Whole Systems Change

The cases of mobile telephony and intellectual property in software and broadcasting illustrate the importance of regulation to shaping the market for new technologies and therefore the impact of such technologies on society. They highlight how the corporate influence on regulatory developments is a central question for corporate responsibility. The lack of engagement by the CSR community on these issues also highlights its limited engagement on the rules of the game, the system conditions, that shape the environment within which corporations operate. However, during 2005 the need for whole systems change  in global capitalism, and the role of corporate leaders in helping this, began to be more widely discussed.

‘Whole systems change’ means changing the factors that shape what all agents within that system do. In the context of companies, this means changing those factors that shape what economic actors do, so that all behave in a sustainable and accountable manner. In January 2005 the introduction to previous Lifeworth Annual Review of Corporate Responsibility called on CSR professionals to make their work a “a catalyst for systemic change”, and outlined different paths that would together constitute a transformative CSR agenda.61 Then the magazine What is Enlightenment? ran a special feature on ‘The Business of Saving the World’ which chronicled a nascent leadership amongst some business executives, aiming “to transform the systems that govern global enterprise”.62

In the article Nike’s Darcy Winslow identifies two system conditions that need to be tackled for all companies to be made more responsible. “One is government: a lot of laws that are in place right now do not give financial incentive to do things differently in future. The other is Wall Street. At the end of the day, the shareholders and Wall Street are what keep corporations moving in the direction they are moving in” (ibid, p 88). A few months earlier her company was the feature of an article in the widely read Harvard Business Review. In it Simon Zadek, CEO of the U.K.-based institute AccountAbility, chronicled the bumpy route Nike has travelled towards more responsible business practices. Organizations learn in unique ways, Zadek contends, but they inevitably pass through five stages of corporate responsibility, from defensive ("It's not our fault") to compliant ("We'll do only what we have to") to managerial ("It's the business") to strategic ("It gives us a competitive edge") and, finally, to what he describes as ‘civil’ ("We need to make sure everybody does it").63 This highest stage has strong resemblance to a whole systems change approach. Frank Dixon of Innovest Social Investors has noted that “the traditional CSR movement has been focused on improving corporate environmental and social performance (i.e.: reducing pollution, making safe products, taking good care of employees, acting responsibly in developing countries, etc.). This has prompted great improvement, but much more is needed to achieve sustainability. The missing element of sustainability is system change.”64 In the What Is Enlightenment? article he described Innovest’s “Total corporate responsibility (TCR)” approach to rating companies, as one that “recognises that economic and political systems essentially force firms to be irresponsible and unsustainable by not holding them fully accountable for negative impacts on society. TCR encourages them firms to work proactively with others to achieve system changes that hold them fully accountable.”65 TCR therefore suggests a new mindset for business. Rather than seeing itself as one entity operating independently from the rest of society, business would see itself as being part of one interconnected system. It would give priority to the good of the overall system, and in so doing ensure its own prosperity. However, the TCR approach recognizes the realities of today’s marketplace and suggests that firms take practical, incremental, profit-enhancing actions that improve internal CSR performance as well as promoting system change. Other initiatives explicitly talking about systems change are the Global Transitions Initiative (GTI)66, and Corporation2020, which asks the question "What would a corporation look like that was designed to seamlessly integrate both social and financial purpose?” During 2005 it continued its search by convening various experts to develop principles for the future corporation.67 It is a major task, and whether it is able to provide some answers to systemic issues about the nature of property and profit, and then how to actually achieve the needed whole systems change, is still to be seen.

The earlier discussion of corporate influence over governance on basic issues such as property rights and consumer safety illustrates that there is much work to be done for a systemic view to actually impact significantly on global political economy. The most famous meeting of corporations and politicians, the 2005 World Economic Forum, showed little evidence of a shift towards awareness of systemic problems and thus system-change solutions. WEF’s recommendations for global priority-setting attended to some serious issues – poverty, equitable globalization, climate change, education, the Middle Ea However, the recommendations were the wedded to the usual neo-liberal economic world view of greater corporate activity being of benefit to all regions, including the poorer, and the limited role of governments in facilitating corporations contributions by ever-‘freer’ international trade.”69

Perhaps we will require many more personal transformations before global transformations become possible. As the journalist for What is Enlightenment? put it, “only as business leaders begin to fully embrace the truth of our unity and interdependence will they demand accountability from each other to change these powerful global systems.”70 The nature of this transformation, and the type of leadership it may inspire, was something increasingly discussed during 2005, and is returned to in this report. See the ‘Living Dead’ section.

contents © Greenleaf Publishing, apart from the Introduction © jem bendell, 2006. site by waywardmedia.com