Paul Polman’s oversight on future capitalism

Writing of Where our Moral Compass meets the Bottom Line, Unilever CEO Paul Polman said this of the future of capitalism:

“When people talk about new forms of capitalism, this is what I have in mind: companies that show, in all transparency, that they are contributing to society, now and for many generations to come. Not taking from it.

It is nothing less than a new business model. One that focuses on the long term. One that sees business as part of society, not separate from it. One where companies seek to address the big social and environmental issues that threaten social stability. One where the needs of citizens and communities carry the same weight as the demands of shareholders.”

There were some remarkable coincidences. A few months earlier, in the McKinsey Long Term Capitalism Challenge, I described such a business model and how it was applied to develop a ‘Marshall Plan’ for Ukraine, in an article titled ‘Re-Imagining Capitalism — The New Bottom Line’.

Oddly Polman’s article begins with a quote from Churchill, the same quote used by our founder in a 2006 interview about Ukraine being the best country to spend the rest of his life.

-I think the first steps of democracy in Ukraine have been very promising. First and foremost, Ukraine now has media freedom and freedom of speech. This is something I watched emerge with my own eyes, in Kharkiv, during the revolution. A lot of people, particularly international observers and commentators, see only the problems and conflicts in the Orange camp after they finally took office in January 2005. If any of them can point to any democracy that doesn’t have similar conflicts and infighting, I’d love to hear about them. There aren’t any, in fact. Democracy is tough, and messy. As Britain’s legendary Prime Minister Winston Churchill once said, democracy is the worst possible form of government — except for all the others. Now what we see in Ukraine is healthy debate and at times tumultuous disagreement among politicians. But it’s all public now

Polman wrote in the Huffington Post, where another ‘Marshall Plan’ for Ukraine would be described in 2015. The same plan described elsewhere as The Firtash Octopus, seen largely as a “get out of jail card” for one of Ukraine’s most prominent oligarchs.

“Dirty money from the East has become a resource for dozens of European structures and politicians. Sergii Leshchenko reports on some of those that are only too happy to open their doors to a Ukrainian oligarch willing to invest millions in cleaning up his image.”

Polman joined Sir Richard Branson in an appeal to create a peaceful resolution to the conflict in Ukraine, following the downing of flight MH17.

In Ukraine, some months earlier as violence broke out, peace activists had called on the EU for help. A ‘Marshall Plan’ for sustainable economic revival was part of their appeal

Branson then showed up in Ukraine, pledging support yet seemingly with little awareness of the situation.

Is it more than coincidence, that these prominent individuals have such interest in the same part of the world? Let me share something from our 2007 ‘Marshall Plan’ on the application of capitalism for social benefit:

‘An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.

That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples — the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise.’

Now hear what’s up for discussion at Davos 7 years later — Can capitalism deliver both financial and social returns? On the panel are Branson and Yunus with Viktor Pinchuk. 3 of the people mentioned in the appeal for a peaceful resolution of the conflict.

In 2010, The ‘Marshall Plan’ for Ukraine was shared with Grameen partners for the social business ideas initiative.

Terry Hallman’s wish to spend the rest of his life in Ukraine was realised 5 years later when Maidan activists discovered his body and wrote of his deathbed wish that his quest to help vulnerable children, would be continued. Their article included an extract of his appeal to USAID and the Senate Committee on Foreign Relations, for support in this new form of capitalism.