Lord Griffiths: The Purpose of Business
Speaking last year at the Legatum Institute on the ethics of business, Lord Griffiths made these points:
“If businesses are to act ethically there are three questions business leaders must ask themselves.
“First, Who Are We? Put differently, What do We Stand for? What is our Purpose?
“This I believe is the most fundamental and difficult question for any business leader to ask. To explore the purpose of a business is to go beyond profit. Without profit — which is the financial return to those who provide equity capital — a business will not survive. However asking about purpose raises broader issues than the bottom line. Does the company take pride in the product or service it provides? Is being part of the firm a source of human flourishing? How does the company contribute to the common good by what it does?”
It was 20 years earlier in 1996, that Terry Hallman, founder of People-Centered Economic Development asked this of the purpose of business.
“At first glance, it might seem redundant to emphasize people as the central focus of economics. After all, isn’t the purpose of economics, as well as business, people? Aren’t people automatically the central focus of business and economic activities? Yes and no.
“People certainly gain and benefit, but the rub is: which people? More than a billion children, women, and men on this planet suffer from hunger. It is a travesty that this is the case, a blight upon us all as a global social group. Perhaps an even greater travesty is that it does not have to be this way; the problems of human suffering on such a massive scale are not unsolvable. If a few businesses were conducted only slightly differently, much of the misery and suffering as we now know it could be eliminated. This is where the concept of a “people-centered” economics system comes in.”
It was the starting point for what has become known as for purpose business and argued that a business could put the interests of community before shareholder value if directors and shareholders agreed that this was the entire point and declared it in the corporate charter. A people-centered business is defined as one in which at least 50% of profit is used for social benefit.
Over the next decade this profit for purpose approach was deployed to tackle poverty in Russia Crimea and Ukraine:
In 2009, it was the papal encyclical Caritas in Veritate that the term people-centred appeared in the context of of business, when Pope Benedict wrote:
“Striving to meet the deepest moral needs of the person also has important and beneficial repercussions at the level of economics. The economy needs ethics in order to function correctly — not any ethics whatsoever, but an ethics which is people-centred.”
“This is not merely a matter of a “third sector”, but of a broad new composite reality embracing the private and public spheres, one which does not exclude profit, but instead considers it a means for achieving human and social ends. Whether such companies distribute dividends or not, whether their juridical structure corresponds to one or other of the established forms, becomes secondary in relation to their willingness to view profit as a means of achieving the goal of a more humane market and society. “
Miguel D’Escoto Brockmann, the President of the United Nations General Assembly offered this in a speech that same year:
“The anti-values of greed, individualism and exclusion should be replaced by solidarity, common good and inclusion. The objective of our economic and social activity should not be the limitless, endless, mindless accumulation of wealth in a profit-centred economy but rather a people-centred economy that guarantees human needs, human rights, and human security, as well as conserves life on earth. These should be universal values that underpin our ethical and moral responsibility.”
I shared ‘The New Bottom Line’ for the Long Term Capitalism challenge, where I described the ‘Marshall Plan’ proposal delivered to Ukraine’s government in 2007 with its argument that capitalism could be applied to resolve a wide range of problems rather than mere financial return.
As a business taking the bottom line past profit to people, we’d argued:
‘This is a long-term permanently sustainable program, the basis for “people-centered” economic development. Core focus is always on people and their needs, with neediest people having first priority — as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine’s poorest and most desperate citizens, rather than a “top-down” approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first — not secondarily, along the way or by the way. ‘
The ethical question which concerns me above all is whether purpose driven business turns a blind eye to human suffering. The fundamental predicate for people-centered economics is that no person is disposable. For Terry Hallman it was something that cost him his life, when he tackled the issue of ‘Death Camps, For Children’.
It was a dark irony to read in The Times that turning a blind eye to suffering in a place called Torez was something in which we are all guilty. Even JK Rowling had admitting an inclination to look away. Terry Hallman and the lives of these children were simply brushed out of the picture in the name of brandbuilding.
The Purpose of Business is a group on Linkedin
