From corporate greed to sustainable business practices: how slow and steady wins the race

So often we think that ethics and business do not blend, and too often we are proven right. But what if this is not always the case? What if there were a way for profit to be generated and for companies to grow, with the only compromise being the time taken to do so? In this article, Niyati Pingali argues that companies do not have to forgo their profit objective – adopting a more-is-more mindset that entails engaging in a slow process of forging and consolidating ethical and sustainable business practices can drive immediate change in the sector, an intervention that can sit well alongside larger degrowth agendas.

Hamstrung by corporate interest

About halfway through the 2015 movie The Big Short about the 2008 financial crisis instigated by a crash on Wall Street, investor Mark Baum and his band of cynical, dogmatic investors take a trip to Moody’s, the reputed financial ratings agency, to ask them why they were actively assigning AA and AAA ratings to housing mortgage bonds (these being two of the highest ratings a bond can receive, representing a bond comprising sound mortgages that are assigned to people with good credit scores and a history of repaying debts) when the bonds should have been rated lower. One Moody’s employee replied in a straightforward manner: if she and her colleagues didn’t rate these bonds AA at least, banks would go down the road to S&P or any other established ratings agency to get themselves rated “appropriately”.  This confession stuns Baum and his colleagues: the system is rigged, and those who could be fixing it are themselves hamstrung by corporate interest.

Which is why it was fascinating to me to learn that in 2019, Vigeo Eiris, an established independent environmental, social and governance (ESG) research and consultancy services company, was bought over by Moody’s and rebranded. Eiris was originally founded in 1983 and dedicated itself to equipping businesses to help manage risks and increase their social impact. It came up with a global ratings system that ranks companies based on their efforts, involvement and long-term practices in good governance and sustainable business (Vigeo Eiris, 2019).[1]

Immediately upon reading about the acquisition, alarm bells started ringing in my head. However noble the goal of a ratings agency to start accounting for the value of a stock or company based on its commitment to protecting the environment and society, if a company like Moody’s has found itself behaving unethically on the ground not even 20 years ago, what’s to say that an ‘independent’ research agency under the Moody’s umbrella would be given the autonomy to act ethically and by extension have the authority to publish unimpaired, unbiased, verifiable facts even if they disparage their ‘mother’?

While no empirical evidence (beyond anecdotal) exists to prove that this will be the case, it’s clear that potential censorship, should Moody’s not uphold its end of the bargain, would lead to fallout, resignation and, as experience indicates, the start of a slippery slope from ‘ethical’ to ‘convenient’.


Sidelining ethics in the name of profit

Sadly, this is not the first time a company has lost its ethical backbone. Think for example of the   of Timnit Gebru, the Ethiopian-American AI researcher working in the ethical AI research team of Google who parted ways with the company because of ‘irreconcilable differences’. While now universally acknowledged to be a consequence of machine learning based primarily on easily accessed data (usually from the internet, which in and of itself is a biased source), the issue Gebru and her colleagues tried to make Google see (and by extension help amend in its products) was that its existing AI-powered products were foundationally flawed and required a series of very different datasets and priorities to redress the balance. She and a number of colleagues were eventually driven out of Google for their criticism.

In doing this, Google has shown that, like many other companies, it is focused on building harmony (and, obviously, its bottom line). To anyone following what’s going on around the world, this is hardly breaking news. Indeed, my own experience in corporate social responsibility (CSR) for a multi-national corporation proved the degree to which my efforts at protecting and promoting the company’s good potential and community-relevant ties were deprioritized.

While indeed the revelation made here that companies (particularly larger ones) prioritize profit over society is not a new one, it is important to consider the impact the concept of ethical business can have. In this, I do not refer to social enterprises (although they are highly beneficial), or even the established Creating Shared Value (CSV)  business strategy that companies like Friesland Campina have successfully adopted. Instead, I am talking about a more-is-more mindset: electing to grow slowly but consciously – keeping profit at the fore but being more selective and long-term about the partners one chooses to work with.


More is more: how partnering mindfully can pay off

The good news is there are companies who are doing this. Take Jeevanti, a now non-operational for-profit healthcare company in western India whose aim to build world-class healthcare facilities in small Indian towns. Their business approach was to lease existing hospitals and nursing homes, and work with local medical professionals, staff and support services such as catering and cleaning services within said towns, and source locally manufactured medical technology, thus creating locally rooted value chains with the hospital at the centre. Ironically, the business closed due to the high demands and questionable practices on the ground by a member of the (systemically corrupt) Indian medical fraternity involved in the project, not because the vision or business function itself proved unviable.

Or consider abillion, an upcoming social media platform catering to vegans and sustainable consumption. When I asked the founder about the issues around discrimination in AI, and the effect that automatised feedback could have on the system, he said it was about feeding their system the right kinds of information – echoing Gebru’s crusade to include a wider variety of data into the existing data universe. In this case it is about training the system to recognise vegan versus non-vegan content and believing in the users of the platform to be ethical in their buying, selling, and sharing practices. It sounds idealistic and I was initially sceptical, but his argument about the majority of people wanting to actively protect the integrity of the platform convinced me.

Both companies grew (one continues to grow!) despite this ‘counterintuitive’ business logic. These examples make it clear that the socio-economic impact of slow, steady, community-AND-profit-centric growth cannot be underestimated.


Putting mind over money

At ISS we often talk about the concept of degrowth. This topic is hotly debated in class and over drinks, its merits and flaws laid out and sliced up a thousand different ways until, inevitably, we come to the (in)conclusion: in today’s day and age, an inaccessibly inordinate number of things in our socio-politico-economic psychology will need to shift to make happen even a tenth of what degrowth asks for. In essence, in today’s day and age, degrowth is an impossibility, available only to those privileged enough to know the concept, or to afford surviving in it.

Which leads us to what is left that perhaps can actually be done to get out of this quagmire and what it will take for companies like Google and Moody’s to dig us out. It’s a simple matter of putting mind over money, taking the long route and, like the turtle, winning the race based on resilience, stability, and keen determination.

[1] Moody’s, on the other hand, was established in 1900 by John Moody with “a vision to widen access to information and establish a global language of credit” (Moody’s, 2022). They have achieved this and more by incorporating research and risk assessment services into their consultancy repertoire, becoming one of the leading risk assessment and ratings services in the financial world. Their website states upfront their commitment to “bring transparency, expertise and trust to bond transactions”, all key buzzwords that customers, and importantly, the average street consumer, genuinely seek.

Opinions expressed in Bliss posts reflect solely the views of the author of the post in question.

About the author:

Niyati Pingali is currently completing her MA in Development Studies, focusing on governance and development policy. As a former corporate employee, she knows the cost and the benefits of capitalism and plans to dedicate her life to changing the narrative to ensure both people and the economy benefit equally: a feat that sounds impossible but she knows can happen.

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1 Comment
  • Chandru
    26 September 2022

    Niyati’s arguments with clear examples are well founded and compels corporates to ask themselves once again “ are profits above ethics or can they co-exist, irrespective of how large or small they are”.

    Insightful and timely for today’s world of millions of entrepreneurs in their pursuit for business growth and profits