Is the survival of business possible without a fundamental reimagining of capitalism?
In short: Economist Rebecca Henderson argues that unchecked capitalism is destabilizing our environment and harming human health. As fossil fuel combustion drives rising sea levels and mass extinction, she suggests that for business to survive, companies must take responsibility for the climate damage they cause through a new stakeholder-focused model.
In her influential work, including the 2020 book 'Reimagining Capitalism in a World on Fire', Harvard Professor Rebecca Henderson explores the intersection of market mechanics and environmental stability. She identifies a critical tension: the current economic model, characterized by a sole focus on shareholder value, is driving a climate crisis that threatens the very existence of business itself. Henderson highlights three core anxieties: a world literally on fire due to fossil fuel use, extreme wealth inequality where the fifty richest individuals own more than the poorer half of humanity, and the crumbling of institutions like government and local communities that traditionally balance the market.
The movement toward a different model gained momentum in late 2019 when the Business Roundtable issued a restatement regarding corporate purpose. This shift moved away from prioritizing only shareholders toward a broader commitment to all stakeholders. This transition helped fuel the growth of environmental, social, and governance (ESG) investment frameworks and corporate sustainability efforts.
However, this evolution has not been seamless. Following the publication of Henderson's work and the onset of the COVID-19 pandemic, the rise of right-wing populism has triggered a backlash against stakeholder capitalism. Henderson's recent research, including her course 'Reweaving Ourselves and the World', seeks to address these shifting dynamics, moving from reimagining capitalism to a broader focus on how leaders can drive climate action and ethical innovation in an increasingly volatile global landscape.
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Sources
- Summary by Intellect · source: To save the climate, we have to reimagine capitalism | Rebecca Henderson
- Also: From Reimagining Capitalism to Reweaving Ourselves: Leadership for a Sustainable and Caring Future in a World on Fire — Harvard ALI Social Impact Review
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