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Eccentric Yvon Chouinard, former climber and founder of Patagonia, the American brand of techno-mountain clothing, famous for his environmental commitment and controversial stances, has recently declared that he “wants to transform capitalism, making the earth our sole shareholder”. Consequently, he has donated 98% of the company shares to a newly founded non-profit organization which aims to save the Planet. The remaining 2% has gone to a family-controlled trust, committed to guarantee that the Company will continue to make profits and produce dividends to distribute to the environmental organization. Commenting on his decision, Chouinard (known to many for his peculiarity of possessing neither computer nor smart phone), explained that “even companies quoted on the Stock Exchange which have the very best intentions, subject as they are to such a high degree of pressure to create profits in the short term, cannot guarantee their survival in the long term and, above all, their responsibility”. Hence his decision to make the Planet the chief shareholder of the Company whose worth is estimated in three billion dollars and which distributes dividends for around 100 million per year. We shall see over the next few years if the solution Chouinard divined for his Company works. As, indeed, we shall see if this particular choice of governance will be capable of guaranteeing and promoting the ethical values of its founder. There is no doubt, however, that the Patagonia affair contributes towards putting moral and ethical choices of company governance at the centre of the debate.

Given that the area of governance is where the objectives and strategies of a business are determined, it logically follows that this is where ethical choices are made. Choices which are then converted into actions, taken in the course of conducting everyday business, in which a moral impact is implicit. There are no neutral choices that impact negatively or positively on the lives of people or the context in which the business operates. If we create iniquitous governance, we will do no more than spread iniquities. Cutting back on employees to recover share value is a choice. Moving pollutant productions to areas less sensitive to sustainability to avoid the costs involved, is also a moral choice, full of consequences. Every decision in favour of shareholders or of their interests as shareholders, or, on the contrary, of stakeholders as representatives of various interests (environmental, social, cultural) poses an inevitable question of morality.

Not that such debate is recent. There have been other cases in the distant past which can be considered precedents: in 1975, rather than market it, Merck decided to donate a pharmaceutical which was very promising in the battle against a form of blindness caused by parasites in Africa and some South American countries, the pharmaceutical had been developed for a different disease and Merck conceded the patent for it, in spite of the potential damage to shareholders, because countries so poor could never have paid back the cost of experimentation. This was, to say the least, an unusual choice for the times.

Today, it is increasingly evident that moral choices are not neutral even with respect to business success. Brands that make precise choices with regard to respect for the environment and diversity, which pursue policies of fair pay and acceptable working conditions, are being increasingly rewarded for such choices by their specific customers. But, in the long run, it is coherence and authenticity that are rewarded. It is no good making bombastic statements, like that issued a few years ago by the Business Roundtable, an association of important big American corporations, uniting companies of the calibre of JP Morgan, Amazon, BlackRock, General Motors, Apple, Walmart, Boeing and Johnson & Johnson. In a document, widely reported in the media, it affirmed that it wanted to set aside the golden rule of Corporations, namely “shareholders first”, and, instead, to protect the environment, collaborate with local areas and “treat employees with dignity and respect”. This was an epic change, at least it seemed so. It is a pity that, according to a Harvard Law School enquiry on Corporate Governance, the majority of the companies whose CEOs signed the Business Roundtable agreement, failed to include these new principles in governance documents. This, too, is a choice. A questionable one from the moral point of view.

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