Former Coca-Cola Co. CEO Neville Isdell had to look no further than the beverage giant’s hometown to launch a lofty effort aimed at redefining how corporations engage with the world.
In a 2009 speech, Mr. Isdell coined the term “connected capitalism,” the idea that corporations can provide greater value to their shareholders by investing in the long-term benefit of the societies where they work.
Since then, he has traveled the globe in search of partners for the effort, a movement he knows will require broad buy-in from leaders in business, government and nonprofits around the world.
“I don’t want this to be narrowed down to a speech that I made. I want it to be broader than that,” Mr. Isdell said at an April 21 briefing on connected capitalism hosted by the World Affairs Council of Atlanta.
Mr. Isdell said that connected capitalism is not a call to turn corporations into charities and that pursuing profit is entirely justified.
But the public’s trust in business has fallen and skepticism toward capitalism has risen, especially since the 2008 financial crisis. For capitalism to continue rapidly improving living standards around the world, it must evolve. Companies can no longer afford to make a quick buck at the expense of society’s long-term sustainability, he said.
Atlanta had the right ingredients to begin outreach on the effort. Not only does the city have a “critical mass” of multinationals, but many of them have the ethos of connected capitalism built into their corporate philosophies, Mr. Isdell said.
“The pieces were there for us to really pull it together and get to where we are,” he told GlobalAtlanta.
Executives from United Parcel Service Inc., General Electric Co., SunTrust Banks Inc. and other private-sector players have joined Mr. isdell in discussions on how to promote a more responsible brand of capitalism.
“This is not just Coca-Cola. There are other companies just as deeply involved in this,” he said.
Though governments have been the “laggards” in the process, U.S. Sen. Johnny Isakson from Georgia has been an important backer, Mr. Isdell said.
Also, working with Helene Gayle, president of Atlanta-based nonprofit CARE Inc., has added “heft” to the initiative’s engagement with the humanitarian community.
Ms. Gayle and Lawrence Summers, who served as President Obama‘s top economic adviser until late last year, joined Mr. Isdell in Atlanta on April 21 for a discussion on the future of connected capitalism.
Dr. Summers noted that government could “turn down the heat” in its dialogue with big business but said that free-market societies have for too long espoused an “avarice with policeman” model in which regulation serves as a check on corporate greed.
This model has created a “debilitating struggle between cat and mouse,” with companies seeking loopholes to maximize short-term gains while government tries in vain to anticipate new schemes.
Companies should continue pursuing profit, but they should look at the quality of earnings, not just the quantity, Dr. Summers said. They also should come up with better ways to gauge their value than share price, learning to operate by ethical norms to preempt government sanctions, he said.
“It’s not easy,” he said. “Share price has the very great virtue of being very definite and very clearly measurable every hour.”
Mr. Isdell agreed, saying in a press briefing that he often checks the Coke stock price on his Blackberry.
But the win-win proposition of connected capitalism requires that companies pursue good in areas that are central to their core business for the long term.
Coke, for instance, invests in clean-water projects around the world because water is central both to Coke’s production process and to the health of the communities that consume its products.
This approach is more sustainable than traditional corporate social responsibility and philanthropy, which can be challenged by shareholders or sputter with leadership shifts, said Mr. Isdell.
Dr. Gayle of CARE has seen a change in the way corporations approach partnerships with non-governmental organizations. They are now less apt to throw money at problems. They still might donate cash, but they’re doing it in much more strategic ways, and they’re also giving more of their time and expertise.
UPS has helped CARE, which fights poverty around the world, deliver supplies in hard-to-reach places like Haiti. Wal-Mart Stores Inc. has worked on a CARE project to improve the business practices of cashew farmers in India.
These partnerships benefit the companies and extend CARE’s resources, Ms. Gayle said.
“We have found that when you have common interests and shared mission, you go a lot further,” Ms. Gayle said.
Visit http://robinson.gsu.edu/wacatl/ for more information on the World Affairs Council, which Mr. Isdell called an important addition to Atlanta’s role as a cornerstone for the discussion on connected capitalism.