Business won’t save the world, but — according to Harvard economist Rebecca Henderson — it can help fix it. Henderson, author of Reimagining Capitalism in a World on Fire, became preoccupied with the harshness of the free market after watching manufacturing plants shut down in England in the 1980s when they proved unable to adapt to evolving markets. Since then, she has been animated by the question of how to build a more just and sustainable system.

Three Takeaways:

• Henderson attributes the corporate world’s sluggishness in embracing green regulations to fears about hurting their bottom line. Even if CEOs acknowledge that “climate change might be a big issue,” concerns about not hitting quarterly earnings targets supersede it. Henderson also points to a fear of going it alone: why invest time and money into decarbonizing if “my competitors are not?”
• When it comes to saving the world, Henderson thinks “a huge political and social and cultural movement” is required. However, she believes businesses can have a positive impact by joining together to tackle problems and catalyze change in different industries. Henderson points to Walmart lobbying for a $15 federal minimum wage (the franchise raised its own wages and wanted others to do the same) as an example of when business interests and the common good can come together.
• Employees are increasingly pushing their employers to align themselves with social and environmental causes. Where you work is where “your identity is bound up,” says Henderson. Accordingly, employees who care about these issues seek out places that share their concerns, and CEOs and companies are being pushed to adapt in order to hire or retain talent.

More Reading:

• Only half of young adults view capitalism positively, according to this 2019 Gallup poll. A steady decline in its popularity has made socialism as popular as capitalism among young adults in the U.S.
• 100 companies are responsible for 71% of global greenhouse gas emissions. Some are beginning to decarbonize. Why? 79% of companies curbing emissions say brand reputation is one of the biggest benefits of going green.
• After the killing of George Floyd, much of corporate America pledged to fight racial injustice. This New York Times article chronicles the commitments companies made. Corporations have since become the biggest funders of racial equity efforts.
• In 2019, Walmart’s CEO called on Congress to raise the federal minimum wage after years of previously lobbying against wage increases. Read more about Walmart’s winding road toward corporate responsibility, and when the company helped victims survive Hurricane Katrina.