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15 Oct 2020

Can Companies Take On A New Role for the 21st Century?

Recently, it was announced that Apple is now worth $2 trillion dollars. Though this seems like a massive amount of money, there are more companies now reaching those types of economic plateaus. Amazon is one of the largest companies in the world, valued now at $1.15 trillion.

Companies have been around for centuries. In the 1600’s the biggest was the East India Company. It became a powerful entity throughout the world helping other companies to grow and serving the needs of thousands. They even had their own private army that protected them from pirates and thieves. With interests in the Indian sub-continent, their mark on the world economy was tangible and was mostly positive.

Other companies have risen up over the centuries. Industries like railroads, oil and steel have been a major factor in the world’s economic growth. From the Middle East to Texas, the effects of the discovery of oil are still being felt.

With the rise of these industries, the world has often seen poor working conditions. Labour laws in some countries are still non-existent. People work twelve hours a day under harsh and dangerous conditions for pennies a day.

In spite of this, these companies do provide jobs to local families … and jobs mean regular paychecks. As families are able to get those paychecks each week, they can afford homes, clothes, medical care and other essentials.

Our world has been changed in many ways due to companies rising up. Port Sunlight in England was built to house workers for a manufacturing business which later became Lever Brothers, then Unilever. A village for Cadbury workers was created in Bournville, England. They attempted to improve living conditions for workers by providing green space.

In 1970, Milton Friedman argued that the sole purpose of companies was to earn money for its shareholders. He said their primary goal should be profit maximisation without any room for a social purpose.

Many of today’s company owners are wiser. They understand that when they try to improve the living conditions for their workers, they get better overall work from the employees. This helps the worker and the company owner. Plus, it has a very distinct effect on society as a whole. Neighborhoods improve as people can afford better homes, cars, clothes and medical services.

In recent decades, the world has become increasingly connected by the internet and cell phones. This has caused a rise in global trade. It’s just as easy for a consumer in New York to purchase shoes from a shoemaker in Italy as it is for him to make the purchase at a store in his own neighborhood.

As the human population reaches 8 billion, everything is changing including the climate. Larry Fink, the CEO of Blackrock (the world’s largest asset manager), made a few predictions several years ago. He said that companies of the future would need to consider the interests of their shareholders, their workers, their suppliers and the community.

He points out the obvious: that if a worker is happy and healthy, they will be more engaged and productive. This will mean higher profits for the company. Companies that strive to develop positive relationships with their customers build stronger brands that make better sales. Everyone profits.

America’s Business Roundtable addressed this issue last year when the chief executives from181 large corporations signed a letter that acknowledged the need for companies to redefine their purpose.

Executives from companies like Microsoft, Amazon, Apple and DuPont all signed the letter making a fundamental commitment to their shareholders to move forward with a broader view of what a company’s obligations to the community are. Hopefully, the world will see an improvement in the near future concerning the way workers are treated and how much they are paid.

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