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Thursday
Aug102017

« Is It Even Possible for Corporations to Rule in Favor of OneEarth Living? A Corporate Lawyer Replies »

Both the previous blog and this one seek clear answers about how corporations rule the world. Corporations weave the fabric of MultiEarth ways that cover the globe—from the lifestyles of rich and poor to the stock exchanges, and from food chains to television and entertainment infused with corporate indoctrination. Without seeing clearly how corporations rule (corporatocracy), we are unlikely to succeed in our heroic work to redesign our societies and lifestyles for Earth-size living. Ecological and civilizational crises, which we can reverse, will certainly proceed if we cannot grasp that corporations function with few limits on their powers. They rule in global decisions as well as through influencing hundreds of choices in our daily lives.

These blogs speak candidly: the power of corporations to structure our lives and societies is so daunting that to think of changing how corporations rule challenges us to the core.

Steve Gehring, who I introduced in the previous blog, continues in this one to reply to the questions I have asked him. These blogs are a continuation of conversations that Steve and I have had over several decades. He is also part of the chapter on corporate rule in my book, Blinded by Progress: Breaking Out of the Illusion That Holds Us (2013). So, let’s get to his replies in this blog. Be sure to leave your comments.

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Q: Even at their best, do corporations structure business and economics in ways that are OneEarth? or are they a kinder MultiEarth way of living? 

A: At best, the big multinationals are agnostic about OneEarth. Their design facilitates the ability to aggregate, employ and manipulate huge amounts of capital. The legal obligation of the boards and managers is solely to maximize profits for their shareholders, constrained only by their interpretation of the law. In this process, they have tens of thousands of the best corporate legal minds to both push the boundaries and minimize the pain when they step over. Over the past 10 years, a conservative judiciary has played right into this strategy with the Citizens United decision being the worst.

Q: In the chapter we did together in my first book, Blinded by Progress, you spoke of a corporation that you considered a positive example of what a corporation can be. What makes a particular corporation better? 

A: The corporation I spoke of is Travel and Transport, the fifth largest travel management company in the country. Whether, as a service company, they are more OneEarth friendly might be debatable. Travel utilizes automobiles, trains, planes and ships, all of which are built by profit driven gigantic corporations who chew up non-renewable resources with impunity. All of these vehicles run on non-renewable fuels produced by another set of gigantic multinationals which are not known for their OneEarth policies.

That said, what I like about T&T is that they are 100% employee owned and they operate like a big, functional family. They have a 70 year old culture of caring for their clients, their suppliers and their people. Management functions as a team, not top down, producing a inclusive decision making process that encourages collaboration and caring. Although I can’t back this with facts, I believe their 1700 people would be much more open to OneEarth thinking than those in the huge, profit-at-any cost corporations.

Q: It’s so important to recognize that how a corporation is managed can increase sensitivity to Earth-size attitudes of those they influence. Are there also legal modifications to corporations—I’m thinking of B Corporations, for example—which make them tools to actually get us to living within our planet’s capacities?
  

A: Lee, your reference to B corporations sets a good stage for this question. As I understand it, a B corporation is a benefit corporation certified by a group called B Lab. About 30 states allow B corporations and some choose to be certified as B corporations. The benefit corporation statutes, as they relate to the purpose of the entity and the duties of the directors, frames the OneEarth issues. Benefit corporation directors must consider the effect of any action or non-action by them on virtually all of the relevant stakeholders, including shareholders, employees, suppliers and customers, the community and general public and the local and global environment. A new entity can be formed as a benefit corporation or an existing corporation, through a charter amendment can become one. As an entity selection, it is ideal to pursue and fulfill OneEarth agenda and earth-saving policies. Over the next 50 years (if we have that many), it may become more and more popular, but is unlikely to stem the tide or replace the C corporations (the C is a reference to the Internal Revenue Code).

Here’s why: GREED.

In business corporations, directors are elected by the shareholders (in reality, a subset of each board, a nominating committee, chooses the candidates and the shareholders largely rubber-stamp them) and the directors owe a fiduciary duty to the shareholders. Over the last 30-40 years, the conservative courts have pretty much adopted the Milton Friedman postulate that the directors’ sole function and duty is to maximize profits to shareholders. Although some state legislatures and courts have allowed directors to consider other stakeholders in limited situations, virtually all courts adhere to Dr. Friedman’s postulate.

That makes OneEarth virtually impossible. The boards of directors of multinational and other huge, public corporations who control the economies will not suggest that their shareholders change to benefit corporations. These boards, which are largely made up of each other’s senior executive officers, have the monetary fix in. Collectively, they have convinced themselves, their shareholders and other needed experts, such as compensation advisory firms, that they, and they only, can derive huge profits for their companies, and in return deserve huge compensation, seldom less than $5 million and often $50-60 million per year. AND, since virtually all of the shareholders and state legislators have retirement plans whose success depends on the increase in the stock prices of the corporations, who is there to be a voice for change???

Q: Point blank: Can the legal structure of a corporation be a player in a OneEarth world?
 
A: The short answer is yes, but not with the current laws and economic system. As long as the world is run by business, there will be entities of some type. Corporations are the most efficient from a capital structure, to promote business. Benefit corporations have all the legal and structural tools to promote business, but make it compatible with OneEarth principles. Without some catastrophe or near-catastrophy that makes following OneEarth principles more likely for survival than greed, it seems unlikely that any meaningful transition will occur.
 
Q: What structures other than corporations do you see as better tools for business and economics to use in order to address the ecological crises, reverse climate change, and get us to where all species can live interdependently and sustainably within our planet’s capacities?
 
A: Interestingly, Lee, some of this is happening, not through enlightenment, but by business evolution that happens to be OneEarth friendly. My home state of Wyoming, the largest coal producer in the country, many years ago forced coal producers to put the land back into its original condition when the producer was finished with a mine. That was costly and time consuming, but both sides made it work and the coal companies made money. Recently, as coal demand diminishes (despite a coal-loving President), Wyoming is now turning to wind power, which will largely replace coal over the years. England and France have recently announced that they will ban all fossil fuel vehicles by 2030 or 2040. That will reduce noise and air pollution immensely so long as they are mindful of how they generate the electricity for the e-cars. France is way ahead of the game, producing about 85% of its power through nuclear plants. So, maybe there is some hope that some business people, driven by profit, will slowly learn how to use basic renewable resources such as water, sun and wind to derive their profits in a OneEarth friendly manner.
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Thank you, Steve, for sharing these thoughts with the readers of OneEarth blogs. 
The book referred to, Blinded by Progress: Breaking Out of the Illusion That Holds Us, is available as an ebook or print copy.
 

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