Most executives would agree, even if not openly, that we have a systemic design flaw in our economy. It is set up such that profit-driven business can make more money by externalizing costs onto the planet and society, usually in the form of pollution and social injustices.

It’s a perilous situation, as private enterprise is too massive a force for this economic structure to be tenable in today’s resource-constrained world of seven billion. InCorporate Knights’ view, we are long overdue for a more symbiotic system of commerce where what is good for business is good for the environment and society.

This requires some rule changes in the game of capitalism, with the goal of creating an economic environment where the most socially and ecologically productive players in the marketplace are likely to be the most profitable, and vice versa.

Who will push for these systemic changes? Traditional business associations aren’t ideal champions. They tend to pursue narrow agendas, and because of their broad-based membership have been known to advocate for the lowest common denominator of policy.

Instead, representation must come from the highest levels across the spectrum of industries that anchor the economy of Canada, a land of unparalleled natural capital abundance and diversity of human capital. Ideally, it would be a collection of forward-thinking executive leaders from top-tier companies willing to work together to paint a vision for the country. United in purpose, they would then advocate for a new economic model that fuses prosperity with sustainability.

Such a champion has not emerged – until now. A year ago, Corporate Knights took on the mission of filling the vacuum. In this issue, we’re proud to announce the creation of the new Council for Clean Capitalism, which will seek the integration of clean capitalism principles into broader economic and social policy.

Founding members include: Kathy Bardswick, president and CEO of The Co-operators Group; Darren Entwistle, president and CEO of Telus Corp; Lloyd Bryant, general manager of HP Canada; David Labistour, CEO of Mountain Equipment Co-op; Tamara Vrooman, CEO of Vancity; and Kevin Dougherty, President of Sun Life Financial Canada.

Nicholas Parker, chairman of Corporate Knights Inc. and co-chair of the new council, said a prerequisite for membership is the commitment and participation of company heads, who will work with the executive leadership of other members to identify policy priorities and influence necessary rule changes.

“Harnessing the credibility of leading executives from major organizations is essential to ensuring that good environmental and social policy is good economic policy, and vice versa,” said Parker.

Two broad policy themes will be pursued: lowering the cost of capital so that investment will flow more easily to companies engaged in improving resource and social productivity; and altering fiscal frameworks so that the most productive actors are rewarded. The council, for example, may decide to push for federal loan guarantees for green infrastructure projects, or advocate for fiscal incentives that encourage new sustainable construction on previously urbanized lands. Efforts are underway to create a “Blueprint Vision for a Clean Capitalist Economy,” with plans for a high-profile release by the end of 2012. “The aim is to better align policy with corporate sustainability so that superior performance is incented and rewarded,” Parker added. “We aim to take on one or two specific initiatives each year with a view to securing tangible progress.”

The council will initially be Canadian and more members will be added over the coming months, with expansion into the United States an option as momentum grows. The creation of a business council with so much breadth, profile and influence – one focused on integrating sustainability with economic policy – is timely.

At the Rio+20 Summit this past June, it was generally recognized that the business community is stepping up to our global sustainability challenges at a time when government seems to be backing away.

“It is undeniable that a sea change has taken place,” wrote Matthew Gitsham, director of the U.K.-based Ashridge Centre for Business Sustainability, commenting in the Guardian newspaper on the presence of Big Business at Rio+20. “A new generation of business leaders has emerged, and they are forcing a change in the rules and the norms of the marketplace that affects everyone else.”

Business was on the fringe at the first Rio conference in 1992. Government was presumed to be in charge, and business was seen more as an obstacle than an ally. Times have changed. The Council for Clean Capitalism aims to be a leader – so stay tuned. Corporate Knights will keep you up to date on the council’s activities and public-policy wins en route to creating markets that make the world a better place.

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