key: cord-289802-svkssyk6
authors: Mirvis, Philip H.
title: From inequity to inclusive prosperity: The corporate role
date: 2020-06-27
journal: Organ Dyn
DOI: 10.1016/j.orgdyn.2020.100773
sha: 
doc_id: 289802
cord_uid: svkssyk6

nan

From inequity to inclusive prosperity: The corporate role Philip H. Mirvis 

Is business basically greedy, selfish, and evil? You might think so if you read social media maven Arianna Huffington's Pigs at the Trough or David Korten's When Corporations Rule the World or just about anything by business critic Naomi Klein. The comic strip Dilbert presents a weaselly picture of scheming, self-interested bosses and documentaries like Supersize Me, The Corporation, and Capitalism: A Love Story by Michael Moore dramatize the seamy profit-driven side of big business.

You find this fare too biased or leftish? Edelman's Global Trust Barometer finds that only one-in-five of the world's public believe "the system is working for me (2019) and 56% agree that Capitalism as it exists today does more harm than good in the world" (2020). Stated simply, the private sector, historic engine of economic growth, jobs, and trade, source of most goods and services, and driver of progress and rise of the middle class, is now suspect.

These attitudes are not universal. Trust is business is high in China, where 850 million have risen out of poverty in the past two decades; in India whose middle class has increased to over 40% of the populace today and is projected to rise to nearly 70% by 2030; and also in Singapore, now ranked as the world's most competitive economy.

Where is trust in business in a trough? Russia, Germany, Japan, the UK, and to a lesser extent the US. "We are living in a trust paradox," says Richard Edelman, Edelman CEO, "Since we began measuring trust 20 years ago, economic growth has fostered rising trust. This continues in Asia and the Middle East but not in developed markets, where national income inequality is now the more important factor. Fears are stifling hope, and long-held assumptions about hard work leading to upward mobility are now invalid."

The COVID-19 pandemic in the US has brought inequities into sharp relief. While most high-wage workers could shelter in place and work remotely from their homes, lowerwage workers faced a double-jeopardy: disproportionate numbers of them were laid-off and those who kept working, in health care, social services and other "essential" businesses were more apt to be exposed to the virus. African American and Hispanic workers (and their communities) suffered higher rates of infection and death as a function of exposure and underlying health disparities. As health official Dr. Fauci put it, the virus shines "a very bright light on some of the real weaknesses and foibles in our society."

Business leaders are waking up to fairness. Some 180 CEOs of major American companies recently declared, "Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity." In their "Statement of Purpose of a Corporation", these CEOs said they would be no longer bound by the single-minded pursuit of profits, but instead pledged to lead their companies "for the benefit of all stakeholders--customers, employees, suppliers, communities and shareholders."

A recent survey by Accenture and the UN Global Compact reports that 88% of CEOs believe our global economic systems need to refocus on equitable growth. Among big companies, Nestlé has been a pioneer in shared value. Its chairman emeritus and former CEO, Peter Brabeck-Letmathe states, "We believe that the true test of a business is whether it creates value for society over the long term." Over the past fifteen years the company has helped cocoa and dairy farmers in Africa and Latin America to adopt more productive and sustainable agricultural practices and promoted local cluster development among smallholders in Organizational Dynamics (2019) xxx, xxx-xxx ScienceDirect j o u r n a l h o m e p a g e : w w w . e l s e v i e r . c o m / l o c a t e / o r g d y n villages in India and elsewhere that increases their access to capital and earning power.

In the US, compare the practices of employee-oriented discounter Costco versus Wal-Mart's Sam's Club. Costco pays its U.S. hourly workers on average over $22 per hour, not including overtime, while Sam's Club's average wage is about $13 an hour. Along the same lines, electronics retailer Best Buy offers a viable career path and development opportunities to its employees while its one-time competitor Circuit City (now out of business) routinely dismissed longer tenure employees in lieu of giving them salary increases.

Looking for a company that has the right priorities for prosperity? When the author began working with Ben & Jerry's in the mid-1980s, the company's guiding purposes were to "have fun" (Jerry) and "give back to the community" (Ben) and, oh yes, make the world's best ice cream. B&J gained legions of fans through its ice cream add-ins (huge chocolate chunks, cherries, pretzels, and cookie dough), offthe-wall brands (Cherry Garcia, Chunky Monkey), and creative campaigns to support social change.

On the financial side, B&J's paid local farmer's a guaranteed premium for supplying cream (to support them during market downturns), devoted 7.5% of its pretax profits to charity, and established a 5-to-1 salary ratio between the CEO and lowest-earning-worker (later raised to 17 to 1 when the company hired a CEO from outside its ranks). It also gave same-sex partners equal access to the benefits of married couples, such as health insurance and parental leave. All of this was guided by the company's commitment to "linked prosperity--for everyone that's connected to our business: suppliers, employees, farmers, franchisees, customers, and neighbors alike."

While appealing, this framework provided scant guidance of how to respond to operational priorities and financial pressures. Nor did it forestall conflicts over the company's image and positioning in select product and social investments (like introducing "Peace Pops" at the start of the Gulf War). Through a series of retreats, first with Board members, then with management, all B&J leaders spoke to their personal views of what the company was all about. Employees chimed in at all-staff meetings. There was within B&J's a sharp divide over the ice cream maker's communal versus commercial emphasis. One influential Board member drafted a "three-part" statement that detailed the firm's economic, social, and quality missions--all to be considered equally under the rubric of "linked prosperity." This was debated by Board members and managers and then adopted as the company's mission.

In 1992, John Elkington conducted B&J's first social audit. Seeing the firm's three-part mission statement, a lightbulb went on and Elkington generalized the idea to the "triple bottom line" (variously termed TBL or 3BL) whereby companies would be accountable for their economic, social, and environmental performance. Within a decade, companies were devising "balanced scorecards", issuing annual reports based on standards of the Global Reporting Initiative (GRI), covering a full roster of sustainability measures, and being ranked on the Dow Jones Sustainability Index (DJSI) and the London stock exchange FTSE4Good Index. Note that this combination of new accounting measures and methods, peer pressure as more companies adopted them, and heightened public exposure in rankings spurred many businesses to improve and accelerate their response to important social and environmental issues.

Ben &Jerry's was acquired by Unilever in 2000. Initially, Unilever had trouble digesting B&J and its progressive practices. But as things settled out Ben and Jerry are once again speaking out for causes (including the Occupy Wall Street and Black Lives Matter movements) and Unilever CEO Paul Polman has bought-in to their linked prosperity business model stating: "This key metric is how Ben & Jerry's measures success".

The last four decades have seen rising income inequality in the U.S. According to IRS data, as analyzed by Piketty, Saez, and others, the top 1% of earners saw their share of total US income increase from 10% in 1980 to upwards of 20% today. Americans in the top 1% today average over 39 times more income than the bottom 90%. The richest-of-the-rich, the nation's top 0.1%, are taking in over 196 times the income of the bottom 90%. Meanwhile, an estimated 40% of the total U. S. population (140 million people) are either poor or lowincome. One real-world implication: a recent survey found that some 40% of Americans would struggle to come up with $400 for an unexpected expense.

Currently, the wealth gap is higher in the US than in any other OECD country. This has not led to greater prosperity in the nation. On the contrary, households in Switzerland and Australia have over 2x the median wealth of the US which also lags behind New Zealand, Japan, Canada, Ireland, France and the UK on this count. The wealth gap fueled the Occupy protest movement that began in 2011 (We are the 99%) and while this movement has faded, mass public protests over economic issues, including "yellow vests" in France and a million women march in Chile, have been reported in over twenty nations the past few years.

The rich are getting richer worldwide. With serious consequences. Analyses show that income inequality = gender inequality with women lagging in employment opportunities in many developing economies and facing a wage gap versus men in developed ones. On a broader scale, low income and poor people in inequitable nations have a much harder time than otherwise in accessing education, health care, housing, and the basic necessities of life.

What is causing increased inequality? Some blame globalization for intensifying it and for the loss of high paying jobs. But there are different stories about the fruits of globalization and who benefits from it. New manufacturing and technology workers in China or India mostly say globalization is good. It has brought them capital, access to lucrative international markets, and a wireless connection to the world. Their nations are more prosperous as a result.

Multinational corporations, their shareholders, and many who work for them have made dramatic gains. Access to new markets and cheaper inputs create bigger profit margins and greater returns on capital and knowledge. Globalization has driven real price decreases for many consumer products and made branded goods more available around the world. And talent markets in Bangalore, Beijing, and Sao Paulo are just as heated up as in New York, London, and Tokyo.

Yet the same benefits have not accrued to everyone and there is increasing concern over globalization's social and ecological consequences. Many developing countries lack sufficient governance, infrastructure, and human capital to find a niche in the competitive global system. In the last decades, the gap between the average per-capita GDP in the twenty richest and poorest countries has doubled. Poor farmers have been pitted against one another in export markets and must compete with cheaper (often subsidized) imports from richer nations. Small-scale manufacturers have been driven out of business. Meanwhile, the prospects for youth the world over have fallen behind the rapid pace of change, creating an atmosphere of instability and discontent that affects everyone.

According to the Bureau of Economic Analysis, 10 million U.S. jobs have been sent overseas since 2001. Certainly globalization, with attendant outsourcing and offshoring by corporations, trade policy and pacts, and China's accession to the WTO, has been a key contributing factor but many point to automation as another culprit for the decline in manufacturing jobs. US factories are twice as productive compared to two decades ago, but operate with many fewer employees.

Executives offer many reasons why they simply cannot pay their people better, invest in long term growth, and keep factories open, retrain employees, and create more equitable pay systems. They point variously to Wall Street, competitive pressures, talent markets, regulation, and other "realities" of running a profitable business. How can they possibly do more "good" alongside their fiduciary duties?

In a now infamous 1970 article in the New York Times Magazine, the late Nobel laureate economist Milton Friedman spelled out the fundamental precept of the free enterprise system: "There is one and only one social responsibility of business--to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." This is the orthodox view of responsible business. It is the received wisdom passed on to M.B.A.s and the logic behind Jensen and Meckling's agency theory, which contends, among other things, that managers' interests and incentives must be aligned wholly with those of shareholders (the owners) and that executives (their agents) must be monitored and controlled to prevent any "opportunism" that takes monies away from shareholders. This theory was the intellectual fuel behind the shareholder rights movement that began in the 1980s and that has led generally to higher shareholder returns, but also to widespread corporate restructuring, downsizing, hostile takeovers, cheap labor outsourcing, and the like. Management fixations on quarterly returns and short-term profit taking seem to be its enduring legacy.

But maybe not. Scholars Joseph Bowers and Lynne Paine argue that agency theory is "at odds with corporate law" and that while shareholders are beneficiaries of a company's activity, they do not have "dominion" over its assets. And speaking to business school professors, the late Sumantra Ghoshal has highlighted how agency is a "bad" management theory that destroys "good" management practices.

An alternative perspective is that companies are responsible to all of their stakeholders, not only financial shareholders, but also employees, customers, suppliers, business partners, communities, and others. This is the perspective embraced by signatories to the Business Roundtable's Corporate Purpose Pledge. And for good reason: studies show that stakeholder-oriented companies outperform shareholder-driven firms and have better morale.

On the practical side, Warren E. Buffett, head of Berkshire Hathaway, Jamie Dimon, CEO of JPMorgan Chase, and Laurence D. Fink, CEO of BlackRock, have each criticized quarterly guidance because it impedes investing to achieve long term goals. Several companies have stopped reporting quarterly earnings. We cited how the use of balanced scorecards and 3BL accounting schemes work against maximizing short term results and for investing for the longer term. But beyond adjustments in scorekeeping, the biggest change has been in how business leaders think about their responsibilities. Will their pledge to manage their business in the interests of all stakeholders shift corporate priorities?

Historically stewardship meant taking care of someone else's money, property, and other assets--as, for example, a bailiff serving the Lord of the Manor in medieval times. Nowadays, I have argued that the concept of stewardship is central to an enhanced vision of corporate responsibility whereby a society entrusts a company to care for its resources. Reaching beyond sustainability, stewards not only protect and preserve, but also enhance society's resources--natural and human. This expands the idea of inclusive prosperity from consideration of an individual employees (me), to a company's workforce overall (we), to working people and their interests more broadly (a collective "all of us").

This expanded perspective on inclusion intersects with theories and social movements concerning diversity, equity, and justice. Most large companies today have made commitments to support diversity in their hiring and employment, dealings with suppliers and customers, and in their community relations. This applies to diversity in race, gender, ethnicity, age, sexual orientation, and so on. And, again, it makes good sense: studies find that firms with a more diverse workforce generally do better than their counterparts.

Committing to equity and justice is a more complex consideration. Most agree that everyone should have equality opportunity to get a job, advance in a company, or do business with one, but not that there should be equality in outcomes--e.g., getting the same pay and rate of promotion, or operating on the same business terms. The idea that business should be "woke" and attend to and remedy histor-ical injustices to blacks (#blacklivesmatter) and women (#MeToo) adds to the complexity.

Nonetheless, inequity and injustice are there. A recent Pew survey found that 25% of women believe that they are paid less than a man doing the same job, 23% say they are treated as incompetent at work, and 15% say they receive less support than men. A study by AARP found that nearly two-of-three workers age 45 or over have experienced agerelated discrimination on their jobs. More broadly, Blacks (61%), Hispanics (69%), and Asians (73%) in the US are far more likely than whites to say that being white helps people to get ahead.

What should a company do on these accounts? Beyond pledges to not discriminate or exploit (e.g., obey the law), there are defensive reasons that a company might focus on these matters (risks of lawsuits, reputation damage, etc.). But corporate values and culture also play a role and select companies are taking affirmative and data-based steps recruit and hire for diversity, equalize pay and promotion rates across different "classes" of employees, and redress economic inequities in society. Listen to Tony Prophet, Chief Equality Officer, Salesforce on this count: "Inequality, in all its forms -gender, LGBTQ, racial, or otherwise -is an issue that every company must address for its own benefit and to create a better world. We believe businesses need to focus on closing the equality gap with the same energy put into creating new products and markets."

Top corporate executives have seen their pay grow by more than 1000% over the past 40 years, nearly 100 times the rate of average workers. To put a spotlight on this pay gap, the Securities and Exchange Commission passed a rule that required public companies to report the ratio of compensation for their CEO in comparison to that of a median employee. The result? The average chief executive of an S&P 500 company earned 287 times more than their median employee in 2018 (the first year the ruling took effect). What has happened since? No changes in corporate CEO pay practices were reported in 2019, although in 2020 a number of CEOs chose to cut their pay and forego bonuses in light of the pandemic.

Still, many big company CEOs make in a single day what their everyday workers earns in an entire year. Defenders make the case that CEOs, like high earners in sports and entertainment, are "superstars" who lead winning (and profitable) teams. The evidence finds otherwise, however, as CEO pay (including stock options) is only marginally related to a company's annual bottom-line and not at all to its longer-term stock performance. An analysis of the top-10 "overpaid" CEOs (making 1000 times more than their median employee) shows how things are out-of-kilter, as "the most overpaid CEOs, in aggregate, underperformed the S&P 500 index by an incredible 10.5% and actually destroyed shareholder value, with a negative 5.7% financial return."

How about pay equity inside firms? The research group Glassdoor reports that men earn 21.4% higher base pay than women on average (women earn 79 cents per dollar men earn). When comparing workers of similar age, education and experience, the gap shrinks to 19.1%. And when comparing workers with the same job title, employer and location, the gender pay gap in the U.S. is still 4.9% (95.1 cents per dollar).

Companies can tackle equal pay for equal work via audits of their pay practices. An audit at Salesforce revealed a statistically significant difference in pay between men and women. "It was everywhere," CEO Benioff admitted in a 60 Minutes interview. "It was through the whole company, every department, every division, every geography." The company responded by spending $3 million in 2016 to start to correct things and then another $3 million in 2017 to eliminate differences by gender, race, and ethnicity across the company. And while audits can help firms gauge their problems and progress in these regards, leading firms are also offering training in handling unconscious bias that contributes to hiring and job discrimination.

Recent legislation in the US lowered the corporate federal income tax to 21% (versus the previous 35% rate). A study found that profitable companies paid an effective federal income tax rate of 11.3% on their 2018 income (the first year the lower rate took effect) and that many big companies, including Amazon, Chevron, Halliburton, and IBM, did not pay federal income taxes at all. This doesn't sit well with the public--over two-thirds of whom say companies pay "too little" in taxes.

There is also concern that states and communities give up "too much" when it comes to wooing business investments in plants and offices. In 2017, Wisconsin agreed to provide Foxconn with $3 billion in cash incentives for a new flatscreen manufacturing plant, projected to employ about 13,000 workers at average annual salaries around $54,000. As of this writing, Foxconn is woefully behind schedule on hiring, seems to have changed what kind of plant it is building, and has refused to renegotiate its deal with Wisconsin lawmakers. In 2015, General Electric announced it would relocate from Connecticut to Boston induced by over $120 million in state incentives. In 2019, however, GE scrapped plans for building a 12-story office tower on the waterfront and has staffed its Boston HQ with 250 rather than the planned-for 800 people. At least GE refunded $87 million to the state. Bottom line: tax incentives for building plants or relocating facilities don't typically pay off.

An association called Chief Executives for Corporate Purpose (CECP) reports that 250 large companies it sampled gave $26 billion to charity in 2019, an uptick from prior years. There was also higher giving as a percentage of pre-tax profits from 0.83% to 0.94%. Certainly reduced tax rates are a factor in increased giving. What do companies invest in? Priorities are K-12 and STEM education, health and social services, and community economic development.

Inarguably, philanthropy is good for business and for communities. termed "strategic philanthropy" where companies spend on business-related issues. Back in the day, corporate charity was done quietly and often anonymously. Today, its trumpeted and an integral part of the corporate reputation building platform. In turn, employees volunteer via company sponsored (and branded) service days. Companies are taking seriously the ROI on their good works. Nearly all corporate foundations and CSR functions measure their impact through surveys of employees, of customers, and via corporate brand trackers.

Is corporate philanthropy only about ROI nowadays? One exception is Johnson & Johnson. J&J's Credo states: "We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services." When the company asked doctors and nurses about their most vexing problems, they repeatedly heard "the shortage of nurses." In response, J&J launched its Campaign for Nursing's Future which included imaginative advertising and engaged its staff and partners in nursing school recruiting efforts, nursing ambassador programs, leadership and communication training for newly promoted nurse managers, and mentoring programs for new nurses as well as fundraising galas, and media events.

The results? The campaign led to a significant increase in the public's ranking of nursing as a career choice and, importantly, in the number of 18À24 year olds who think of it as a good career choice. Recruitment and retention rates in the nursing profession are substantially improved, too. The upshot: J&J chooses programs and countries to support based on need and not whether they present a business opportunity.

The evidence is clear that companies that are growing, employ high skill workers, and operate in red hot talent markets pay their employees better. Median salaries in tech firms like Google, Facebook, and the like, and in consulting and finance, top the lists on employee compensation in recent years--at over $170,000 in 2019. What is happening otherwise? Researchers report that over two-thirds of the jobs created in the US the past few decades feature lowwages and low-hours. Roughly 53 million Americans between the ages of 18 to 64 (or 44% of all workers) qualify as "lowwage." Their median hourly wages are $10.22, and median annual earnings were about $18,000 in 2019.

While the media points a finger at big companies like Walmart, Target, Amazon, and CVS for exploiting their workers, these employers have, as a result of state and local legislation plus some public shaming, increased entry-level and median pay significantly the past few years. Note, too, that many retailers and pharmacies operating during the pandemic increased hourly pay some $2 or more and enhanced paid leave for sickness. But the vast majority of low wage workers are employed in small and mid-size businesses. Here you find less job security, health care coverage and much less paid sick, vacation, and holiday leave.

There are many companies, large and small, that provide good paying jobs. Most "great places to work" pay competitive salaries to full-time employees, and offer a benefit package that includes health coverage, paid vacation, sick, and parental leaves, a company contribution to a pension or 401 K account, training monies or tuition reimbursement, and typically an incentive scheme, bonus plan, and/or stock options.

We noted how Costco and Best Buy opt to create good jobs for their lower level workers. How about Walmart--the 800 lb gorilla of low-cost retail? When Greg Foran, then heading Walmart in the US, found Zeynep Ton's The Good Jobs Strategy, he said "Bingo"! Walmart upped its wages but in doing so the company also made changes in its operations and employment practices. Walmart rolled out a new induction process that includes training for new hires on customer service, merchandising, teamwork, and communication, and provided mentoring by experienced employees, plus it provided them a clear picture of career paths and what skills and experience are needed to advance. To increase efficiency, employees also got handheld computers to scan prices and check inventory. The kicker: Walmart employees are eligible for quarterly bonuses based on store performance.

Top employers are compensating part-time workers better, too. Home Depot, for example, offers its part-time employees tuition reimbursement, 401(k) matching, an employee stock purchase program, paid maternity and paternity leave, and dental and vision insurance. Starbucks has strong full-and part-time employee benefits. Its founder Howard Schultz launched a campaign to "Create Jobs for USA" and found a financial partner, Community Development Financial Institutions, to enable citizens to lend money to small businesses. This jobs campaign created or retained more than 5000 jobs and raised over $15 million to support small business job creation.

How do employers in declining industries maintain good paying jobs? Pridgeon and Clay (P&C), a Grand Rapids, Mich. auto supplier, was hit hard in the auto industry meltdown. But their focus on research and development, product innovation, and training positioned them for recovery. Rather than replace workers, they prepared and trained their existing workforce. They even instituted an in-house training program, which provided wage increases of more than 50% for entering the training and additional wage incentives for those that graduated. As a result, P&C rebounded far better than many, adding millions in revenues and growing their employee base from 400 to 650.

You've seen the "pay gap" between men and women in the US. It is even more pronounced for Latina and black women. And, sadly, the overall pay gap between white versus black men in the US seems to be widening. All of these pay gaps shrink when making apples-to-apples comparisons between peoples having the same credentials and jobs. But understand the bigger picture: women and minorities in the US are over-represented in low income jobs.

Another company that cleaned up its pay structure is PayPal. An audit of its hourly and call center employees found that 60% struggled to make ends meet and were living paycheck to paycheck, despite earning at or above marketlevel wages. Then PayPal took actionraising wages, reducing healthcare costs, making all employees shareholders, and launching financial literacy and planning courses for staff. It is also notable that over 50% of its employees who are VPs or higher are women or people of color as is half its Board of Directors.

What else can be done? Estimates are that just 7% of large employers offer on-or near-site child care and only 4% offer child care stipends. Roughly one-in-three provide paid maternity and paternity leave. And some 57% provide flextime work schedules for employees that enable them to better balance their work and personal time. US-based companies lag behind their European counterparts in family friendliness. The consequences are notable. Nearly three-infour working parents report that their jobs have been impacted by childcare problems. Many are also pressed by the financial and practical costs of caring for elderly parents. Breakdowns in child-and elder-care lead to increased absences and lost productivity costing US businesses $3 billion annually.

Finally, consider the gig economy. Actually there are two different gig economies. One is composed of folks who drive for Uber or Lyft, make deliveries for Amazon Flex or Door Dash, provide goods and services on Etsy or Fiverr, and all manner of freelancers. The other includes on-call, independent, and temporary workers, the so-called contingent workforce. As there is no "official" designation of gig workers, estimates are they comprise anywhere from 10-15% (contingent workers) to 35-40% (including multiple job holders and those with a "side hustle") of the US workforce. But however you count and categorize those with "alternative work arrangements", this Workforce 2.0 segment is expected to grow in the years ahead.

Touted benefits for gig workers include greater freedom and flexibility and for freelancers the chance to be "your own boss". Downsides include social isolation and, for many, substandard pay and benefits, no pension, and scant job security. How do corporations factor into the gig economy?

First, many more companies are employing contingent workers, not only for added flexibility but especially because it saves them money--lots of it. Second, firms outsource and offshore jobs to gig economy workers--to handle customer calls and provide administrative support and web services--in lieu of creating more full-time jobs. Finally, campaigners and regulators alike are pushing Uber and other app-based firms to classify and treat independent contractors as employees. California recently passed legislation to this effect that affects over 1 million workers. Listen to State Senator Maria Elena Durazo, "Today the so-called gig companies present themselves as the innovative future of tomorrow, a future where companies don't pay Social Security or Medicare. Let's be clear: there is nothing innovative about underpaying someone for their labor."

Companies that orient themselves to stakeholders and assume the role of stewards reach beyond their fence line to promote equity and inclusion in communities and society. This means going beyond a bare-bones "jobs, profits, taxes" agenda to investing in communities and societal infrastructure. Ben & Jerry's was a pioneer in using its business to drive inclusive prosperity. In the late 1980s, the company hooked up with Greyston Bakery, in Yonkers, NY to supply brownie wafers for its ice cream sandwiches. The bakery provides "great deserts by great people doing great deeds." Combining an economic and social mission, it sells brownies to food purveyors and the public made by the "chronically unemployed" --ex-convicts, former drug abusers, and disadvantaged youth--whom it hires and trains in business and social skills.

The partnership got off to a rocky start. The first shipments of brownie wafers to B&J melted in transport and arrived as a two-ton block. Rather than send them back to Greyston (who could not afford a loss of that size), the B&J team chipped the block into chunks and mixed them with ice cream. Ben & Jerry's Chocolate Fudge Brownie ice cream was born! The flavor sold well, which meant B&J soon needed more brownies. More brownies meant more bakers, allowing Greyston to hire and train more people from the Yonkers community who couldn't otherwise find jobs. Between 1990 and 2018, Greyston created over three thousand brownie-baking jobs, generating about $65 million in payroll and providing benefits to about 19,000 families through the Greyston Foundation.

Rush University Medical Center, on Chicago's westside, has partnered with residents, community leaders, nonprofit organizations and other health care institutions, to redress inequities in access to healthcare. The center conducts an annual community health needs assessment and sets goals for reducing inequities and enhancing community access to health services. Some of its programs include free mammograms for women lacking health insurance, communitybased education on healthy eating and exercise, plus participation in community food banks and shelters for the homeless. Interestingly, Rush's community needs assessment identified many vulnerabilities in its patient population that it incorporated into its emergency preparation plans. When the COVID-19 pandemic hit Chicago, Rush rapidly converted its ambulance bay into a triage center, treated patients in bed units secured by thick glass doors with a negativepressure system to prevent infections from escaping, and tested new treatment protocols, such as putting patients on their stomachs to improve oxygenation. While many of nation's hospitals had their hallways overloaded with patients in the heat of the pandemic and oxygen had to be wheeled in via portable tanks, Rush was credited with having the "foresight" to build state-of-the-art practices into its protocols.

On a larger scale, Ford, GM, Chrysler, Toyota and other auto suppliers contribute to Focus-Hope, a nonprofit based in Detroit, Mi., with money and employee volunteers who help to train, mentor, and provide internships for those looking to reskill or prepare themselves for jobs in industry. Focus-Hope has trained (or retrained) over 12,000 men and women (primarily African-Americans) to become machinists, CAD-CAM operators, IT specialists, and systems engineers and partners with area universities which provide college degrees for trainees. It also runs a day-care center, a food 

American businesses have for decades assisted K-12 schools with donations of money, books, technology, and such, sponsorship of science fairs, employees' volunteering as student mentors, and even adopt-a-school programs. Yet 40% of employers say that today's high school (and college grads!) are not prepared for their higher skilled jobs. (And some 39% of youth report that their formal schooling did not prepare them for the job they want.) Select high tech firms have stepped into the breach with specialized training programs in communities that make use of corporate tools, know-how, and human resources. Some of the most noteworthy include Cisco's Networking Academy, Microsoft's "Unlimited Potential" and "YouthSpark" campaigns, Dell's "TeckKnow" program, and Intel's "Education Corps" volunteers that prepare students to operate in a digital economy. Tech company motivations here include not only enlarging the pool of skilled job entrants but also creating a high paid workforce that can pay for and use their goods and services! You may recall that IBM convened an Education summit in 1996 with a group of CEOs, state governors, and President Bill Clinton to focus on systemic changes in K-12 education. IBM then launched twenty-five demonstration projects in U. S. school districts during this period through its signature social campaign "Reinventing Education," which applied the company's technology and know-how to education. Today IBM operates four P-Tech (pathways to technology) schools that offer disadvantaged students the chance to receive a high school diploma and associate's degree within six years, as well as a shot at an IBM job. Students take traditional high school classes and get workplace training, intensive STEM education classes, college courses, and often real-world job experience as well -all at no charge. According to IBM's projections, there will be 16 million jobs by 2024 that require post-secondary degrees, though not necessarily a four-year college degree. To scale this venture, IBM has partnered with more than 600 businesses (like American Airlines and Volkswagen) to start over 220 P-TECH schools across the US and around the world.

Goldman Sachs 10,000 Small Businesses is a $500 million investment to help entrepreneurs create jobs and economic opportunity by providing them with greater access to education, financial capital and business support services. The program currently operates in 30 markets in the U.S. through a network of more than 100 academic and community partners. Small business owners participate in a hundred hours of education over the span of three months, either in a classroom or virtually, in a kind of crash course MBA. The subject matter: how to scale their own business. The emphasis is on peer-to-peer learning among the thirty or so entrepreneurs in a cohort who also get 1-to-1 coaching and mentoring from Goldman employees. To date nationally, over 8200 small business owners have graduated and some 67% of graduates see revenue growth and 47% report creating new jobs six months after completing the program.

Another way to support small business is to take care of your suppliers. Caterpillar's Supplier Diversity program focuses on increasing opportunities for small businesses owned by minorities, women, veterans, or the disabled. The program requires that all suppliers meet Caterpillar's requirements concerning quality, capacity, and cost. Caterpillar runs a 100-day transformation program to help suppliers adopt lean manufacturing processes and eliminate waste in their operations and Caterpillar employees serve as mentors to participants. A Supplier Development College offers both free and fee-based courses and train the trainer programs so participants can cascade knowledge to coworkers.

On a global scale, Coca-Cola's 5by20 initiative provides economic empowerment for nearly 5 million women entrepreneurs across the company's value chain--include retailers, suppliers, producers, and more. Women participating in 5by20 get business skills training, access to financial services and assets, and connections with peers and mentors. An early study of the program found that women increased sales an average of 44% after receiving business skills training and that their average personal income increased 23% over one year. Participants reported that, on average, they could better afford basic expenses for themselves and their family, such as expenses for children's education, medical visits, and clothing. And two-thirds reported they were able to put money into savings each month.

JP Morgan Chase is making big investments in Detroit, Michigan. Over the past five decades, Detroit's population declined significantly from a peak of 1.5 million in the 1970s to less than 700,000 today, causing a large drop in the city's tax base and decimating city services. In June 2013, Detroit filed for Chapter 9 bankruptcy, with estimated debts of more than $18 billion. A year later the city emerged from bankruptcy but nearly 80,000 buildings, or 30% of the city's total stock, was empty.

In early 2014, JP Morgan Chase made a $100 million commitment to the city of Detroit. They coupled this financial investment by sending in employee volunteers -in the form of their Detroit Service Corps. In November 2014, their first team partnered with four local not-for-profit organizations to support neighbourhood and workforce development. To date, nearly 100 employees have helped 21 Detroit organizations to improve their capabilities and strengthen community outreach. The combination of financial support and employee assistance from Morgan Chase enabled these local organizations to provide training and career education to nearly 15,000 Detroiters and technical assistance to 18,000 entrepreneurs and small businesses, yielding more than 700 jobs. Recently, JP Morgan Chase offices expanded its local service corps and grants to Chicago, New York, London, Paris, and Hong Kong.

Cities also need investments in technology and infrastructure. IBM runs a "Smarter Cities Challenge" where a team of IBM executives joins with city officials and community groups to study and develop innovative solutions to urban problems.

The execs are volunteers and their on-site assignment is limited to three weeks. But their impact can be substantial.

For instance, IBMers helped the city of Rochester, NY to develop an integrated digital platform that enables city service providers to share data about the people with whom they work. This enhanced coordination among the providers and integrated services for locals-in-need. In San Jose, Ca., a smarter cities team helped to develop a "rental unit registry" that includes a database and analytics dashboard to help the city track rentals governed under its rent control ordinance. A second project is a website that guides prospective renters to available affordable housing. To date, over 50 cities worldwide have received challenge grants and assistance. Now these are not just good works. IBM is focused on creating a "smarter planet" and city governments are big customers for its sensors and services.

Corporate conduct and philanthropy have a global dimension. Recall how a few years ago some 1127 textile workers--sewing clothes for Sears, J.C. Penney, Walmart and the Gap--died in the collapse of a shoddy garment factory in Bangladesh. These companies joined in a coalition of businesses from 28 countries, international labor representatives, and NGOs to work with the government of Bangladesh to reach an accord on building safety in factories. As a result of the accord, 90% of the hazards reported at 1000 factories in Bangladesh have been eliminated and the minimum wage for workers increased from $38 to $95 a month.

Banks, beginning with one launched by Nobel Peace Prize winner Mohammed Yunus, have introduced micro-credit lending whereby the poor can pool their modest savings and get small loans. Repayment rates have been upwards of 97%. This model has spread into other businesses where, for example, Mexican cement-maker Cemex introduced its Patrimonio Hoy program that gives customers technical assistance and loans to design, build and fund improvements in their housing.

Note, too, to how telecommunication companies are lifting up the world's poor. The story behind Africa's "rise" features political and economic reforms, to be sure, but it is also hinges on the telecommunications revolution. Africa today has more than 650 million mobile phone subscribers--more than the U.S. and Europe combined. A decade ago, Kenya-based Safaricom, partly owned by Vodacom, introduced M-Pesa (M for mobile and Pesa is Swahili for money) in Kenya and Tanzania to enable people to use their mobile phones to transfer monies, pay bills, and secure microfinancing. The share of the "unbanked" in the region that uses MPESA rose from 21% to 83% in twelve years and today an estimated 25% of Kenya's gross national product flows through the channel. Vodaphone is now effecting a "reverse innovation" by introducing the service into Europe.

Finally, select companies today are building out Base-ofthe-Pyramid (BoP) business models to provide more affordable goods and services, as well as employment opportunities, to the world's poor. SC Johnson, the world's leading maker of insect control products, worked hand-in-hand with Rwandan farmers to sustainably farm and harvest the plant for products like Raid. In turn, the partners set up a motorcycle-based distribution system to bring insecticides (aerosols and coils) to areas with endemic malaria. To sell them in an affordable and culturally compatible way, they set up WOW club memberships, involving seven or more homemakers, that can share in the purchase of four different pest control and home cleaning products in refillable formats. WOW membership also includes group coaching sessions around home and family-care best practices and loyalty rewards.

But BoP investment is not only needed in developing nations. Many inner-city neighborhoods in the US are "food deserts" where locals cannot get access to fresh produce and affordable staples. Grocers Shaws and Pathmark have built stores in inner-cities that feature a dizzying variety of racially and ethnically targeted brands, at multiple price points, and locally originated store layouts and displays. Like other companies operating in BoP markets, Shaw's had to do its own sociological study of customer's needs. The Shaw's market team identified forty-two different ethnic and religious affiliations within inner-city New Haven, Connecticut. To develop the right product mix, Shaw's management collaborated with community groups and organized meetings with the ethnic leadership to discuss product offerings. You can, for example, find fresh goat meat in some storesmeeting the needs of consumers from Caribbean countries. Whole Foods followed this practice in setting up a market in inner city Detroit.

Globally, about 1.7 billion adults remain unbanked--without an account at a financial institution or via a mobile money provider. In response, a variety of microfinance institutions (MFIs) have been started offering individual loans, savings products and micro-insurance, not just for small businesses, but for farms, schools and individuals paying for education, health care and such. Nonetheless, demand outpaces supply and MFIs face constant threats of market failure.

Part of the challenge is how to connect MFIs to larger capital pools and social impact investors. Credit Suisse saw growing interest among its clients in social impact investing. The global bank developed microfinance debt funds and private equity funds that would invest in small, undercapitalized MFIs--and offered those funds to its wealthy clients. While this helped provide capital relief, it did not address problems MFIs encountered in vetting loan applications, managing data, deploying the latest technology, and combatting fraud. Credit Suisse then launched its Microfinance Capacity Building Initiative which helped to create a microfinance ecosystem of several intermediary lending institutions (FINCA, Accion, Women's World Banking, PlaNet Finance, and others).

This enables MFIs to bundle funds into investible instruments and speed currency conversions. Credit Suisse employees, through the bank's pro bono program, work with its partners to conduct market and risk management studies and offer them training, IT and HR support, and relevant mobile solutions. Recent achievements include: Backing some 530,000 students worldwide by increasing households' ability to afford the education of their children. Raising the income of more than 40,000 people living in rural areas by increasing their access to working assets, such as short-term loans, and by improving their cash and inventory management. Equipping 120 managers at 60 MFIs with training and tools during a three-year period to better serve the needs of women (through new credit, savings and insurance products).

All of this, according to Laura Hemrika, spearheading the capacity building initiative, has enabled micro-finance to reach 2.5 billion of the world's poorest people.

The United Nation's Sustainable Development Goals variously call on countries and companies to eradicate poverty, achieve equality, and promote inclusive prosperity. While progress on the fronts is evident, we have a ways to go to realize these goals--and further still given the economic impact of the COVID-19 pandemic. According to the World Bank, the virus is projected to push one-half billion people worldwide and tens-of-millions in the US back into poverty and shred national safety nets.

Where are some of the bright spots? Globally, more than $22.8 trillion are invested sustainably, representing more than $1 in every $4 under professional management. A recent survey from Morgan Stanley shows 70% of asset owners are pursuing environmental, social, and governance (ESG) factors when making investment decisions. Interestingly, the study found that while three-fourths are motivated to do so to reduce risks, as many are seeking financial returns! What this means is that the business case for corporate responsibility has gained traction with investors.

Employee stock ownership can also be expanded. The National Center for Employee Ownership estimates that 32 million US employees participate in an employee ownership plan. Research also shows that 100% employee-owned companies show consistent revenue and profit growth, report less turnover, and that both household net wealth (92% higher) and average income (33% higher) are greater for workers of employee-owned companies.

Now some are optimistic that, after the virus abates, companies will "reset" their agendas and seriously tackle two slower-moving crises: economic inequality and climate change. Many of the conditions and frameworks are in place to speed progress including heightened public expectations of business in these regards, new accounting and public reporting schemes, activists and investors pressing for and rewarding positive action, and a clear and compelling business case. There are, in addition, public policy and regulatory measures that advocates of more inclusive prosperity have proposed. Still, I suspect that, short of regulation, the key ingredient will be more "enlightened" management cum stewardship.

Yet many are dubious that the private sector can reduce the wealth gap and improve the upward mobility of lowincome and disadvantaged workers. Corporate moves toward philanthrocapitalism, shared value, and doing well by doing good (such as described here) are seen by critics as window-dressing. It seems to them that capitalism is the culprit--that inequality is in its DNA. Hopefully, this article presents a more uplifting picture of what some companies are doing and makes a case that businesses overall can and would benefit from doing more. To size the challenge ahead, consider these two findings from a recent survey of the American public: 95 % want large corporations to promote an economy that serves all Americans; yet only 45 % believe large corporations 'walk to talk" in promoting this kind of economy.

For up-to-date information on wages and wealth, see Internal Revenue Service (IRS), Organization for Economic Co-operation and Development (OECD), and Economic Policy Institute and, for data junkies, the World Inequality database. Compensation info is available at the Bureau of Labor Statistics (BLS) and at glassdoor.com, payscale.com, and other wage tracking sites (as self-reported). For business compensation practices, see periodic reports by the Society of Human Resource Management and by commercial firms like Willis Towers Watson and Mercer. Polls on public attitudes toward business, income and wealth, and such include Edelman's Global Trust Barometer (annually) and select ones by Cone

Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure

The error at the heart of corporate leadership

How and where diversity drives financial performance. Harvard Business Review, 30. To learn how businesses responds positively to inequities, see

A better world

For latest trends, visit websites like businessfightspoverty.org and sharedvalue.org. My own writings on business stepping up include Googins

Stewardship and human resource management: From me to we to all of us

The link between competitive advantage and corporate social responsibility

Research Fellow, GNCC and Babson Lewis Institute, c/o 29 Rabbitbrush

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From inequity to inclusive prosperity: The corporate role