Decisions are taken without consulting the people and communities whose land is exploited. The environment is seen as a free provider of water land and other resources, and as a dumping ground for pollution. Tax is seen as an expense that business seeks to minimize and corruption is an ordinary part of business in far too many cases. And investors seek as high as possible returns irrespective of the conditions on which that is based. This cannot go on. Business as usual is based on exploitation of people, destruction of the environment and relentless marketing of overconsumption to satisfy the extreme pressure for returns to investors. This is based on a myth that business must maximize returns for investors and it is bad for everybody. It is threatening the very basis of our existence and the possibilities of good lives for people now and in the future. This is based on the myth that business must maximize returns for investors and it is bad for everybody. It is threatening the very basis of our existence and the possibilities of good lives for people now and in the future.
We believe that sustainable business is possible. A fundamental transformation is required to a way of doing business where business is a positive, integrated part of the communities and ecosystems it effects. Where value is created rather than investor returns maximized, and where every single human being and every element of the environment that we all depend on has intrinsic worth. This is the transition that we need business to undertake.
To sustainable circular business models where no social or environmental costs are left for society to cover now or in the future. In the SMART project we aim to contribute to the transformation of business, through a reform proposal for changing EU business law. We suggest to redefine the purpose of business to be about creating value in a sustainable way within the limits of our planet. To make sure that this is taken seriously, we also propose to redefine the duties of the board, the core decision makers.
The proposal has three main elements:
The board must commit to achieving this overarching purpose. The purpose must be integrated throughout the entire business. I say business and not company because it is not just about the single legal entity of the company, it is about the whole business, which more often than not has global value chains.
This duty involves assessing and adjusting the business model of the company. It entails developing and making public a strategy for how to integrate sustainability throughout the business. To be able to do this the board shall ensure that a stringent sustainability assessment is undertaken every few years across global value chains.
This entails employing sustainability due diligence, which shall cover environmental issues including greenhouse gas emissions, impact on biodiversity, water use, land use and introducing novel entities into nature, like micro plastics and nanomaterials. Social issues including human rights and labor rights, decent work and equality, and seeking to ensure that also the needs and concerns of especially vulnerable groups and persons are identified and taken care of.
Governance issues, including anti-corruption, anti-bribery and anti-tax evasion, and making sure that workers and other affected people and communities are included in open and participatory processes. Based on the sustainability assessment, the board shall identify ongoing negative sustainability impacts and principal risk for future negative impacts and draw up a plan for an ambitious continuous improvement process. The board shall report on the progress annually. External experts must give assurance that these processes are carried out and that the relevant issues are identified.
The annual reporting on the continuous improvement of these issues must be audited. It is time that we take the environment and people as seriously as we have been taking financial issues for centuries. This proposal is the key in a broader set of reform proposals that we have developed. We truly believe that sustainable business is possible and that we together can achieve this.