Profit Is Not A Dirty Word

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UConn Storrs presentation. The vast majority of corporate value is in intangible assets thus providing a business case for sustainability. Also linking capitalism - economic model - with freedom.

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Profit Is Not A Dirty Word

  1. 1. Balancing economic, social and environmental sustainability
  2. 2.  I help organizations turn their values into successful business models 20 years+ career including corporate communications/organizational development, public/community relations, sustainability and CSR Corporate executive Co-founding board member of the Sustainable Business Network of Washington (SBNOW) Sustainable Business blogger for Huffington Post www.sbnow.org twitter: @JohnFriedman
  3. 3. How wrong can one be? Capitalism doesnt need Capitalism at the expense of defending, and nobody worth someone elses freedom is listening to claims profit is a not right no matter how dirty word happy it makes you.You are living in an alternate universe,nothing at all like one we live in where You are correct. Capitalismcapitalism is founded on greed, ruthless thrives when the economyexploitation of workers, including the thrives.poorest in 3rd world countries, andrapacious of the earths resources. I suppose it is necessary to use words like sustainability in a post like this, but it seems a bit fantastical. Capitalism works as long as energy is cheap and the promise of unlimited growth can be fueled by commensurate unlimited resources. Capitalism - as a vestige of civilization- will follow Nature into catabolic collapse.
  4. 4.  Capitalism is an economic, not a political model Culture (nationality, faith, etc.) define how capitalism is implemented Individual wealth creation – the ability to earn and retain capital – is a tremendous force for change Short-term thinking is inconsistent with long-term best interests
  5. 5. On Average 70% of market value comes from: Intangible Assets90% for technology companies Brand Finance 7
  6. 6. S&P 500 Companies80% of market value comes from: Intangible Assets Monks/Lajoux, Corporate Valuation 8
  7. 7. Burlington Northern Santa Fe: Market value: $29.2 billion Balance sheet assets: 103% of market value ($30.3 billion) Goodwill: NoneCaterpillar: Market value: $49 billion Balance sheet assets: 95.9% Goodwill: 44.1%United Health Group: Market value: $79 billion Balance sheet assets: 52% Goodwill: 48%Apple: Market value: $58 billion Balance sheet assets: 19.8% Goodwill: 80.2% 9
  8. 8. Microsoft: Market value: $279 billion Balance sheet assets: 33.7% Goodwill: 66.3%Best Buy: Market value: $26.3 billion Balance sheet assets: 39% Goodwill: 61%Starbucks: Market value: $27.8 billion Balance sheet assets: 12% Goodwill: 88%Goldman Sachs: Market value: $61.7 billion Balance sheet assets: 1.1% Goodwill: 98.9% 10
  9. 9.  Relationship with ◦ Customers ◦ Employees ◦ Owners/Investors ◦ Suppliers ◦ Competitors ◦ Communities ◦ Government agencies/regulators
  10. 10.  To improve company valuation, Improve CSR relationships! Good CSR Relationships Lead to a Sustainable Corporation
  11. 11. (self interest considered upon the whole) Financial Reputational Capital Capital $$$INPUTS Physical Output Sustainable Conversion (Goods/ Customers profits; Social Capital Process Services) maximum Capital value Human Capital RETURN ON CAPITAL (preserve adequacy of capital inputs)
  12. 12.  There is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud. That responsi-bility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con-forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.  Milton Friedman, 1970, New York Times Magazine
  13. 13. (self interest considered upon the whole) Financial Reputational Capital Capital $$$INPUTS Physical Output Sustainable Conversion (Goods/ Customers profits; Social Capital Process Services) maximum Capital value Human Capital RETURN ON CAPITAL (preserve adequacy of capital inputs)
  14. 14. Individual Wealth Self Freedom Determination Changing CommunitySocietal Norms Benefits
  15. 15.  The culture that follows upon successful economic growth is a global one, rooted in American consumerism ... that subverts traditional elites and values. Global business is the carrier of this culture, responding to consumer demands. It is legitimate for business to deliver what people want, but at the same time business should take care that local cultures are not permanently asphyxiated.” Business has a responsibility to moderate its impact on those communities, which can hardly protect themselves against the intrusions. Moral Capitalism Steven B. Young
  16. 16. Business has an obligation Business must be respectfulto promote progress and protective of local cultures
  17. 17. Business has an obligation Business must be respectfulto promote progress and protective of local cultures
  18. 18.  Increasing access to information is creating an ‘empowered’ consumer for a more conscious capitalism Capitalism is the best way to advance conditions for the individual, communities and societies Empowering individuals, communities and societies from within is vastly preferable to imposing from outside

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