Do-good firms are taking a karma view of capitalism

FREE markets have delivered enormous good.

- James Reed Guest Columnist

By encouraging innovation, entrepreneurship and consumer choice, capitalism has enabled millions of people to succeed. I am a firm believer in the opportunities it can provide.

But I also believe that the model of short-term, shareholder-driven business is increasingly not serving society. It is becoming outdated and unsustainable — and something has to change.

Take the companies in the FTSE100. Over the past decade, their profits have soared by 49%, while charitable donations are 13% lower in real terms than 10 years ago. Less than 1% of net profit goes to charity.

This is a growing fault line in our economy: businesses that generate vast returns but give little back and do not align with the values a healthy society needs to prosper. Many big businesses are deeply unpopular, and increasingly people question whether capitalism is working as it should.

In my new book, Karma Capitalism, published this week, I set out an alternative: purposedriven business. Imagine a world in which social value, employee and community well-being and long-term legacy are built into the DNA of our companies. Not as some afterthought or marketing exercise but as identity.