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Inclusive Capitalism is a global effort to restore capitalism as an engine of broadly shared prosperity. Together we can achieve this through business and investment practices that extend the opportunities and benefits of our economic system to everyone.

All firms draw on a variety of assets or capitals when doing business, yet it has been the concept of financial capital that has dominated recent thinking and accounting practices. Inclusive Capitalism emphasises the importance of the other forms of capital too – most particularly human, social and natural capital. This reflects the inter-dependencies and relationships both inside and outside the firm that enable it to operate and create profit. Inclusive Capitalism holds that by taking a broader view of the firm – its purpose and its stakeholders – it is more likely to prosper over the long term. But this is only possible if investors extend their investment time horizons, overcoming the myopia of short-term financial metrics.

Every firm must seek a license to operate from the society in which it trades. This is both a legal and a socially defined license. This means that firms must contribute proportionately to the societies in which they do business; not free-riding on services that others have paid for.

The public are increasingly demanding that firms account for their behaviour and values. We see this expressed in consumer buying patterns, citizen shareholder activism and demands for more consumer-focused corporate information. Firms that practice unsustainable activities and disrespect their stakeholders and the communities in which they operate will find their licences called into question. Firms that practice Inclusive Capitalism will see their license strengthened over the long term.

Inclusive Capitalism provides that firms should account for themselves not just on the bottom line but on environmental, social and governance metrics (ESG). Investors and consumers need to understand the true price of the goods and services that corporations make and sell and the true value of the contributions of the stakeholders – employees, suppliers, customers and community – that help make it happen.

Inclusive Capitalism is a journey not a destination – a set of evolving practices not an end point. It holds that with properly structured incentives, meaningful stakeholder engagement, supportive governments and effective business leadership, firms can generate broad and sustainable prosperity in a manner that respects our communities and our environment for generations to come.

- See more at: http://www.inc-cap.com/about-us/#what-we-do

Corporations that practice Inclusive Capitalism are more successful. There is strong evidence for this. Firms that invest in improving their performance on material ESG issues experience a stock valuation premium and better profitability. Firms practicing ESG approaches have a lower cost of both debt and equity. Firms that adopt ESG metrics into their core corporate reporting practices attract more of the long-term, dedicated investors that help management make clear-sighted decisions for the long-term.

 

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Inclusive Capitalism can make for better and more innovative corporations. In order to understand the effect of their activities on the world, they have to understand themselves – their business processes and how they create value. To reduce the negative environmental and social impact of their business processes, executives must innovate. Inclusive Capitalism, therefore, can be a source of business innovation and help make a corporation more resilient.

An investor might reject an appeal to practice Inclusive Capitalism by talking about trade-offs; highlighting it as a cost to the financial bottom line. We think that’s wrong and think that there are several bottom lines to consider. But even if we accept the language of trade-offs, we have to choose the right time horizon over which to assess them and think about the stakeholders involved. If a corporation decides to pay its workers better this year, it might mean that it pays a lower dividend to its shareholders. In cash terms, there’s a trade off this year. But, a better-paid workforce is likely to be a more engaged workforce. The corporation will experience lower staff turnover, higher productivity and better standards of customer service. A reduced dividend this year can therefore make for a more resilient, skillful and productive company in the long-term. The longer the time-horizon, the less it looks like a trade-off.

Capitalism as a system has made the world healthier, richer and more free. It has also wrought environmental degradation, growing inequality and corruption. The people that lose out seem to be larger in number than a generation ago. Capitalism seems to be producing too many outsiders and not enough insiders. Corporations have failed to take their responsibilities to society seriously. Technology, globalization and lobbying have increased the rewards for a very few. Inclusive Capitalism requires countervailing measures to be taken by asset owners, executives and government working together.

Leading figures in business understand that our current form of capitalism has to change and believe that business should take the lead in making this happen. This is why they support our work. The Coalition for Inclusive Capitalism has, across two conferences, brought together executives, asset owners and asset managers representing more than $50tn of assets under management, to discuss the imperative for change and the practical steps that can be taken. The Coalition believes that business–leaders can and should be vocal and effective advocates of Inclusive Capitalism.

The public though need government to be an effective partner in making capitalism more inclusive. Without government’s involvement, there is a danger that marketing will take the place of real change. The public suspect that some corporate initiatives are ”just talk” or “check the box”; marketing dressed as good deeds. Such spending wastes investment and goodwill that could be more effectively spent.

We, and the supporters of the Coalition for Inclusive Capitalism, don’t think Inclusive Capitalism practices are “nice to have”. We think that they are necessary for our future economic development and prosperity. We are working to ensure that they are brought into the corporate mainstream.

- See more at: http://www.inc-cap.com/about-us/#what-we-do

Corporations that practice Inclusive Capitalism are more successful. There is strong evidence for this. Firms that invest in improving their performance on material ESG issues experience a stock valuation premium and better profitability. Firms practicing ESG approaches have a lower cost of both debt and equity. Firms that adopt ESG metrics into their core corporate reporting practices attract more of the long-term, dedicated investors that help management make clear-sighted decisions for the long-term.

 

Screen Shot 2015-06-05 at 11.03.54 AM

 

Inclusive Capitalism can make for better and more innovative corporations. In order to understand the effect of their activities on the world, they have to understand themselves – their business processes and how they create value. To reduce the negative environmental and social impact of their business processes, executives must innovate. Inclusive Capitalism, therefore, can be a source of business innovation and help make a corporation more resilient.

An investor might reject an appeal to practice Inclusive Capitalism by talking about trade-offs; highlighting it as a cost to the financial bottom line. We think that’s wrong and think that there are several bottom lines to consider. But even if we accept the language of trade-offs, we have to choose the right time horizon over which to assess them and think about the stakeholders involved. If a corporation decides to pay its workers better this year, it might mean that it pays a lower dividend to its shareholders. In cash terms, there’s a trade off this year. But, a better-paid workforce is likely to be a more engaged workforce. The corporation will experience lower staff turnover, higher productivity and better standards of customer service. A reduced dividend this year can therefore make for a more resilient, skillful and productive company in the long-term. The longer the time-horizon, the less it looks like a trade-off.

Capitalism as a system has made the world healthier, richer and more free. It has also wrought environmental degradation, growing inequality and corruption. The people that lose out seem to be larger in number than a generation ago. Capitalism seems to be producing too many outsiders and not enough insiders. Corporations have failed to take their responsibilities to society seriously. Technology, globalization and lobbying have increased the rewards for a very few. Inclusive Capitalism requires countervailing measures to be taken by asset owners, executives and government working together.

Leading figures in business understand that our current form of capitalism has to change and believe that business should take the lead in making this happen. This is why they support our work. The Coalition for Inclusive Capitalism has, across two conferences, brought together executives, asset owners and asset managers representing more than $50tn of assets under management, to discuss the imperative for change and the practical steps that can be taken. The Coalition believes that business–leaders can and should be vocal and effective advocates of Inclusive Capitalism.

The public though need government to be an effective partner in making capitalism more inclusive. Without government’s involvement, there is a danger that marketing will take the place of real change. The public suspect that some corporate initiatives are ”just talk” or “check the box”; marketing dressed as good deeds. Such spending wastes investment and goodwill that could be more effectively spent.

We, and the supporters of the Coalition for Inclusive Capitalism, don’t think Inclusive Capitalism practices are “nice to have”. We think that they are necessary for our future economic development and prosperity. We are working to ensure that they are brought into the corporate mainstream.

- See more at: http://www.inc-cap.com/about-us/#what-we-do