 Welcome everyone. I am joining you now from my phone because of the technical difficulty, but thank you all for joining us. It is a pleasure to have you. We are really looking forward to this conversation. My name is Autumn McDonald and I am the head of New America, California. New America, California focuses on issues of economic equity and we are always looking to elevate work of voice and think about issues of income and what it looks like to people to survive in the state and nationally. I am joined by three fantastic guests and I'm actually going to let them each introduce themselves to you. So I'm not going to go into their background right now, but I did want to let you know that the format for this session will be that will be in conversation. I'll ask some questions and then there will be a period at the end for each of you to ask questions. So without that, with that rather, let us begin. I'm going to start with Lenny and Lenny if you will just tell us kind of the two-minute story of you and what it is that leads you to be interested in this topic. Thank you Autumn. I'm delighted to be here with you and with New America and it's particularly a delight to see here on its face on the screen since we've spoken many times but I haven't seen you live in a while so it's good to talk to you. Lenny Mendoza was most recently the Chief Economic and Business Advisor for Governor Gavin Newsom in California. Prior to that I was with McKinsey for 30 years where among other things I chaired their McKinsey Global Institute for a decade and their strategy practice and there was previously the Chairman of New America. This conversation to me is very exciting to think about how we can turn away from capitalism but recognize that capitalism is a continuously evolving mechanism by which we help make society work and if we're at those one of those important times in that history or we need to have a bold set of thinking and execution against how we really make it work because it is desperately challenged at this point in time and I think the conversation we'll have will be instructive to how we might be able to move in a direction that reimagines capitalism for the environment that we're in today. Okay great thank you for that Lenny I appreciate it. Hugh Rodd if you would do the same we would love to hear a little bit about your background and your interest in this area. Thank you. Sure happy to good to see you again autumn after having this conversation a few months back and you Jess as well and Lenny wonderful as ever to see your smile and face. So I think this is a critically important conversation at a critically important moment in time to have it there's probably not been since the history of capitalism a bigger opening for its transformation than I think we're facing today. How along that window will be open and you know to what extent the potential will continue to exist. You know I think is an important question probably leads to at least leads me to thinking that it's it's quite narrow and there's a sense of urgency now that hasn't been there in in the past I've been at this for over 30 years now the organization I'm with is called the fourth sector group we are a global NGO our focus is building an enabling ecosystem for purpose driven enterprises so businesses that follow a purpose first logic. Yeah and again delighted to be in this conversation. Thanks so much can you hear me okay now still. Okay great and now Jess if you would tell us a little bit about your story and also what brings you to this conversation. Thanks for having me autumn and great to see both as well. Yeah I definitely resonate with there hasn't been a bigger opening in this kind of unique moment that we're in and I'm here with the lab which is a nonprofit organization that serves the movement of people using business as a force for good and really specifically we do that through be court certification and through benefit court governance which I'm sure we'll talk about as we talk about stakeholder capitalism which is just a mechanism that allows companies to operate differently and essentially what we're working to do is reform capitalism and I think in this moment we see how important that reformation is to achieving our vision of an inclusive and equitable and regenerative world. So I specifically work for be lab use in Canada I'm based out of California so really glad to be part of this California conversation and the Bay Area is actually probably the biggest concentration of be courts in the world and so a lot of really great examples of how this really important actor business can play a difference in impacting its stakeholders so looking forward to this conversation and I'm really glad to be here. Thank you all this is really fantastic because you've already started into this element of what are we really talking about you mentioned stakeholder capitalism we hear people talk about we imagine capitalism and let me know that some people think of this as people saying destroy it you know blow it all up or not and I think that it's interesting to kind of jump into that I love each of you that just kind of give you your base understanding of what is what we're talking about here kind of the kind of quick and dirty if you will some people may have joined us back in February at so of course when we started this conversation and if you'll start you out that'd be great. You're happy to um well it's it's the boundaries around this conversation are are kind of fuzzy and they're certainly massive in scale for us the thing we're most focused on is basically you know capitalism is an economic system that was invented several centuries ago and it's been evolving since its inception right so there's nothing static about it but we're out of point where the the prevailing model is you know as things evolve you know they go through sometimes continuous sometimes discontinuous sort of changes and I think the moment we're in is one that is requires for certainly discontinuous change and and so that's the piece that we're most focused on is what is the next iteration of of the system that we're we're trying to make a a huge leap to in a short period of time and and that next iteration of capitalism if you think about capitalism is basically a system for institutionalizing trade right trading activity is what humans do to to cooperate in society one person grows food another person builds shelter in the trade so our system of trade is is basically the the the sort of kernel of the economy and it's been institutionalized several centuries ago when slavery was legal in most of the world and the environment was seen as an abundant pool from which we can just freely extract several centuries ago we invented this institutional structure for trade focused on profit so private gain as the as the primary objective and that system you know has been both the engine of tremendous progress across the world for centuries but it's also been the engine of tremendous harm and degradation to the environment that's the social fabric because at its core extraction of value from from humans in nature basically is baked in so we're at this point in time where a that that while it's been incrementally improving and you can look back and see all kinds of ways that business has taken increasingly more responsibility for its stakeholders and for the environment and society that continuous path of change and evolution is just not enough because we're in this critical moment in history where we've got more and greater and more complex social environmental and economic challenges that we've ever had to face and the institutional structures that are basically at hand are the ones that are creating those sets of problems in many ways so there's no way that that we can incrementally improve and continue this sort of steady path of evolution it's time for step change our interest is what's on the other side of it when business goes from a logic of for profit you know business is the main engine of the economy to to to one that's for purpose or for benefit what does that actual architecture look like what is the institutional framework within which it exists what's the policy architecture and market architecture how do we measure and report performance unless and until we understand what the end state needs to look like on the other side of this chasm and unless and until we create the enabling infrastructure for that end state to be able to exist we can't make the leapfrog that we have to make or the leap we have to make and we're stuck in this incremental gains you know going against exponential losses in in a time horizon that is rapidly collapsing to zero so that's where we come in awesome thank you so much for this okay okay okay comedy of areas here uh Jess if you would be willing to also give us your quick take on and if you want to respond to anything that Hugh had said that would be fantastic as well yeah and i think um what i'll really just do is build because with this system for institutionalized trade i think what we've seen is that the business has an impact on the communities that it operates in on the workers that it employs on the environment and on the customers that that it has and as we've seen uh the power of capital markets the power of corporations grow in this outsized way we see that the impacts that it has both positive and negative has grown as well and so when we talk about stakeholder capitalism we both talk about it in contrast to shareholder primacy so you know with with the kind of rise of an understanding that the role of business is to maximize profit for its shareholders came this kind of at all cost method and how do you do that how do you do that most efficiently is through is through extraction it's through decreasing your margins it's through um understanding um that who you are accountable to is only that stakeholder on the other side and only that shareholder and and that stakeholder capitalism asks the business asks the corporate sector broadly to look more comprehensively and say um your responsibility or accountability isn't just to the shareholder but is to this broader set of stakeholders that that both are the drivers of the profits of the business and are impacted both positively and negatively by the actions that the business has and so stakeholder capitalism is a capitalism that thinks comprehensively about the impacts that a business's operation that a business model is having on the people the environment that it is operating in and we'll talk about this more later but like within the model of the look that we try to do is create a framework for what stakeholder capitalism looks like and a set of measures for holding businesses accountable um to to really clear sets of practices both in how it's governed and to how it operates Lenny I'd love to hear your take and also uh if there's anything that you think is particular to your vantage point of with uh policies at the state or you know great and I will uh as Jess did just build on what's been said because I agree with it as opposed to contrasting with it I would start with I am a unapologetic capitalist I do believe the answer of making capitalism work is unassailably the right answer as opposed to throwing out capitalism and starting with something else it is an extraordinarily effective mechanism allocating capital when the rules or the game are clear about what we're trying to accomplish with the allocation of that capital the problem has become and it really got pronounced and accelerated in the beginning with the the Milton Friedman's set of observations about the purpose of capitalism and then extended through some academic work that Michael Jensen and others did about the primacy of short-term shareholder value that has overweighed the entire system to that objective function and that has created an enormous imbalance and without the proper legal regulatory and political architecture around it it's led to all the challenges along with the advantages of of efficient allocation of capital most pronounced where most people in the world and certainly outside the United States believe that this is imbalance has to do with the environment and we are as if you don't if you have a externality not priced into the system that creates a huge problem and that's what's happening with not ensuring that the cost of environmental degradation is not embedded in the accounting and the economics of business and movement on that main whether it's as direct as price and carbon or in regulatory mechanisms that accomplish some more things is absolutely essential if we're going to have a planet to live in. Less obvious but extremely important and even more pronounced today is an ineffective use of capitalism to allocate the rewards of capitalism when you've got it reallocated aggressively to short-term capital returns that means that the returns to labor and the returns to those who don't have to have don't happen to have the same degree of capital wealth is is misaligned and so we have to have a capitalism that has the advantage of being efficient capital allocation amazing productive at ensuring that we're continuing to create innovation and productivity improvement that allows the world to do better and more with less resource but really needs to be one that is incorporating issues of sustainability and resilience or regenerativeness whatever words you want to use into the planet elements of what we're doing so that this isn't capitalism for short-term capital but something that can sustain throughout generations and have a planet that that regenerates itself as opposed to as extracted from and it needs to be massively more inclusive you it does not work if it's a system that rewards the a very small portion of of the population and large portions of it are having their their labor and their innovation and their intuition and their energy going to the holders of capital so i think that's doable i think if we scale things and reorient the institutional mechanisms to align i think capital moves quickly i also think there are increasingly good examples of when that's done what happens and so we look forward to continuing the conversation but i do think the alternative throwing out capitalism is not viable and what we really need to do is to accelerate the transition to a continually vibrant but more sustainable and inclusive model of capitalism i think those are great points and the point about sustainability and inclusivity are really pointed ones especially now as we think about just the state where now however if we want to go back and think about this issue pre-covid i would think about the different challenges that we face to get to while we're talking about so we talk about what we would like it to look like what it looks like when it's when it's working well and so i'm going to ask you each to think a little bit about what you think is kind of like the main challenge or obstacle to getting where we want to get but at the same time if i just share my own thought on it which is it brings me back to childhood i grew up on the east coast and uh when it was snow they would plow all of the snow to the corner our schoolyard and a playground in the area and we were playing with them and so you know one of us would try we would all try to get to the very top of the mound of snow and then we would try to from there keep everybody else from taking our spot so my question to you is as it relates to the challenge of the cultural use have some people already have kind of the power or at the top of the mountain if you will what would it take for there to be more inclusivity if there are others who don't necessarily have the positionality to change how it works and i'll start with you Jess you want to speak to that challenge or any others that you see yep um i can there's a lot of challenges and challenges kind of both at the macroeconomic level and i think um you know we work with business leaders every day who face challenges at the day-to-day level i think folks who really want to figure out how to operate in this new context who feel enormous pressure to kind of continue business as usual so i think the expectations of business make a really are really powerful in terms of the maintenance of the status quo and so expectations of investors short-termism and the need to consider in the cost of capital and those externalities is is really critical consumer expectations matter and in this way kind of the regulatory environment really matters so the expectations that government has of business as well either creates or stands in the way of an environment that allows businesses to operate in in kind of a different in a different way uh i i do think you know where we come in with a set of incredibly kind of like practical on the ground tools for businesses to operate differently um we see the need to be able to incorporate your business in a way that allows you to take into consideration stakeholders and not just financial returns and so the the adoption of benefit court governance and mechanisms that even just give you permission to make decisions that may not maximize profits is really really important and then even just model what what does a good business look like what does it look like for what are the standards for considerations of your workers of the environment what are the best practices what are innovative ways to address challenges around packaging around uh kind of anything from the we work with a lot of business leaders who really have the desire to run and operate their business in a way that takes um stakeholders considerations seriously and lack the tools and the resources to kind of adopt um those methods and and that's where we see there's just a lot of need for capacity building um so there's kind of the external pressures the sticks and then there's also the carrots and the tools and the resources that that company needs thanks so much for that hopefully this audio is a time bit better you add if you would do the same and just either respond to the challenge I tried to say that maybe many people couldn't hear which was this idea of king of the mountain from my east coast days of growing up the snow all plowed into the corner and people kind of using their position at positionality to keep others from taking their spot or you can respond to whatever challenge you feel is kind of the most pertinent uh sure um so I think I mean the way evolution unfolds is that that there's innovation and there's more fit or more appropriate um you know solutions that emerge and those things get to scale because people favor them so if we want clearly I think as as as um we've all said and and Jess and many articulated eloquently we need to shift to a different model of capitalism uh that is more inclusive and more environmentally regenerative sustainable etc so we have to make that change and we have to quickly and Lord knows people are trying there's many people trying so um if we want businesses to be more equitable on the other side of this this bridge we're crossing or economies to to behave more that way then all we got to do is look at the existing instances of businesses that are in fact operating on a different kind of logic right and there are plenty of those examples many of them are b-corps many more of them there's a study that came out a few years back saying there's tens of millions of new startup purpose-driven businesses globally um somewhere on the order of 10% of GDP in the US and Europe would be in in this purpose-driven values-driven sector of the economy if it were formalized and institutionalized so we know there's already examples of businesses doing exactly what you're saying ought to be done um that that don't have that king of the mountain mentality at all but have much more inclusive models of ownership and governance and and just values that drive their decision making throughout their supply chain with their customers and so on so if we just figure out how to identify those kinds of businesses and we figure out what is it they need to be more effective in their ecosystem what kind of enabling policy will encourage more of those kinds of businesses or help the existing ones survive and you know in a competitive landscape where the the invisible hand favors the opposite kind of decision-making and behavior right uh that are not inclusive so so if we just figure out what it takes for those to to be more effective and survive we figured out the answer to what it takes to transition the economy I think it's fantastic hearing what both of you have said has really resonated and I know Lenny you have said before you've talked about excuse me carrots and sticks and I'm curious if you would agree that the main piece is kind of like a cultural how do you get those who are already enjoying kind of the the fruits whether it'll gotten or not of a tilted system is it just getting people to decide to pursue a kind of different direction and showing why that's advantageous or is there something else in your mind I think it's part of it I'm certainly a broadly shared understanding of the objective of business and that a long-term oriented stakeholder driven enterprise is actually more effective than a short-term driven shareholder value maximization enterprise is and an understanding of that that's embedded in how future business leaders are trained etc is important so you've had you know 30 or 40 years of business school students at least in the united states being trained that their entire objective is to figure out how to make more money for the shareholders in the short term what do you think is going to happen but I I don't think that will become widely shared until you recognize that capitalism doesn't exist in isolation it exists within the rules of the game and you have to alter the rules of the game so that you don't have free riders or people taking advantage of the system in the short term and then handing the problem off to somebody else I think if we get those elements aligned you will see capitalism move and remember that while this is all huge challenges that need to be adjusted the last 50 years has also been the largest reduction in extreme poverty in the world more than the entire history of mankind before that and so there are elements of this when it's aligned that could really work but we need to do is make sure that the the rules of the game align so that people have the the right incentive then we'll align their cultures along with that align the systems align the training so that you're orienting that way I mean I think there are large sectors of the economy that and large enterprises that and many newer enterprises as Hirad mentioned that are are attempting to do that and would be enabled and create a competitive advantage for them if the rules of the game were aligned to say that's what we're asking you to do as opposed to we're begging you to do it out of just the generosity of your heart that makes a lot of sense to me you you brought up this piece of how the elements work together such that you know the system works properly which which I've been thinking a lot about in this moment right with this moment of can't really call it a moment it's an error the COVID era you know you have a lot of people who don't have jobs you have a lot of people who are determining you have a lot of kind of state and at the federal level determining how do you provide people with the income that they need or kind of a stop gap if you will until there's a place where people can kind of get back on their feet there are all these different elements that come into play when it comes to just having some sort of income right you have people who are driving for different you know whether it's Instacart or Lyft or Uber what have you you also have all of the different individuals who are trying to figure out okay how can i do my job safely with all of these different things with COVID coming into it what does it look like to try to address this in this period of time and i'll start with you Lenny if there are thoughts you have on what do we think about now and what we do if there's anything different well again we're talking about to enable this whole system to work is not a short-term crisis phenomena that it's much more one that needs to be thought of as how do you alter the entire system so that we get what we want and that doesn't happen overnight i certainly believe that some of the elements of the environment that we're in and COVID is is obviously a predominant element of that but the elements in many parts of the world and certainly in many communities in the united states around the challenges of inequality and racism and the unequal distribution of wealth and concomitant power has put itself front and center at the democratic systems that help determine what those rules of the games are so if you have a democracy some of these elements about what you're trying to accomplish can be in direct conflict with how the power is executed at those who are in charge and so you can either say well the answer is we need to go to a much more authoritarian capitalism and create more of the power in the in the government at the center and all knowing all seeing leader or you can say now let's make the economy work by leveraging what democracy is at its best and disperse some of that and create a more equal distribution of opportunity i think the that the it's clear in the U.S. national election that COVID and the economy are front and center about what people are caring about now and they are recognizing that the way we're operating now is not solving either one of those problems and so what choice do you want to do about how to solve them so i don't think that in and of itself COVID is a it is positive or negative to what we're describing needs to happen i think it's obviously a front and center issue that needs to be dealt with but it's the the issues that we're talking about are much more systemic than a particular pandemic as as as problematic as it is thanks for that uh hirad would you like to share your thoughts as it relates to where we are with COVID as it pertains to this issue because what linear spoken to is that it really is about changing a larger system right a very large system at that and so do you feel like there's an opportunity now that didn't exist before or the opportunity always existed and it's just something that we need to continue plugging away at what are the things that you think are different because of where we are right now i think we've had the opportunity for some time now you know there's been decades of innovation in this space and and and growing consciousness and awareness that we need to make these kinds of structural reforms and a lot of great thinking and great ideas and solutions have emerged that have not been adopted so i do think opportunities been around but there is something significant about this moment because first of all if we had seized these opportunities in the past and had a more sustainable and regenerative and inclusive economy when COVID hit um a lot of the the the negative consequences of COVID would have been mitigated i'm i'm pretty sure um i think it's it's made this crisis exponentially worse than it could have been or would have been had we made these kinds of structural reforms before it's in fact surface to need for those reforms so so now in this moment where trillions are being allocated by governments to try to respond both to the medical crisis but also to the economic and other other downstream consequences of it so as we're spending these trillions globally we have a choice to either reinforce the failing architecture that got us here which is the status quo and the default choice before governments or we can look at the need for structural reform that that actually we should have done a long time ago but didn't and and for going forward knowing there's going to be a lot more crises ahead surely with greater magnitude and amplitude than this one um that we need to set ourselves up for better resilience um and and start to make the structural reforms that we know are needed in order to give us the kind of the quality response when shocks do happen and also set things on the right footing for when we are not in shock but in fact in the moments of stability so i think we it's the the covid question for me is that we should do everything we can not to squander the trillions of dollars in recovery and and um you know response and um stimulus capital and governments are pouring into their economies we should not squander those resources pursuing approaches that basically put Humpty Dumpty back on the wall and and we should leverage this opportunity both for the structural reforms we know are needed and for the diversion of resources to the right kinds of responses that actually bake in this kind of stakeholder um sustainable inclusive equitable model of business and capitalism thanks for that i i think that those are really great points and i'd love to hear just if you have anything that you would like to add as it relates to or anything that you'd like to counter and say i see it this different way but um i'd love to hear what what you see as covid related to this issue yeah thanks um and i think what i want to highlight is even before talking about the opportunities that the impacts um of covid-19 and of the recession aren't small and in fact have taken us back um in incredible ways from an economic and a community development perspective as well as like worker related outcomes um there are um 1600 bcorp that we work with in the us in canada um from what we saw in our community is again who are majority small and medium-sized businesses but many of the leading businesses in terms of the practices you think about when you think about stakeholder capitalism um 50 weren't industries seriously impacted by covid um 82 applied for ppp and the repercussions were really outside so for us our average revenue for a white-owned bcorp is 26 million dollars but for a person of color owned bcorp is only 6.6 million dollars and there were huge barriers to access to ppp for black indigenous and people of color owned businesses that have limited cash reserves because of structural racism and um and all of this has basically exacerbated and set back i think a lot of the really important pathways to entrepreneurship to business creation in communities across the country um and it's going to take a lot to kind of get us back even to where we were i think pre-covid and pre-recession um so if anything the opportunity is a sense of urgency and a growing awareness i think both you combine the economic inequality that's growing the climate crisis racial justice uprising the crumbling of our democracy kind of all of these things in confluence with each other and and see if if this isn't the wake-up call that we need to put in the regulatory reform the consumer activism the business activism that is needed to push the government to be where it needs to be in terms of having the policies in place that would allow us to take seriously our our responsibility to um to workers to our communities to the environment um that i think is is the opportunity is if this isn't the wake-up call particularly in the u.s. in this moment i'm not sure what would be um and in fact we're at risk now of um needing to rebuild and we're at a crossroads of deciding how we're going to do that rebuilding and if that rebuilding is going to further benefit kind of the top five percent the largest companies or if we're going to take seriously our commitment to building wealth in communities across country and particularly communities that have been because of structural racism left out of opportunities in the past thank you so much for that so i'm seeing some really great questions starting to come in already and so i'd love to segue to those but i did want to note that at the before we end i want to make sure to ask each of you if there's something specific some sort of action or closing thought that you will want to share with everyone as they think about the different kind of platforms that they hold or the different network or group of people that they get to speak to so i just want you to keep in the back of your mind what is the thing that you would want other people to be sharing broadly how do you want them to kind of engage in this for all of those who are attending but i'll start with one of our first questions so this is from Carlton Buffard and it says similar to what we have experienced with COVID-19 and the need for national economic strategy to win doesn't stakeholder capitalism acquire a national economic framework that allows for equitable stakeholder participation and competition on a national state and local level so that it is excuse me fair and just everywhere given that competition is everywhere COVID is everywhere and it is not controlled by borders or politics so i think i'm seeing that as kind of like what are your thoughts on how we come up how we come at this since there is no there are no borders to it doesn't need to be national doesn't need to be international what are we talking about here anyone who has an answer for that feel free to jump in happy to i i think i think all the above it has to just like you know the old model of capitalism it has to work at all scales and it has to be interoperable at all scales so we need a policy and market architecture that basically recognizes and supports a certain class of enterprise that uphold the values we've been talking about and that needs to work at the global level because some of many companies operate globally in multiple jurisdictions got to work with the national level is going to work all the way down the local level doesn't he have anyone have anything to add great then the next question i have is related to the need for business or the market structure the way we approach economic change or economic transformation to be something that goes beyond a mindset and so this question is if we can't expect businesses to transform their mindset on their own is there a case for strengthening institutions to ensure that government can hold businesses accountable to a new model of capitalism and what are your ideas on this so each of you have already mentioned the idea of kind of carrots and sticks but what are some of the things you imagine are ways that government could be involved in moderating or changing how we how we operate this in this way i can add a couple of things on that number one they do have to insist on the the appropriate rules of the game to ensure that things are both embedded in how business decisions are made through things like accounting standards and through things like how what are the expectations for things that are being priced into the to the economy that are not priced into the economy just carbon being the most obvious one but if we're if those things are not showing up on your income statements they're not capitalized in your balance sheet we don't have standardization and transparency around what the impact of those things would be and that is not therefore equally and effectively built into the decision-making of capital holders and corporations then you're going to get what you get and so government has extremely important role in those elements i also think government obviously has an important role in establishing rules of the game for labor markets things like standards for that have been effective in driving change in in environmental regulations have been and can be effective in labor regulations as well whether that's standards for employment work work rule hours wage standards those sorts of things and then finally more broadly i do think there is a real conversation that needs to be had about how do we really build what is clearly a objective of the broader population into a much more inclusive society a much fairer one into those rules of the game that's more complicated but it's one that we have to do and government has a really important role in helping lead that conversation and being serious about it whether it's it's how we do things like what are standards for government contracts what are standards for government grants what are the reporting requirements what are the ways in which we score legislative or ballot measures to say how do they affect or not economic mobility and inclusiveness you know all those sorts of things can help move the environment and then lastly i do think what is going on today as as purot and jesser at the forefront of there actually are a lot of enterprises that are operating this way and there are lots of learnings that happen from those enterprises so what we need to do is diffuse and scale those things and think about how do you create the mechanisms to make that happen faster and more broadly i think it's fantastic that there's a huge number of of for-benefit enterprises in b-corps and high up in the living a part of the world like just where a lot of those are you know it's it's where that's a lot of innovation happening and a lot of excitement around that but that needs to be the norm not the exception if there are we should flip it around so that businesses that are operating in that kind of mech and that kind of approach are not disadvantaged they should be advantaged and that would cause a very different mindset about how we think about all sorts of things and would actually accelerate the diffusion because those sorts of enterprises would have a competitive advantage and not be today often feeling like they're competitive disadvantage from doing the right thing and i can maybe just add to that really briefly that it's you know even belab we have very much in the first decade of our existence taken the carrot approach and really said how do we create a model for businesses to measure manage and have transparency and accountability around their performance and just this year we released our first policy agenda saying that that carrot approach isn't enough we need laws and regulations to require businesses and financial institutions to look beyond their own financial returns and that was a shift for us in kind of our thinking about our role in this conversation and so i can show the link to that that policy paper and what that policy agenda is but i think it it kind of it reflects i think both the urgency and the importance and that outsized impact that we're seeing corporations have fantastic and i will basically 100 agree with everything lennie and jessa said um and the only thing what i would sharpen is basically i think we're what lennie was talking about i just want to draw some sharper contrast to that the the market and policy reforms that we need to make in order to change the traditional private sector so incumbent businesses that are operating on a profit first model um the the architectural shift that needs to be made there is you know is pretty deep and substantial and there's a lot of incumbency and entrenchment and and legacy structures there that don't turn around very quickly so the agenda of the reforms for the private sector or one agenda the agenda for for reforms that enable the fourth sector which is this new burgeoning class of for-benefit businesses of which there are millions you know across the economy and hundreds of millions um or billions of dollars going into them and you know the tremendous amount of economic activity and interest by employees and consumers and so on that four sector the economy the policy and and market reforms required to enable and recognize and legitimize that or i think different you can go further faster on four sector reforms than you can on private sector reforms and so i think having a bifurcated approach because if you tether the two together then you only make incremental progress against the incumbents whereas the innovators that are already way out there they they drive on a purpose and equity and sustainability logic and dna fundamentally they're going to be held back because we can only make incremental improvements here and they need exponential reforms to enable what they're trying to do thanks for that all of you have talked a little bit more about the carrots and the sticks and have also been a little bit more specific about what those look like one of the questions was about what some of those specific incentives might look like and lenny i know you've already rattled off quite a few but this person in this question has asked about things like text breaks and government purchasing requirements and government matching funds and i'm just curious if there are any quick things that you guys want to share as some of the things that you're talking about when you talk about some of these incentives lenny if you have a either a few to add or you're not interested there are specific things that were mentioned that you think of as the way that people would be incentivized or cautioned against certain type of behavior so again government all levels and this is clearly true at the the national level it can also be true at a state or local level particularly for large metropolitan areas or for large states have can have a very outsized role in moving the market behavior in some of these so in just to do historical examples why is it that companies are are incorporated in the state of Delaware tell me why that's logical for anything other than a set of people in Delaware decided they'd create a legal architecture to create an advantage for incorporating in Delaware i still believe that there's possibility for equivalent of a state to do that to say we're going to be the home for for benefit enterprises you have to incorporate here and we want you to be headquartered here and if you do that here are a set of advantages that come with that then they can be all the things that were listed in that question they can be they could be purchase preference for government contracts and for grants in the same way minority women owned businesses veterans businesses are with real teeth to them they could also be elements of tax breaks or in some cases they can legitimately be sources of capital whether that's in things like what the proceeds from cap and trade revenues have gone to to help reinvest in businesses either through grants or loans or regulatory incentives to ensure the development of low carbon intensive energy and low carbon intensity activities and those don't necessarily and if they're done right those aren't burdens on society they're actually moving society in the direction that you wanted so these sorts of things done right when you have clarity of what you're trying to accomplish and transparency around it when you have an aligned regulatory and incentive system and you have a a private sector who understands and is insented and operates in a way that that can align with that you can move things so you know California since the implementation of AB 32 and the and its focus on moving towards a carbon neutral economy has continued to grow and reduced its energy intensity and its carbon output at the same time it has become an economy that is not driven and assume that the only way you can grow is by being more energy putting more more red and pulling more energy out of the ground and putting more carbon in the air and at the same time it's created an entire new set of industries including the number two and probably this year the number one product export in the state of California will be zero emission vehicles which didn't exist in an effect in a decade ago and those that's a very attractive business and create an enormous wealth and create a large number of jobs in an in an industry that didn't exist and the scale of California both in terms of its regulatory environment and encouraging other states to adopt those standards create a marketplace for those vehicles and align the whole side of its incentives including tax including grants including supporting infrastructure to enable that to happen that much quicker and create a large industry with an export product and a large domestic market in and of itself I think that can be done in other circumstances and so it's it's really thinking aggressively around how do you align those things in a way that uses the full power of government to accomplish what what the citizens really wanted to do as opposed to saying we're just going to let the private sector do what it does and the public sector will be left with trying to clean up the bad consequences I'll add a completely completely agree with all of that and I would say in addition to direct action that government can take there's a huge role I think government can play in stimulating other actors to engage in in the fourth sector so create incentives for investment capital to flow in there impact investors to move more capital in there create incentives for businesses to align their procurement with four benefit suppliers for consumers to shift their purchasing behavior you know provide resources to universities to to support research and incubation and acceleration of four benefit businesses there's a huge role that every sector society can play and government can stimulate all that in the same way that government plays a very active role in stimulating growth in the private sector in those ways just shift the focus you know or widen the aperture and say okay here we're doing economic development basically success is more and bigger for profit firms contributing to economic growth let's widen the aperture recognize that four benefit firms also contribute to economic growth while solving all these social environmental problems and creating less harmful impact so let's also look at growing more bigger for benefit firms how do we stimulate the whole of society essentially to align their economic choices in a way that helps scale the fourth sector and I would say if the history books were to basically write about a first state in the U.S. that became the Delaware or the leading state in the U.S. that ended up becoming the Delaware for benefit corporations it would have to be California on that list so I think I think that's the place for this to happen thank you chest did you want to add anything okay great so I see a question that's related to this window people keep talking about with COVID now each of you mentioned that there was a lot that could happen and was happening before we got to this point but I'm curious if there are particular opportunities that you think exist because of COVID in reimagining anything is this just a time where we're kind of broken down to the studs and it's a good opportunity to reimagine whatever one wishes to reimagine and if there are any thoughts you have about what some of the steps might be for that the person didn't ask for specific steps or suggest specific steps but I'll add a few of my own which is are there any opportunities as it relates to small businesses things we can do or startups businesses that aren't yet at their kind of full full full force but are just beginning their processes are there any things we can do I know Lenny mentioned before in business schools and how we train those who are thinking about going into into the sector are there any opportunities that you think exist because of this place where we can kind of rebuild and start over or start definitely two thoughts that come to mind one is around how we value labor and the dialogue of the central services and thinking about that as it relates to wages as it relates to minimum and living wage and the opportunity to kind of reassess that and both both from the cares and mistakes side of things really use this as an opportunity to think about are we are we are we paying are we valuing labor the way that it really is creating value for for communities and for our society and the others are on virtual and flexibility I think where we've seen a lot of innovation is you know kind of in the knowledge space industries and how quickly companies have been able to transition to more worker flexibility and there's opportunity for some of those benefits to extend I think beyond knowledge work to thinking more creatively about worker flexibility and with all of the challenges of the gig economy I think what's represented there is the need that workers have for flexibility and and there's an opportunity with with COVID to think about to think about that in terms of worker needs and job design I'll give you two autumn that are completely different and led by different actors one as as just mentioned COVID has accelerated large portions are of our economy to a possibility of a future of work that is happening at a pace that would not have happened had we not had COVID obviously the number of people doing what we're doing right now doing this remotely the number of people who are simultaneously having to work childcare and teach out of their home at the same time or elder care the dispersion of work outside of a small number of urban tech hubs to being much more dispersed where people are living those are all phenomena that would not have happened at the pace and scale were not for COVID there are real questions about how do we as we work through the public health elements of this get the benefits of those things without the burden being disproportionately borne by and accelerating the inequality and lack of inclusiveness that we've got today so we really do need to have and this can happen at some degree at a sub national level but it definitely needs to happen at the national level is is what's the future of our care economy we cannot have an expectation that the entire burden of working parenting caring for your elders and educating our our children are born by working mothers that's just not going to work and so how do we think about that extraordinarily valuable work that is often uncompensated in today's economy what are we going to do about that that is an element of something that the current environment puts forefront and i think it's something that if you've thought about that with a different kind of model for what kind of enterprises can help solve that particularly for benefit enterprises what would you come up with and how do you accept and accelerate the movement of those enterprises so that's one example another example that's not that's happening organically in the private sector is that there's more and more analytic sophistication happening and how you measure and build into investment decisions things that are today not capitalized and so the as an example of the the in the for benefit enterprise which is why analytics is trying to figure out how do you help make better private equity investment decisions but build in on not instead of but on top of the financial market returns the value and all the other elements of what are accomplished through that investment particularly as it relates to environmental poverty reduction inclusiveness etc and you see very very substantial benefits and different decisions made if you do that and if you really believe there's a large group of investors and some of the smartest ones and most analytically driven ones in the world who believe that those things will create better investment decisions if you're investing for the longer term that's an area where there's a lot of ripeness for better decision making and i think that's something that can both move capital and move large blocks of capital and also something that can be flowed into and taught in our business schools around how do you make those kinds of investing decisions so those are just two examples of things i don't want to actually always say that we're in a complete disaster i think there are things that can be utilized and accelerated in environment we're in and i think there are things that smart investors and those who are looking towards the future can get ahead of where this is going and create real value for broader sets of stakeholders and also create economic value for themselves and their investors such great points that you make Lenny of course i don't know if you saw me nodding vigorously when you talked about the need to not have it all lay on the shoulders of working moms since i am trying to do this from the office in hopes of allowing my kids to continue their at-home learning and just down the street are my parents who we we located from Cambridge and i'm trying to help them be a support to them so that really resonates with me and probably many other people as well it's also interesting to think about where this all fits into this larger idea of all of the different elements that fit into work and business that aren't necessarily related to work in business for instance it is my belief that like our democracy and our economy are inextricably tied and so we can think about all of the different things that become policy issues but still affect how you know what people are expecting from work what people need from work if you think about benefits if you think about healthcare and you think about things like that that so often people are hoping to get healthcare from the fact that they are employed and their employer is helping them get that but i won't go too much further because i would love to hear what he learned and just think as well please um yeah i mean i think that the two are inextricably connected very often what people vote for is for essentially a more a better quality of life that is enabled primarily through business through their engagement with business so you're voting for people in government to change the levers for how businesses behave so that your quality of life can be improved so and very often because of the way the financing of campaigns work and the electoral process and you know businesses have an outsized influence in the way policy is shaped so it's a it's a you know it's a it's a pretty the feedback loops are not are not in the right direction and you know to the covid moment i think it's critical like more than ever basically we've got governments are facing mounting social environmental and economic challenges simultaneously you know at a scale in complexity that they haven't really had to deal with before um and we engage with a lot of different people in different governments and you know there's a lot of like shoulders shrugging and we really don't know the way out of this nest actually um so there people are actually looking for solutions in ways that i think that there hasn't been this kind of opening in the past um and the the model of economic activity basically that can handle you know the the basically economic social and environmental challenges simultaneously is the for-benefit approach so really the the the best way for governments to get out of this thing is to figure out how to unleash all the millions of entrepreneurs and investors and consumers and workers and innovators and academics and you know people across the economy who wake up every morning thinking how can i go out there and figure out a way to leverage markets to do good in the world um and solve these problems like governments would be really well off figuring out in this moment how to unleash that that innovative energy uh and that requires choices that are different than the ones we're making did you have anything you wanted to add jess okay okay so i see a question here that is about the role of universal basic income as an element but what i will add to this because i think i don't know if this person was thinking of these things as well but i'm i'm curious about just all of the other ways in which we have kind of safety net services and provisions i think it's also maybe a question about what about things like portable benefits and things like that so i'm just curious i'm gonna actually lump that in with some other questions as it relates to just what is the the way that the safety net or different ways of executing a safety net uh fit into this this concept um i can start that's a big question obviously um let me distinguish between the need for substantial immediate and targeted round of stimulus to support those who need it right now from a longer term conversation about universal basic income they're very different things um in the united states we unequivocally need another round of targeted stimulus for those who most need it including direct payment to individuals who are unemployed or struggling with the current environment and for helping support in a more effective and targeted way than ppp did although it was important um our smaller businesses particularly those who are uh main street businesses and those owned by minority and women owners we need that and we need it now and the longer congress diddles and in particular the longer the senate makes us a political issue as opposed to coming to a resolution the worse off we're going to be i'm not optimistic in the short term i am slightly more optimistic as we get through uh the next two weeks that there will be serious conversations around that and it's essential and i think that's very different from a conversation around universal basic income that's a different question around more to me the right question as you described at ottom is how do we create the safety net and the set of systems that ensure that we've got an economy that works for everyone and that people aren't left out of that i do believe we need a different conversation about safety net to me part of that includes portable benefits it includes a higher minimum wage and higher eitc and to me it would include a definition of work that includes a broader set of things that are eligible for eitc including large elements of uncompensated care today if you did all of those things and then aligned and made it simpler to ensure that people are receiving the other benefits to which they're eligible in that safety net that's a much more effective and targeted way to deliver what we're trying to accomplish than universal basic income which is expensive which is not targeted and which will create the wrong kind of incentives around and a different definition of the dignity of work than one that actually creates a broader conversation around how do we ensure that people are utilizing their capabilities to the fullest and that they're appropriately compensated for the activity in a way that is aligned with what we're trying to accomplish as a society should i add or just anything to add just one thought to add there and i was just talking to a b corp up in canada earlier this morning right for this call and some of her observations related to the differences between what she's seeing happen in the u.s and impacts of that on the b corp community in the u.s compared to canada and i think what it highlights is that the lack of a safety net makes it incredibly difficult to tackle some of the long-term work that needs to be done and so and we see this even within b corps who are working to be net zero who have some long-term commitments who right now are stepping in to meet some of the most basic needs for their teams and so one thing just thinking of that contrast is where you have stronger safety nets you spend less time chasing some of these really immediate concerns and then and and we know that thinking about climate and thinking about long-term solutions to economic inequity takes long-term planning and sustained commitment and when we are chasing some of these challenges and to the point of the impacts that covid has had in the united states relative to other countries we see that that can be an enormous distraction because the pressing challenges are so apparent and so that that was just something that i wanted to to highlight as we can look to countries with stronger safety nets as being able to do long-term sustained work towards sdgs towards climate change things like that and i'll add one small comment on top of that i think for governments the four sectors also a tremendous opportunity for figuring out how to deliver a better safety net so there's a whole tool set there leveraging the for-benefit enterprise model and innovators and investors and and folks who want to leverage market-based solutions to delivering social value there's a huge vista of opportunity to harness the four sector for that i really appreciate all three of your answers to this question and it actually brings us to a question that i see here let me see if i can say this appropriately let's see so when you think of the fact that there are consumers and society at risk of going bankrupt from a lot of a slew of issues and afford an affordability issues like health care housing college transportation transportation retirement how do we restructure economy to competitively achieve affordable market prices for these products and services without consumers having to borrow excessive amounts from private sector or without government having to subsidize at accessible levels so it's kind of connected which is what is the ability and i know huard you were just basically touching on this but what is the ability of a restructured economy to make the affordability of these different things we need more tenable i'd love to have huard try and answer that i will just start with particularly in the sectors that we're outlining that question around health care to some degree that happens in particularly affordable housing or college transportation retirement i doubt other things like journalism like our democracy infrastructure are all partly public goods and when you set up a system that is disaggregating the role of governments financing and governments oversight from a private sector delivery which is oriented around near-term profit what do you think you're going to get you get for-profit colleges that actually have nothing to do with delivering the education objectives in many cases and a health care system that's oriented towards more delivery of services at more and more expensive costs than actually delivering a better educated and relevant for work at a workforce or health outcomes and so i just think you have to think in the way that hero does around aligning those incentives so that that can occur a very tiny example for something that i'm involved with personally it's not surprising that we have most of our local news delivered and generated by people whose objective is short-term profit that they've just decimated local journalism but if you said that's something that is partly a public good and how do we create for-benefit enterprises that can deliver in a cost-effective way but its objective is partly to ensure the community benefit what would happen i think we could see a rejuvenation of a large number of locally oriented and ultimately at scale journalism if we thought differently about it and oriented our system as opposed to saying you're an extractive owner of a publishing enterprise and someone that's really oriented around the broader public good of local journalists yeah i'll build on that so i think if you look at the current economic system if you're an efficiency expert and you came and said i'm going to restructure this economy to save money you would find inordinate amounts of capital to save because there's so many feedback loops like like the one Lenny was just talking about in journalism that are negative so we have an industry that produces what they call food you know snack food which isn't really nutrition the nutrition value of it is you know negative oftentimes um that people consume that gives them all kinds of health care problems that creates lots of burden on a health care system and a lot of money flowing to a health care system dealing with somewhere on the order of 80 percent of expenditures go towards chronic illnesses that are related to behavioral or lifestyle choices that people make which are driven by consumer advertising by companies that are trying to sell stuff that is toxic to us but profitable for investors so so much of the economy is is like these kinds of really harmful feedback loops the way it's currently constructed so when you transition to a for benefit economy the whole thing changes now you've got organizations that are that are in the food business those companies their purpose is to improve the well-being and nutritional you know input in the foods that they create the well-being of the consumers who purchase and consume them and the farmers who grow them and the soil fertility and you know right that's their purpose that's what they exist for so they don't create all these externalized costs on a system that end up basically the lion's share of the money that we spend on the on the saking that and these essential services and goods that people rely on is is basically wasted capital in this way so for benefit economy will completely change that whole equation and when you run a business on a for benefit logic it actually can be super competitive relative to a for-profit one with a with a much lower profit requirement so when you're optimizing benefit for stakeholders so that whole thing is is just a fascinating economic model to study but when every basically an organization is as successful as its stakeholders affinity to it right so the more you attract and retain and grow stakeholder interest the more you are effective as an organization well for benefits because they were a stakeholder you know their architecture is stakeholder driven they exist to create benefit for all their stakeholders and optimize that they're going to attract more so they're going to scale faster and and grow more robustly if they're they have a ecosystem that's conducive so the economic model in a company like that is vastly different you can you can basically afford to provide and you can see this in social entrepreneurs all over the world who've developed health care for benefit models and food and other sectors they can they can basically figure out an economic model that provides at a much more affordable cost because affordability and access to their services part of their mission the same business services at for-profit counterparts cannot possibly compete on so yeah i think the economics are completely different in a for-benefit economy and much more in favor of equity and access hey bud you aren't by chance insinuating that we take away people's cheetos are we because i'm actually but if your zone organics comes up with four benefit cheetos and consumers end up preferring the taste of that everybody means don't take anything away from everyone just give them the opportunity to have competition got you i have to say i've never actually eaten a cheeto ever in my life anywho i digress um my question for you actually let me just see did just did you have anything you wanted to add before i move on okay great so my last question for you is going to be about this idea of how do we continue to have this concept this idea this movement if you will kind of catch fire and be something that well i shouldn't say catch fire we're in california be something that people are excited about want to get engaged in uh and are there means that you would recommend what would you want those listening to kind of share with others with the people they speak to and i wanted to before even saying that um note that i have been really interested in hearing what webeca hinderson who is a professor at hover business school wrote a piece back in july on reimagining capitalism and has a new book uh reimagining capitalism in a world on fire and so i am interested in what each of you think is a way to have this move further and faster and i'll start with jess great thank you um my three-year-old just got home so you might hear him in the background um the uh as i think about this audience a little bit um what i think the one thing that i can share is kind of like a takeaway is this um policy agenda um that we've recently released and i i think um coming from the position of you know foundation spot leaders um and the the that that lens though i think that there's lots of lenses as individual consumers there's ones that we can take as um business leaders there's ones that we can take but um i think that there are with legislative and with regulatory changes as an opportunity to kind of bake this um need for stakeholder capitalism and to advance the work that we're that we're doing and so i what just what comes to mind is it is a it is a big paradigm shift to think about unraveling how we've understood the purpose of business for so long and i think for many of us how we've been trained to understand the purpose of business and so so it's kind of from whatever lens or lover that you're able to pull um thinking about that in a much more expansive way um and one concept we talk a lot about is interdependence and so we live in a pretty individualistic society and i think what we're seeing um now in in more heightened ways is that we are all deeply interdependent on one another and um to take a narrow view or a narrow understanding of capitalism is to not see what's right in front of us that without taking seriously our climate to the environment to each other to our communities um we won't experience the long-term quality of life that i think we we want and so um so uh i can share this um policy agenda there's a ton of great resources out there and um whether you're thinking about it from the government when from your own kind of individual life what who are the businesses that you're supporting um and what decisions are you making to kind of we talk about voting every day with where you work um with who you buy from um the businesses that you support um i think that there's there's a lot that we can be doing to um think about the responsibility that the business that um our market forces have um to making the world a better place and not just making more online thank you so much for that uh Hira do you want to share your final word and your final thoughts of uh sure um i would say basically if you believe that that capitalism needs to be reimagined and and reformed and renewed um then you know lend your voice and and your your um effort your hands um and your capital if you can to policy reforms and market reform efforts that actually help help cause that to happen um there is a as i said earlier i think a narrow uh potentially very narrow moment uh in time when we have the opportunity to make the kind of pivot that's required before the the the challenges we're facing get exponentially worse and our capacity to respond in a systemic way you know becomes severely diminished um so you know if this is just a very important time to ask ourselves what is it we can do to help advance these kinds of reforms if you see the need for them and and i would invite anybody who's interested we actually are in a in a collaborative effort with a number of other networks and organizations called build better economy challenge it's essentially a a policy hackathon to help co-create policy solutions for governments around the world to help them figure out how to uh direct their stimulus and recovery strategies in the direction of this kind of the new economy and capitalism and the the URL for that is buildbetter.world slash challenge so we'd invite anybody interested in checking that out and getting involved thank you so much autumn for convening this conversation thank you and Lenny so um briefly i think there are two things that would be on my mind to accelerate this um and remember as we said from the beginning this isn't something's going to happen overnight so we need to think about catalyzing something that will occur over time but those catalytic events can be really important and i think the election in 2020 will be one of those and so i would revisit this conversation in 2021 where hopefully we're thinking about much more along the lines of what your odd was suggesting about a better economy than trying to just stimulate our way so that we can we can barely get through something and go back to what we were before there is a real opportunity and hopefully be enabled by different mindset in washington to say how do we use this moment to really create it particularly if we're going to have large-scale government investment to something that incents the kind of things that we're talking about as opposed to just having us hobble along the second thing is if you believe that that could happen and even better if you believe it will happen i think there's an important opportunity for capitalists particularly forward-looking investors with a long-term view to think about what what can i do to harness my investment capacity to help take advantage of this and even accelerate it as i said before and things like what uh analytically if you're pricing in all of these things that we say should be part of how capitalists make decisions if that's the way it's going to go when you were doing it how would you shift your portfolio what kinds of new ventures would you invest in what would your disposition of things that you think are underpriced and could be a better lead if they were oriented around that mindset be and where are there places where there's something that is really interesting but if scaled could have enormous impact i think those are all really interesting opportunities i think there's a lot of opportunities to have the kind of reimagined capitalism and a better economy both be good for the society that we want to live in and also an attractive investment opportunity i think we're going to need both of those things a policy environment that that catalyzes it and investors and capitalists that are prepared to use their resources to accelerate it well i think the three of you have given that the final word the word that i think is hopefully really encouraging to all of those who are listening and i think all of you for joining us and a special thank you to you Lenny, Hilad and Jess