The private sector has an important role to play in development, advocates of our current economic system and public good capitalism would argue. And until recently, that role was clear: besides creating wealth, the private sector was expected to manage the expectations of its stakeholders based on environmental, social, and governance (ESG) criteria and align its impact with the business. What’s changed?

From the evolution of corporate philanthropy in the 1990s to Corporate Social Responsibility (CSR) and Sustainability in the early decades of the 21st century, mechanisms for public good capitalism were established for each company to evaluate its impact and manage the ethical, social, and environmental aspects related to its activity. Moreover, with the introduction of ‘materiality analysis’, the company decides its sustainability priorities through a consultation process with its stakeholders.

However, this virtuous evolution has a downside that is not always visible: the focus of conversations with stakeholders revolves around the business impact itself, whether to measure, classify, or manage it.

Here lies the limit of this linear model for public good capitalism. The magnitude of current crises, which are multidimensional and include poverty and inequality, climate emergency, and the weakening of democratic institutions, demands different tools. While it is commendable to include impact in all processes, focusing on the part rather than the whole can act as blinders, narrowing the view and making us lose sight of the context that calls us, shapes us, and gives us identity.

If systemic change teaches us anything – well expressed by Gestalt – it is that the sum of individual contributions, of each company or foundation, is insufficient to solve structural problems. If we truly want to live in a society with more opportunities, we must recognize that it is not enough to achieve the best certifications or have the most recognized sustainability program for public good capitalism.

Even if other companies achieved good performance and deepened their particular focus on social investment, the dispersion of efforts is so great that this modus operandi could only make a difference in Scandinavia. Can we in our fractured communities scatter resources and energies on such varied issues by insisting on our own impact?

Read the full article about public good capitalism by Javier Garcia Moritan at Alliance Magazine.