28 years ago I travelled with a backpack in the north-east of Thailand, staying in guesthouses and visiting towns and small villages. It was an amazing experience. I fell in love with the people, who sought to live their lives with dignity and joy whilst struggling to survive in a poor and very dry region. While I was there, I came across an inspiring business, set up by a group of enterprising nuns to help local women make a living through weaving. Their main aim was to reduce the numbers of women driven by poverty to join the sex trade in Bangkok. The business – the Village Weavers Handicrafts – has been a great success, providing livelihoods for the women while putting the profits into providing clean water and education for children. It is hard to imagine any other type of intervention that would have been so effective, so long-term sustainable and so empowering for these women.
I’m sure we can all think of small, inspiring businesses like this that have made a positive contribution to their communities. What is much rarer is large, inspiring businesses. When a business grows beyond a certain size, efficiency and growth seem to come to the fore and “softer” priorities such as compassion, truth and social justice fade away into the background. The logic of the system takes over, often despite the best efforts of those supposedly in charge. At scale, the organisational structure becomes decisive. And our structures are showing their age.
The most common legal form for business, the limited company, has been with us in its current form since 1855. It is funny that in all the time since then we haven’t been able to improve it. Its principal drawback is that those who finance the business are treated as owners, having the ultimate power to appoint and dismiss the board with no matching responsibility. This power without responsibility encourages immorality, a lack of concern for the consequences of shareholders’ actions. It also encourages the board to focus more on “shareholder value” than on human values such as love, compassion and truth. This top-down model, a hangover from a bygone feudal age, is disempowering for those further down in the system. Isn’t it time to liberate the modern day serfs who toil away in our large corporations?
I started to think these thoughts many years ago when I was handling mergers and acquisitions for a multinational retailer. I had always enjoyed my work and was comfortable amongst the trappings of power – the dark suits, the imposing corporate buildings, the huge salaries. Yet I was becoming aware of the escalating global environmental crisis, and the role played by large corporations in contributing to that crisis. I couldn’t find a place within the corporation to raise my concerns.
A natural response would have been to blame the people around me. They must be “bad” people to be part of such a “bad” system. Yet the fact was I liked and respected my colleagues. I found them, as individuals, intelligent, responsible and caring. It was our collective behaviour that troubled me – collectively, we were stupid, uncaring and irresponsible. I find people routinely under-estimate the impact that legal and governance structures have on human behaviour. We need such structures in order to organise ourselves. Yet the models we have adopted are over-simplistic and ill suited for the information age. They are ripe for change.
Eventually I left the corporate world and went to work in the not-for-profit sector. At first this made for a refreshing change – everyone wore jeans and sweaters and talked a lot about values. Yet they also spent inordinate amounts of time worrying about diversity policies and arguing about whose values were best. I came to miss the dynamism, energy and creativity of business. Couldn’t we combine the best of these two worlds, I wondered?
I then came across “social enterprises”, small dynamic enterprises aiming to use the power of business to achieve social or environmental aims. I was intrigued to learn that there is no legal form for a social enterprise. They are a hotchpotch of charities, cooperatives and limited companies, none of which to my mind are quite suited for the job – every structure has its own bias. I dreamed of experimenting with new structures, which led me to Riversimple.
Riversimple is a small Wales-based business designing an unusual type of car. Capable of over 250 miles per gallon (energy equivalent), our beta prototype vehicle is powered by hydrogen and built from carbon composites. We are currently aiming to raise £3m in crowd-funding, to run a pilot project next year.
Our breakthrough with the technology comes from integrating existing components in a new way. We have done something similar with our legal structure. Our starting premise was simple: if you’re a stakeholder, you should have a stake! We have appointed six trustees (or “custodians”) to speak for six groups of stakeholders – customers, staff, investors, suppliers, our neighbours and the planet. These six custodians, each a separate legal entity, collectively appoint the board. We believe our model will scale very well.
As far as we are aware, this structure is unique, in particular the giving of a voice to the planet at the highest level of the business. Yet the underlying philosophy is not new. It is based on trusteeship, where assets are held “in trust” by one group to be used by and for the benefit of others. Moving beyond ownership to trusteeship is critical if we are to achieve the level of selflessness needed to truly integrate multiple interests, and to think and act for the long term. Trusteeship was advocated by Gandhi (among others). The John Lewis Partnership is owned by a trust, as is the Guardian. Looking wider, I see us as part of a movement of people developing Earth law, which includes Polly Higgins’ work on the law of Ecocide and the Mother Earth law adopted in Bolivia.
It is no longer enough to be merely efficient. Large businesses need to take into account the interests of the community and the planet at the highest level of the organisation, and then build a profound caring for these interests into every level of the organisation.
I continue to take inspiration from the nuns I met in Thailand all those years ago. They created a business that was financially and socially sustainable, holding onto their deeper values while pursuing efficiency on a daily basis. It is out of that conversation between value and values, profit and purpose, power and love, that new sustainable businesses will emerge to lead the way to a more just and caring society.
[This is an updated version of an article that first appeared in Resurgence and Ecologist magazine, May 2013]