Yvon Chouinard, the founder of the outdoor clothing company, Patagonia, wrote in his book "Our mission statement says nothing about making a profit. In fact Malinda and I consider our bottom line to be the amount of good that the business has accomplished over the year. [...] Our intent is to remain a closely held private company, so we can continue to focus on our bottom line, doing good."
- Let My People Go Surfing, Yvon Chouinard, Penguin Books, 2006, p. 160, 164
A new movement called the "Economy for the Common Good" has been gaining momentum in Europe and can help transform Chouinard's business principle into an instrument to encourage businesses across the globe to refocus towards doing good.
What is meant by "common" and by "good" within this context? Who belongs to the "common" and what is the "good"? The Economy for the Common Good (ECG) addresses these questions and has created a tool to help businesses across the globe live up to Chouinard’s ideal.
The stakeholder theory of business ethics provides us with an answer to the first part of the question: who belongs to "common"? Stakeholders are the various groups impacted by a company. It can be the customer who buys a product or the supplier of the material. A successful business looks after the needs of each stakeholder group. If the customer is not satisfied, the business will likely fail. At the same time, if the local community in which a business operates is adversely affected, it can also be detrimental to success. According to a more broad interpretation of the stakeholder model, the following five groups are impacted: suppliers, investors, employees/owners, customers/partners, and society/environment.
For the answer to the "good" part of the equation we simply need to turn to the constitutions found in most democratic societies. Certain values are enshrined in these constitutions and should be applied to the business world. In an open, democratic process the ECG has distilled these values into five areas: human dignity, cooperation, sustainability, justice and democracy/transparency.
Using these values as a guideline, businesses create a so-called Common Good Balance Sheet in which they measure their company’s impact in 17 different areas. These 17 indicators, clearly illustrated in the Common Good Matrix, range from ethical supply chain management to environmental impact to just income distribution.
Through a process of peer evaluation and/or external audit, a company produces a Common Good Report and receives points based on how they impact their stakeholders. The point system and the audits ensure the validity of the score and the resulting Common Good Balance Sheet gives an understandable, transparent, comprehensive picture of how well a company is serving the common good. The point system makes it possible for customers, investors, suppliers and the general public to immediately judge the social and environmental impact of large and small companies across all branches of business.
The Common Good Balance Sheet is a 2nd generation corporate social responsibility (CSR) instrument, designed to encourage companies to move away from the goal of profit maximization and towards “doing good”.