Progressive Capitalism

There’s Nothing Wrong With Profit. The Problem is Profit-At-All-Costs.

Business, at its best, can be a powerful force for good. It can lead to shared prosperity and well-being. The problem – and it’s a big one – is that American capitalism is seldom business at its best.

Too many American businesses – today and historically – have operated driven by a profit-at-all-costs (PAAC) mentality that too often ignores, or significantly downplays, the negative impact business decisions can have on social and environmental matters.

A great observer of American culture, Alexis de Tocqueville, nailed the PAAC mentality nearly two hundred years ago when he wrote:

“As one digs deeper into the national character of the Americans, one sees that they have sought the value of everything in this world only in the answer to this single question: how much money will it bring in?”

For me, business at its best is progressive capitalism. That entails business that prioritizes people, planet, and profit, equally. The social returns of a business activity need to be fully considered along with the private returns to individuals or companies.

The principle of the “Common Good” must be valued as much as individualism.

Let me step back and clarify a bit here. Throughout our country’s history, there have been plenty of companies that have properly balanced the needs and objectives of stockholders, customers, employees, and communities. The problem is, they have been, and continue to be, in the minority.

Wall Street firms, along with too many individual investors, have been part of the problem too, with their short-term thinking and seemingly unceasing focus on quarterly earnings reports.

But there is good news to share. The number of “Triple Bottom Line” (people, planet, profit) companies is increasing, as is the number of impact investors.

Impact investing, a progressive approach to investing, emerged a little over a decade ago and in recent years its growth has been exponential. In fact, the impact-investing sector has doubled in size the last two years, according to Global Impact Investing Network’s “2019 Report on Sizing the Impact Investing Market.” According to the same report, impact investors say their impact investing allocations will continue to grow.

Impact investing is a pushback against profit-at-all-costs business and investing practices, which focus almost exclusively on financial performance, while ignoring the social and environmental problems such practices can create. Impact investing is a sister to progressive capitalism, in which businesses are designed to add value to society in multiple ways, and work for the benefit of all stakeholders – customers, employees, shareholders and communities.

Both impact investing and progressive capitalism are grounded in terms like sustainability, fairness, equality, transparency, environmental impact, and social impact. It’s a purpose and profit approach to both conducting business and investing.

What’s really exciting is that impact investing has the potential to positively address a wide range of global issues: the climate crisis, accessible water and power, affordable housing, equitable labor practices, sustainable farming, clean energy, and many more.

Impact investing’s explosive growth the last five years has been driven to a large degree by Millennials (those born between 1980-’94) and the Gen Z generation (those born between 1995-’15), who want their investments to do more than just make money.

That said, it is not just young investors that have spiked impact investing’s growth. The number of impact investors is rising across all demographic categories. These investors have also been described as personal values investors; in that they want their investments to align with their personal values. In doing so, their intent is to make their investment portfolios a statement of who they are and what they stand for.

Historically, there has been a common misconception that profits and positive impact on society are mutually exclusive. To a large degree, this is because the current capitalism structure – including the investment sector — prioritizes profits over people and planet. But as Warren Buffet has said, “Good profits simply are not inconsistent with good behavior.”

Impact investing is not only changing the traditional investing world, but also helping to transition capitalism from a profit-at-all-costs mindset to a people-planet-and-profit mindset, in which an equal emphasis is placed on social, environmental, and financial performance.

To that end, we at CoPeace are trying to do our part. CoPeace is a Public Benefit Corporation (PBC) and Certified B Corporation. Our name is short for “Companies of Peace.” The rationale for the name is tied to the company’s deep desire to help create a new form of capitalism – one that is progressive, inclusive, and committed to success with multiple bottom lines, leading to a better, more peaceful, world.

It sounds idealistic, and it is, but that vision is what drives us.

We hope you will join us.

Ken Reed is a Senior Communications Advisor at CoPeace. As a forward-thinking holding company, CoPeace is building a portfolio of carefully selected for-profit companies with measurable social and environmental impact. To learn more about impact investing, check out CoPeace’s Intro to Impact Investing.