Net Positive Company

Rating

Net Positive Company

In their book "Net Positive" former Unilever CEO Paul Polman and sustainability guru Andrew Winston explain what they learned from their courageous, in-depth application of Intrinsic Stakeholder Commitment. They define a Net Positive Company as:

Definition of Net Positive (NP) Company

"a business that improves well-being for everyone it impacts and at all scales - every product, every operation, every region and country, and for every stakeholder, including employees, suppliers, communities, customers, and even future generations and the planet itself" (p. 7).
They see this definition as a North Star where we should be heading if we want a viable economy and planet (even if no company can achieve all these aims at once).

Old Thinking

Over the last 50 years of so, capitalism and shareholder value thinking has led to tremendous economic growth, moving out millions of people of poverty. But the downsides of short-term (!) capitalism (in particular inequality between rich and poor as well as climate change) now threaten the social stability of society and the very existence of humanity.

According to Polman and Winston, Milton Friedman's "shareholder-first" philosophy is totally unfit for today's world. Friedman's shareholder primacy approach views stockholders as the economic engine of the organization and the only group to which a firm is socially responsible. In Friedman's view, the (only) goal of the firm is to increase its profits and maximize returns to shareholders.
But nowadays, company success is based on much more than financial metrics and interests, especially if these are applied only in the short term…
Moreover, traditional corporate social responsibility, corporate philanthropy and reducing carbon footprint are also inadequate approaches for our times. They are merely about doing less damage or at most reaching zero in certain areas, but not about making things better overall.
Even Porter's Shared Value-concept does not negate the negative things a company does, so its ambition is too low.

Net Positive (NP)

According to Polman and Winston, the ultimate question for relevant businesses is now: "Is the world better off because your business is in it?" Instead of the old thinking, leaders must rethink what a business is and how it drives change in the world. To help out, they can use NP, essentially a long-term intrinsic stakeholder value model.

5 Core Principles

In order to guide this process, NP companies actively apply the 5 core principles of a net positive company:

1. OWNERSHIP OF ALL IMPACTS AND CONSEQUENCES, INTENDED OR NOT
   These impacts include what happens to your suppliers and customers, the pollution and climate change you impose on society, as well as any slave labor and increased inequality you cause.
2. OPERATING FOR THE LONG-TERM BENEFIT OF BUSINESS AND SOCIETY
   Even if there still are many ruthless or ignorant investors looking for a quick profit. Be careful with short-term executive compensation plans (e.g., stock value increase) for top executives. Use Scenario Planning.
3. CREATING POSITIVE RETURNS FOR ALL STAKEHOLDERS
   No need for equal attention to each of them, each day. But in the long term the outcome must be positive for all stakeholders - including the employees, suppliers, communities, the company itself, its shareholders, and even Mother Earth.
4. DRIVING SHAREHOLDER VALUE AS A RESULT, NOT A GOAL
   Avoid pressure for quarterly stock results and stop talking to investors all the time. Rather executives should spend their precious time on strategy, innovation, future growth, etc.
5. PARTNERING TO DRIVE SYSTEMIC CHANGES
   Large improvements are only possible when you collaborate with competitors/peers, governments (legislation to stop free riders), communities, NGOs, consumers, suppliers.

Are you a corporate leader or are you otherwise occupied with these matters? Then I highly recommend reading this ⭐⭐⭐⭐⭐ book . As the authors say: The future of your business, capitalism, humanity, and life on our planet depend on it...

Compare: Intrinsic Stakeholder Commitment, and Strategic Stakeholder Management .

Source: Polman P. and Winston A.S. (2021), "Net Positive: How Courageous Companies Thrive by Giving More than they Take".