The ills of modern capitalism are apparent.
The symptoms are everywhere: economic growth that fuels climate change, growing income inequalities, the global financial crisis, corporate activism such as Occupy Wall Street... the list goes on.
Although the world has largely experienced positive economic growth and prosperity over the last few decades, "brute capitalism" - or capitalism carried to its excess - is increasingly viewed as a major contributor to social, environmental and economic problems around the globe.
Companies are perceived to be prospering at the expense of the broader society.
The corporate beast
THE root cause of these problems is often attributed to the nature of corporations and their single- minded pursuit of maximising value for shareholders (and in the process, that of the corporate elite).
It has been argued that this exclusive focus on shareholders and profits is how corporations are constituted in the first place.
Mr Joe Bakan, a legal scholar, points out that companies are legal entities created to "valorise self-interest and invalidate moral concern" and, thus, are naturally and "pathologically selfish" in their pursuit of profits.
Following such a perspective, the pushback against unbridled capitalism has largely taken two forms.
The first has been calls for, and implementations of, rules and more rules to rein in corporate excess. Thus, over the years, there have been increasing environmental regulations, stronger labour protection laws, and stricter codes of corporate governance.
Every time instances of corporate abuses and scandals come to light, new regulations are created to punish the behaviour and to prevent their recurrence. That said, the burden of increasing regulations to rein in corporations is probably not a long-term sustainable option for economies.
The second form of response has been attempts to redefine the nature of the corporation so that it is accountable to the wider group of stakeholders of the economy.
TO BE sure, there already exist organisations that, from inception, are created to focus not just on financial returns, but also on the triple bottom lines of "people, profits and planet".
These social-business hybrid organisations are often broadly termed as "social enterprises" or "social businesses".
They are usually small and medium-sized enterprises, purposefully creating social impact, with profits usually ploughed back to the community. Local examples include Bizlink Centre, which seeks to provide employment services for disadvantaged people, and the many cooperatives of the labour movement such as FairPrice and NTUC First Campus.
An overlapping group is "inclusive businesses". These focus on low-income communities by providing goods and services to, as well as livelihoods for, members of the community.
An example is SaniShop, which was established by the World Toilet Organisation, a Singapore non-governmental organisation. SaniShop operates a franchise model where it supplies toilets made by local masons to local sales entrepreneurs to sell to poor communities in countries such as Cambodia, India and Mozambique.
While social enterprises and inclusive businesses have existed for decades, they have mostly operated at the fringe of the business sector. Most were set up by social sector players and some by businessmen with social leanings.
However, in recent times, the number of these organisations has grown. They are becoming less of a side show as they receive recognition from mainstream businesses and, in turn, influence their thinking and actions.
One manifestation of this is the emergence of "impact investing". This is the active placement of "patient capital" into social enterprises and inclusive businesses.
The interest in impact investing has led financial institutions to create impact investment funds. Investment bankers get starry-eyed with projections of a US$1 trillion (S$1.25 trillion) market for this emerging asset class by 2020.
Corporations are also beginning to make more impact investments. Traditionally, some large corporations engage in corporate venture capital, investing in a portfolio of companies to drive financial and strategic returns for the parent company.
Some of these companies are now extending that investment concept to "corporate impact venturing", where social and environmental impact are part of the metrics for measuring success in the venture.
Furniture retailer Ikea, for example, created Ikea GreenTech AB, a corporate venture vehicle which has invested in "green" technology firms that can help Ikea "go renewable" in its core activities, encompassing energy, materials, water and waste issues.
Last year, Patagonia, a sustainable outdoor apparel pioneer, started an internal venture fund, "$20 Million & Change", to invest in start-ups focused on clothing, food, water, energy and waste, so that it can "do business more responsibly".
Beyond investments, mainstream corporations are also directly engaging with social enterprises and inclusive businesses, even integrating them into their core business. DBS Bank, for example, nurtures social enterprises in a significant way. It promotes, mentors and supports them both as suppliers and customers by starting them off with a special package of "virtually free banking services".
Corporations with a heart
OF COURSE, it is only when mainstream corporations behave much like these social enterprises and begin embracing social and environmental impact in their core businesses that we will really have turned the corner.
Some major corporations are leading the way in this respect.
One of the pioneers is Interface, the world's largest manufacturer of modular carpets. Its founder Ray Anderson had a dramatic awakening in 1994, feeling that "some day people like me will end up in jail" for being "a plunderer of the earth" and stealing "our children's future".
He set the company on a path of an innovation-based green strategy. Over the years, Interface has been recognised for being a leader in sustainable business. Even after Mr Anderson's death, the company continues its "Mission Zero" agenda to be the world's first fully sustainable company with zero negative impact by 2020.
Another leader is Unilever, the world's third-largest consumer goods company. It developed a Sustainable Living Plan in 2010 which set three big goals for 2020: Improve the well-being of a billion people, source 100 per cent of agricultural raw materials sustainably, and halve the environmental footprint of its products. Close to mid-point, the company has reported "excellent progress" and the achievement of a "virtuous circle of growth".
On the local front, City Developments has built its business around the principles of sustainability. It is a pioneer and leader in green buildings, recently delivering the world's first green library for children at the Central Public Library, and Singapore's first zero-energy green gallery at the Botanic Gardens.
It has significantly reduced its carbon emissions. It is the first Singapore company to be listed (currently ranked 39th) on Corporate Knights' Global 100 Most Sustainable Corporations in the World. These examples show that even though a corporation might be constituted with a narrow focus of maximising shareholder value, it is the people in the company who determine its DNA and culture.
These corporate executives understand that just as corporations have created many of the world's problems, corporations are also the solution.
They have moved from a focus on shareholder values to a focus on what Harvard professor Michael Porter calls "Creating Shared Values", by recognising the mutual dependency between the health of the community and the competitiveness of the firm. As more companies take on this mantle of shared values, it is fair to say that a more compassionate and moral capitalism is emerging.
Yes, while capitalism, as we knew it, has been ill, change is in the air.
Long live capitalism!
The writer is a former managing partner at Accenture. He currently sits on the boards of several commercial and non-profit organisations, and is chairman of the Singapore Institute of Directors. He is the author of Doing Good Well.