By Richard Eidlin
Voluntary corporate sustainability initiatives and social enterprises are essential but are not game changers by themselves. In addition, we need laws and regulations that guide our economy toward sound, long-term decision-making, with full recognition of social and environmental externalities. As business leaders, we can and must support policy changes to help make the economy more sustainable.
A sustainable economy will depend on policies that will help advance change on a societal level. Here are three important policies that will help--and specific actions you can take.
According to polling of small business owners commissioned by the American Sustainable Business Council (ASBC) and the Main Street Alliance last year, 70 percent of small business owners identified the lack of retirement security as a critical issue to their business interests. Yet the same poll showed that only 30 percent of small businesses offer a retirement plan. The most common reason given for not offering a plan was cost, which means that most small employers want to offer a plan but believe that they cannot afford it.
An Employee Stock Ownership Plan, or ESOP, is a strategy to give some ownership of a company to its employees as part of a transition from one owner to another. Rather than selling a company to new owners who may consolidate or close it - resulting in job losses - ESOPs allow owners to give employees more control over the company and more of a stake in its success.
According to the New York Times, more than 10,000 firms--including other ASBC business members like Dansko and Eileen Fisher--across almost all sectors operate with an ESOP in place. The National Center for Employee Ownership (NCEO) notes that those companies employ 13 million people.
Another model is represented by cooperative organizations, or co-ops. As the name suggests, co-ops are controlled by customers and employees who work together (in cooperation) to benefit each other and the community at large. They can be large or small businesses, and contrary to a popular perception of co-ops as being mostly grocery stores, they can exist in any sector, including finance, energy and agriculture.
Cooperatives tend to operate with a more democratic structure, with larger groups of stakeholders involved in the decision-making process. The intention is that decisions are made for the benefit of the community, rather than shareholders, whose only goal is maximizing profit.
The economic benefits are significant: Cooperatives in the U.S. boast more than $3 trillion in assets and employ 1 million people, paying out $25 billion a year in wages and benefits. These benefits go directly back into the community, creating broadly shared opportunity and spurring even more job creation.
Since co-ops remain a well-kept secret, a U.S. House bill, introduced by Rep. Chaka Fattah (D-Pa.), would create a Department of Housing and Urban Development program to promote cooperative development.
However, Securities and Exchange Commission (SEC) rules have previously made this type of small dollar investment cost-prohibitive due to registration and reporting requirements at both the state and federal levels. Following the passage of the JOBS Act in 2012, the SEC began developing final rules for how crowdfunding would be regulated.
Policy Points is produced by the American Sustainable Business Council. The editor is Richard Eidlin, Director – Public Policy and Business Engagement.
The <a href="http://asbcouncil.org">American Sustainable Business Council (ASBC)</a> is a network of companies and business associations. Its column, Policy Points, identifies public policies where a business voice, grounded in principles of innovation, fairness and environmental stewardship, can make an essential difference in the advocacy process. The goal is to arm readers with information and specific actions to take. As business leaders, we can and must support policy change to help make the economy more green and sustainable. The column editor is Richard Eidlin, ASBC's Vice President - Public Policy and Business Engagement.