Post-COVID capitalism should care for people and the planet

Posted on: June 12, 2020

Chair, Mahindra Group


Woman flips open sign
Photo: KayWalker/Shutterstock

Communities will act as a brake on the excesses of businesses that prioritize value for shareholders

The COVID-19 crisis has shaken up how we view the world. It has shown that many of our political and social structures are built on privilege and inequality, breaking through the clutter and smug self-satisfaction of our times, and turning the spotlight on what is truly important. 

We must never forget that during the crisis we have not been desperate for lawyers, actors, athletes, or reality TV stars (or, let me add, business people). We have needed teachers, doctors, nurses, carers, shop workers, delivery drivers, and countless others whom we usually take for granted. The crisis underlined that the edifice of our prosperity depends on many who work in humble ways and whose well-being is the foundation of our own well-being.

As a business person, it brought home to me how interlinked the cogs are of our economic wheels. The working of a factory in Mumbai, a construction site in Delhi, a tourist hub in Goa, and a plantation in Kerala depend on wandering migrants from the remotest and poorest corners of India.

When they flee, because their life has become unbearable, the scaffolding that props up our prosperity collapses. Yet, in spite of their centrality, the underprivileged have disproportionately borne the burden of the virus – not just in India but all over the world.

COVID-19 has also demonstrated the incompatibility of our “normal” lifestyle with the natural world, and how quickly nature can repair the damage we inflict upon it if we change how we live. 

In the nine or 10 weeks of enforced lockdown in India, pollution levels have fallen drastically, the Himalayas are visible from the plains for the first time in decades, birds are back in our cities, and the skies and oceans have shrugged off the patina of grey in which they are normally enveloped. 

Crises reveal what should be truly important to us. The bottom line is that interconnectedness, of people with each other and with the planet, is non-negotiable. Business leaders who do not get it are going to see their company’s brand value erode before their very eyes. 

In our group of companies we were fortunate to experience this epiphany some years ago. We recognized, from a business perspective, that if we wanted to grow sustainably we could not rely on a relatively narrow customer base of prosperous Indians. Instead we had to create value collectively for our entire spectrum of stakeholders – colleagues, business associates, shareholders, potential consumers across the economy, local and global communities, and the planet – making them partners in our success. 

This crystallized into our business philosophy: “Rise”. Our core purpose is to enable others to rise by driving positive change in their lives. It does not explicitly mention profits, because we believe that if we enable others to rise we will rise with them and profits will inevitably follow.

In a sense, we were articulating a philosophy of “shared value”. But we take particular satisfaction that we were shaping it well before the term was coined by Michael Porter, of Harvard Business School, a decade or so ago.

This business strategy, the touchstone by which we judge all our decisions, has served us well. It is the galvanizing force that brings our people to work in the morning. They feel they are working for something larger than promotion or profits – to make a better world for themselves and others – and that gives meaning to what they do.

Concern for people has led to our choosing new businesses that make an impact on people and communities. Concern for the planet, and its global commons, has incorporated sustainability into our strategies, our factories, our offices, our products, and our lives. That has resulted not only in greater sensitivity and better environmental practices but in innovation and savings too. 

Little did we know, when we evolved the Rise philosophy, that it could one day serve as a signpost for the post-COVID world. The coronavirus pandemic has underlined that we are all an inextricable part of a larger community, irrespective of geography, wealth or status. Fault lines have revealed that inequality is a very unstable foundation on which to build, and that what is only good for shareholders, or a class of consumers, is not necessarily in the long-term interest of the community.

I believe one consequence of the crisis will be that communities will act as a powerful brake on the excesses of shareholder-value-led, or even consumer-led, capitalism. Protesters in the United States are holding up placards saying “Eat the rich,” but I do not think this is a precursor to class warfare. Rather, it is an indication that communities, and their values and priorities, will increasingly dictate the directions that businesses adopt, enabling them to create shared value in a changed world.

The concept of community capitalism, a step in that direction, has been defined as an approach to capitalism that places a priority on the well-being and sustainability of a community as a whole, whether in a metropolitan area, a region or indeed an entire country. 

If the pandemic has taught that we are all inextricably interrelated, and that people and the planet should be at the heart of every decision, then community capitalism is the logical next step for business. I would go further, arguing that the definition I mentioned is actually too narrow, localized and parochial to meet the challenges of the post-COVID world. 

There is a Sanskrit saying “Vasudhaiva kutumbakam”, meaning “the whole world is one family”. Only when community capitalism integrates that worldview can it realise its full potential. In our Rise philosophy we interpret community in the widest sense, from individuals to the entire planet. Once we adopt this enhanced approach, then environmental protection, for example, is no longer the zero-sum game that some businesses presume it is. 

“Purpose-driven business” has become a catchphrase, but it suffers from an underlying implication that purpose is something that companies have to graft on to their otherwise natural state; that it requires a higher level of human evolution than we have yet attained. In my opinion, that is utopian. Like corporate social responsibility, it will become a mere box to be ticked, rarely comprehensively or with conviction. 

I believe that purpose will truly come first when it is aligned to Adam Smith’s assumption that people act out of enlightened self-interest. Even in our Rise philosophy there is an underlying assumption that it is in our own interest to enable others to rise, bringing us with them. That does not detract from the idealism of the purpose, but exhorts and enables it. Purpose-led capitalism, where enlightened self-interest aligns with community interests, is the future for business.

If the world absorbs the lessons of the COVID-19 crisis, people and communities will look for strong evidence of caring for people and for the planet through adherence to purpose in the company of the future. 

Those that have this with conviction and authenticity will create the greatest shareholder value. They will understand that in a post-COVID world, the well-known triple bottom line of people, planet and profits, needs to be turned into the equation: People + Planet = Profits.

This piece was originally published for the GEF-Telegraph Partnership.

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