Deep dive

Wellbeing economy and businesses

There are several reasons why a wellbeing economy does not 'hurt' a healthy business environment:

  • A wellbeing economy is about recognising that there is more to the economy than ‘markets’ and rebalancing and revaluing the roles that the market, the state, the commons and households play in how we care and provide for one another (Module 1).

    That does not mean that a wellbeing economy is anti-business. Businesses play a crucial role in building a wellbeing economy, by extending their goals beyond the pursuit of short-term profit to include care for their workers, wider stakeholders and the environment.

    Governments, in turn, can help shape markets so that they enable regenerative and redistributive businesses to thrive, as well as shaping the deep design of businesses so they are better able to pursue social and ecological goals [1].

  • Governments already guide business priorities in many ways, based on existing (dis)incentives and rules. A wellbeing economy approach would reorient existing rules and (dis)incentives, so that business success is redefined from being 'the best in the world' to being 'the best for the world'.

    At present, businesses with a social or environmental purpose are often given a harder route to success than destructive, selfish businesses. That needs to change. This does not mean more bureaucracy that hinders innovation. There is good evidence that companies with a purpose outperform their peers [2] [3] [4] [5], especially when sustainability principles are embedded in the deep design of businesses [6] [7] [8].

  • An increasing number of companies are taking actions to become more ecologically and socially responsible [9] [10]. Many businesses recognise that they can’t do this alone and need government support in order to level the playing field for their businesses to prosper in the long-term. For example, in 2023, more than 1,400 companies spanning 70 countries with a total revenue of US$ 7 trillion called on their governments to adopt policies now to reverse nature loss in this decade [11].

References:

[1] Sahan, E. & Schneider, N. (2023). Regenerative business rising. How policy can create an economy led by a different kind of business. https://doughnuteconomics.org/tools/public-policies-to-foster-regenerative-businesses

[2] Eccles, R., I. Ioannou and G. Serafeim (2014), “The impact of corporate sustainability on organizational processes and performance”, Management Science, Vol. 60/11, pp. 2835-2857, http://dx.doi.org/10.1287/mnsc.2014.1984.

[3] Clark, G., A. Feiner and M. Viehs (2015), From the stockholder to the stakeholder: How sustainability can drive financial outperformance, University of Oxford and Arabesque Partners, London, https://arabesque.com/research/From_the_stockholder_to_the_stakeholder_web.pd. 

[4] Lyon, T. and J. Shimshack (2015), “Environmental Disclosure: Evidence From Newsweek’s Green Companies Rankings”, Business & Society, Vol. 54/5, pp. 632-675, http://dx.doi.org/10.1177/0007650312439701.

[5] BCG (2017), Total societal impact: A new lens for strategy, Boston Consulting Group, Boston, http://www.bcg.com/publications/2017/total-societal-impact-new-lens-strategy.

[6] IBM (2024). Beyond checking the box. How to create business value with embedded sustainability, https://www.ibm.com/thought-leadership/institute-business-value/en-us/report/sustainability-business-value.

[7] Sahan, E. Sanz Ruiz, C., Raworth, K., Van Winden, W. & Van den Buuse, D. (2022). What Doughnut Economics means for business: Creating enterprises that are regenerative and distributive by design, https://doughnuteconomics.org/tools/doughnut-design-for-business-core-tool#paper

[8] WEAll (2020). The business of wellbeing. A guide to the alternatives to business as usual. https://weall.org/transforming-business

[9] World Economic Forum (2024). The Global Risks Report 2024, https://www3.weforum.org/docs/WEF_The_Global_Risks_Report_2024.pdf

[10] For example, more than 8500 companies are taking actions to adopt science-based targets to reduce greenhouse gas emissions; one in five Fortune Global 500 companies now track three or more dimensions of environmental sustainability in their sustainability reporting. A growing number of businesses are also transforming more holistically, through ownership and governance models designed to prioritise the interests of their employees, society and the planet and use commercial viability for social and environmental goals. 

[11] Business for Nature’s Call to Action, https://www.businessfornature.org/call-to-action