Fiduciary IRresponsibility

There are many factors influencing the challenge of moving business toward sustainability - one I'd like to highlight is "fiduciary responsiblity," the entrenched belief that companies must make the maximum possible financial return for shareholders. (For public companies, this is even required legally). Such a restriction means that other goals, like resource conservation/preservation or human development, cannot be the primary focus of a corporation, except to the degree that they enhance or at least do not diminish the financial goal.

What this means in the immediate term for sustainability is that we seek solutions that achieve both ends: "Green" that also brings in "monetary green." Some businesspeople are delighted by this additional challenge, which offers the intangible benefit of feeling good also. Some even discover that particular "green" behavior results in better returns than not doing it (ironically, this furthers the profit-only mentality more than green behaviors that merely coexist with profit!). And a third set of businesspeople simply tolerate greenness as the latest fad, incorporating it where they can in order to please shareholders who care.

None of this will bring real sustainability to business. That is because a deeper cause of unsustainability lies in the notion of "fiduciary responsibility" itself. If the goal is to make maximum money, that's what you'll get! You won't also get environmental and social sustainability, which have different causes. Cause. Effect. We waste a lot of time in ignoring this unavoidable priniciple.

Frankly, I'm surprised that businesspeople are willing to accept such an enormous restriction on their behavior as that imposed by fiduciary responsibility. Imagine the freedom of being able to run your business with your own choice of goals! As long as you make a positive return so the business can continue, you could do anything else in terms of achieving social or environmental or other objectives. In fact, this is how people run their own personal lives. Very few people are willing to sacrifice anything in order to make the maximum amount of money possible - most people have other values also, like working for a pleasant boss, having a short commute, working only 4 days/week to have more time with family, etc. We each choose our own combination of circumstances (within the scope of possibilities we encounter) to maximize our quality of life.

And yet, we expect and require a business to make the narrowest choices - whatever will lead to maximum returns for shareholders. How suffocating!

The irony is, we do it to ourselves. No government mandate says this has to be true (although legal precedent seals it in place for public companies). We choose this system because.. we do! We all collectively believe it, and so it is true. It is one of the most destructive forces in the world.