Restoring Balance Between Business and Society
As part of our series of speaker profiles for ACCSR’s Annual Conference, we spoke with Danny Almagor, impact investor and CEO of Small Giants, about social enterprise, B-Corps and re-framing the role of business in society.
For Danny Almagor, failures in leadership reveal the flaws in our social and economic systems, which reward self-interest and privilege shareholder rights.
“We define [our leaders] by the structures we create,” says the CEO of Small Giants, an impact investment firm dedicated to supporting social enterprises.
He sees a dissonance between responsible leadership and current business practices, which take a more Friedman-ite view, where profit trumps all other considerations, including people and planet. Almagor believes that a more ethical approach to business is needed.
“Responsible leadership is about empathy and a good dose of emotional intelligence, which is deeply lacking in current practice,” he continues. “There’s a sense that business is in it for itself and that it doesn’t have responsibility for wider society.”
In stark comparison, Almagor’s own organisation, Small Giants is Australia’s first certified B-Corporation. The impact investor’s portfolio includes social enterprises and non-profits such as Streat, TOM Organic, Hepburn Wind and GoodStart Early Learning.
A movement founded in the United States, “B-Corps” come from a range of sectors, industries and countries, with a unifying mission to solve social and environmental challenges using the power of business.
Small Giants is in good company with other B-Corp alumni, such as global ice cream giant, Ben & Jerry’s, outdoor adventure pioneer, Patagonia and online community marketplace, Etsy.
For Almagor, who is also RMIT University’s inaugural Social Entrepreneur in Residence, the B-Corp is “the commercial side of social entrepreneurship [which]…started out as a profession, then became a sector and now is more of a mindset than anything else.”
This mindset permeates the structure of the B-Corp and informs all decision making. In this way, it calls for a radical re-think of the role of business in society.
Almagor believes that the traditional business maxim to deliver the highest possible return to shareholders has been taken to the extreme. Up to the point where it often neglects a business’ wider stakeholder network.
“We need a redefinition of the company, beyond exclusively shareholders,” he says. “Employees and customers have ownership of the company, as well as the community. The company is made up of the ecosystem around it, including employees and the environment.”
Almagor believes that “the role of business is to add value to society. This is the ultimate role of business and is the primary reason why the market was created. It was not created to make individuals rich, but to make a functioning society better.”
The economy is a tool through which business creates greater outcomes for society, rather than the other way around.
“Modern economic theory advocates people chasing their own self-interest because through enlightened self-interest the community benefits. But that has been taken out of context,” he says.
Cultural change is a long-term process, while engaging leaders to think responsibly and counter traditional thinking about the role of business is a complex challenge. Almagor views the first step as training our next generation of responsible leaders to understand how business imperatives should generate social and environmental value.
“The current paradigm is stopping students from thinking about business in those terms,” says Almagor. “I wonder if those doing business courses today have one subject on business ethics or whether the whole course is embedded with issues relating to business and society.”
He uses the example of his own engineering degree, where health and safety were not separate issues but integrated into every subject.
“Take accounting and social impact assessments – can conventional accounting incorporate carbon accounting, social impact accounting or Social Return on Investment?”
Almagor will share his insights about reforming and transforming business models at a session on the future of responsible business at ACCSR’s 6th Annual Conference on Responsible Leadership in Melbourne.
With a decade of experience assisting private firms, non-profits and government agencies to plan and advance their sustainable development agendas, Sara's career is committed to creating shared value for communities and companies through evidence-based decision-making, risk management and strong stakeholder engagement.
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