their groups screen corporate behavior to encourage Socially Responsible Purchasing (SRP) among consumers. SRI and SRP screens can both discourage corporate behavior, through negative screens, and encourage behavior through positive screens that recognize corporate contributions to improving our state and our world.

Korngold writes that “investors, consumers and employees are rewarding companies for their global problem-solving strategies.” She cites examples where companies that work on sustainability and climate change problems are being rewarded with business profits and investments.

The baseline message Korngold offers is this: Government action, through public policies, and nonprofit and NGO actions are essential for combating climate change, inequality, poverty and disease. But none has the global reach to effect change the way the international business community does. We need to help business get on the right track.

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