Coffee With Doc: E Corp (Video 4 minutes)
E-Corps – A Framework for Thought?
An E-Corp is an Earth Corporation, an Eco Corporation, or an Environmental Corporation, however you wish to interpret the E. The idea is the brainchild of Mark Donovan of Bali, Indonesia. Mark is the founder of EWABI, a company that makes electric bamboo bikes. It is chartered as an Indonesian non-profit with the provision that Earth “owns” the business. That’s a heavy-duty change in thinking.
To size up the potential impact of an E-Corp, let’s wade into the complex thicket of corporations and their legal variations.
Background:
A corporation grants an organization many of the legal powers of an individual, plus conferring two superhuman powers, limited liability and an indeterminate long life. The purposes of corporations and their legal forms have been spindled, folded, and mutilated in many ways, but the basic concept began in Roman times. Emperors granted a variety of social groups the power to make contracts, engage in transactions, and sue. For millennia, monarchs chartered corporate-like powers. Today governments do. StoraEnso, the oldest operating corporation today, was chartered by King Magnus Erikson of Sweden in 1347, and its record of shareholders dates earlier than that, 1288.
The murky history of non-profit corporations is entangled with volunteerism. For example, American colonists could avoid taxes if they volunteered service to governments, or to the common good. Volunteer fire departments descended from this tradition. Now nearly all organizations, pubic and private, have to incorporate to do business in a transactional world: towns, counties, churches, schools, clubs, foundations, charities… all incorporate. Non-profit means that they are either part of government (a commons) or that they are otherwise exempt from taxation. By intent, non-profits serve a social purpose. But sometimes their legal forms are adopted only as tax dodges.
Incorporation equips any organization to engage in transactions, exchanging wealth and money. Corporate purposes range from shell corporations to minimize taxation or to disguise ownership, to highly dedicated charities. Most of us deal with these legal artifacts daily. They are node points in webs of monetary exchange and wealth accumulation. Corporate legal form says little about human missions or motives. And powers to monetarily transact are abstract from the physical economy – what we physically do to nature or with anything else.
Both legal and historical precedent obligates a for-profit corporation to primarily serve the interests of ownership. Maximizing profit is hard to define, so this obligation can be legally forced on a governing board only if it clearly sanctions illegal practices, or if it diverts money that should go to owners. If there are offers to buy the company, the board needs a legally defensible reason if it does not take the highest bid, social responsibility be damned. In practice, this opens a company to “corporate raiding.”
Benefit Corporations and B-Corp Certification
For centuries, people have devised variations of corporate organization to preclude owner dominance: mutual companies (customer owned), co-operatives (co-owning members furthering common interests), Employee Stock Ownership Plans (ESOPs), and land trusts (property held for designated users, or for a dedicated purpose). Well used, all serve their purpose, but none escape abuse by self-serving financial miscreants.
A recent addition to this list is the benefit corporation, a for-profit corporation that legally absolves its directors from primary allegiance to ownership. This frees them to pursue social purposes, e.g. aiding neighborhoods; improving environmental conditions. B-Corp certification is an audit to assure that a benefit corporation is actually benefitting society.
B-Labs is an organization that devises the criteria and administers these certifications, which are designed for for-profit corporations. It says that 40,000 companies only self-assess and 2,168 companies are certified. To stay certified, companies must be re-audited. B-Labs’ assessments address Corporate Social Responsibility in four major categories: community, customers, environment, and employees. All companies say that they are socially responsible, but to many, making a profit is enough – that is their social responsibility. B-Labs measures responsibility in a broader context, but is it enough?
Implications of an E-Corp
An E-Corp operates under the assumption that Earth “owns” the whole enterprise. If its trustees’ primary obligation is to earth, they must act primarily on behalf of earth – earth, not owners – and maybe all humans are second priority, including them.
Taken literally, does this mean anything for practical purposes? Only if directors are dedicated to earth, feel connected to the environment, and are bound to leave it at least as well as they found it, if not better. They strive to help earth and its ecology regenerate, and humans just have to adapt to this. That’s a different worldview.
Within this worldview, if an E-Corp’s owners are not human, concepts of serving owners, customers, employees, or suppliers don’t fit – or at least they are fuzzy. Poof. There go decades of consultants’ advice and business school dogma.
Having erased conventional concepts, re-think everything starting from scratch. Any human system serving earth has to center on WE, all of us interconnected to each other and to earth, bound together more strongly than by contracts, transactions, and social media. Transactional node points in systems are ME points. At a macro level, we fight across the capitalist-to-communist spectrum about which ME should get how much. If earth gets its cut first, how does all this change?
Let that sink in. Then ask questions, deep ones.
An E-Corp is an extreme clash with business convention, calling for a different pattern of basic beliefs. At the macroeconomic level, where we debate public policy, we assume a lot about human behavior – who to reward, how to stop cheats. However, E-Corp is microeconomic and personal. Could it evoke new behavior and beliefs at the action level? Perhaps, if E-Corp provokes fundamental questions, like:
- How can we “pay” Earth? Do we pay just by giving more to nature than we take from it? But how? Nature accepts no currency.
- If almost any competitive action would damage the environment, how would an E-Corp compete in any conventional market sense?
- What do we do with excess funds (assuming that there are some)?
- What are the obligations of E-Corp trustees making decisions for nature?
- Who or what can be customers of an E-Corp?
- Would an E-Corp compete with other companies?
- What is value to nature, rather than to us?
- If humans are subordinate stakeholders in an E-Corp, what priority does human quality of life get?
- To an E-Corp, what’s wealth?
- To an E-Corp, what’s success?
- What are the most important performance measurements of an E-Corp?
- What qualifies as work? Does it have to be paid in currency?
- How would an E-Corp qualify its suppliers? Would nature be a supplier?
Pondering endless questions of this type makes it obvious that regardless of how it might work in practice, an E-Corp pushes us outside our old frames of reference. The reference frames for nearly all business is benefit to humans – to some more than to others – and it depends on human transactions. The frames of reference for an E-Corp are more like webs of relationships.
“Webs of relationships” is one way to describe the frameworks of thought by which indigenous peoples lived. Tribes were mostly self-sufficient, not dependent on trading and transactions, and yes, nature did not always favor them. Since any corporation is an artifact for contracts and transactions, an E-Corp attempts to bridge a commercial economy with the natural, physical world and its complex webs of relationships, including those with humans.
Can the idea of an E-Corp really work? Could it eventually be accepted globally? The idea is just emerging from glimmers of thought, but EWABI is real. It generates more electricity than it uses, sends almost nothing to landfill, and teaches people how to make bamboo bicycles. But the E-Corp idea promises to structure a bigger framework than the bicycles, a new framework on which to hang new social organizations, new concepts of organizing for work, and new ideas for learning how to care for all life in a rapidly changing world.