The future of business lies in being “regenerative by design” and looking for alternatives to the shareholder-first model. Fiona Jarden and Winne van Woerden share insights from last year’s Oxfam Novib forum about responsible business.
We live in an economic system that is structurally geared towards serving the interests of the wealthiest 1% at the expense of everyone else. An economy that has overshot multiple planetary boundaries, and that is fundamentally biased against women. In summary, it’s divisive and degenerative by design. A fundamentally different economy is urgently needed. Business has a key role to play in this systemic change.
That’s why Oxfam Novib hosted its first Responsible Business Forum in November last year, with participants from over 20 different countries. We focused on the role of Small & Medium Social Enterprises (SMEs) and other progressive actors in building responsible business practices.
What is a responsible business model?
A clear message from the forum is that transitioning from an exploitative and extractive to a fair and regenerative private sector involves more than just creating business that minimises harm: it means committing to changing the fundamentals of how business works.
That means going beyond standard sustainability actions such as eliminating deforestation or recycling plastic, and looking to actively improve the ecosystems crucial for all life. It entails models that put people before profit. It means moving beyond a living wage for employees, towards democratising the whole ownership and governance model of business.
What we need is businesses that are regenerative and fair by design. As Oxfam Novib, we recognize the need for alternatives to the shareholder-first business model and advocate for a long-term transformation of our economic system and the role of business within it.
But that in the short term will start with adapting the system as it is today. We therefore support existing innovative models that optimize responsible business practices within the current economic paradigm, while advocating for changing the game.
No more growth at all costs
Being a social enterprise in an economy geared toward growth at all costs is not an easy job. But the bold impact-driven small and medium enterprises (iSMEs) attending the Responsible Business Forum prove that business models designed for the wellbeing of people and planet do “work”, even within existing economic parameters.
Olivia Onyemaobi, Founder and CEO of the Oxfam-supported iSME PadUp Creations in Nigeria, exemplifies this new business model. Her firm is dedicated to addressing period poverty and promoting women’s economic justice by producing reusable period pads, combating a root cause of school absence for women and girls in rural poor areas.
She told the forum: “To be an entrepreneur, passion is not enough. What kept me going? Compassion – the number of girls out of school. That kept me going for seven years.”
Olivia consciously tackles systemic barriers by hiring lower-income women, providing them with training, a living wage, childcare, and a formal uniform, fostering a sense of dignity and self-belief. To counter patriarchal norms hindering women’s access to paid work, PadUp pays community allowances for material goods such as TVs, garnering respect for female workers. Community engagement officers address norms at workers’ homes. This attention to the needs of its workers has led to a punctual, trustworthy workforce, contributing to the distribution of 8.9 million reusable sanitary pads in rural communities. The business serves as a practical example of an SME actively promoting women’s economic justice, making a positive impact on women’s lives and societies.
Owned and governed for workers’ benefit
Entrepreneurs, even those committed to social impact, often have to conform to prevailing corporate governance norms. This prioritises channelling profits into capital gains, dividends, and bonuses for shareholders and executives, over higher wages for workers or social and environmental goals.
However, many alternatives to the shareholder-centric model exists. Businesses can be democratically owned and governed for the benefit of workers, communities, and the environment. One alternative model, said Melanie Rieback, computer scientist and CEO of Radically Open Security, is steward-owned business. In steward ownership, economic and voting rights are separated, with the aim being that profits serve the company’s long-term purpose, rather than being distributed to shareholders. This prioritises organisational purpose over immediate profits.
From niche to normal
Today, more than ever we need business that proactively contributes to tackling the major challenges of today. The change we need has already begun: fantastic social enterprises that are swimming against the tide are showing us what is possible. Taking these models to scale, from niche to normal, is essential to achieve the world we want to see.
Author
Author
This blog is adapted from this article about the Responsible Business Forum and is the second of two blogs about responsible business. Read the first blog by Jan Joost Kessler: How can we make responsible business the new normal?