World Economic Forum Jumps on the Bandwagon

Two days ago, the World Economic Forum – “Davos Man” – affirmed the vision of the Caux Round Table for Moral Capitalism’s (CRT) 1994 Principles for Business in their “Davos Manifesto 2020.”

Another domino of establishment opinion has fallen away from conventional wisdom.

I welcome Klaus Schwab to the movement and thank him for his support.

Klaus also issued a statement on Sunday explaining the reasons for more robustly affirming the approach to global capitalism advocated by the CRT.

I note that in his view, the three options open to global civilization for economic growth – social Darwinism for shareholders, nationalized socialism or moral capitalism – are the very same ones that were discussed at our Global Dialogue a couple of weeks ago.

CRT Celebrates 25th Anniversary of Principles for Business

On Friday, November 22, the Caux Round Table for Moral Capitalism (CRT) celebrated the 25th anniversary of our Principles for Business.

The Principles foreshadowed the rapidly growing awareness of the need for corporations, both public and private, to adopt – and initiate – goals to create a sustainable operation. The Principles and our call for a “moral capitalism” also helped shape the U.N.’s 17 Sustainable Development Goals. They have been cited as a model by a growing number of business leaders and politicians, such as the Business Roundtable and Robert F. Kennedy, Jr.

The 25th anniversary was celebrated with a luncheon that featured a number of presenters, including Douglas M. Baker, Jr., CEO of Ecolab, and Paul Polman, Chairman of the International Chamber of Commerce and former CEO of Unilever.

To highlight the history of Minnesota leadership, we produced a short film for the event titled “The Minnesota Legacy.” The process that led to the founding of the Principles was initiated in Minnesota by Minnesota business leaders.

“The Minnesota Legacy” can be seen here.

To view photos from the event, please visit our Twitter page.

Invitation to Brainstorm Topics for 2020 John Brandl Gathering – Tuesday, December 17th

You are invited to a roundtable discussion on Tuesday December 17, 2019, to gather input and prepare for the next “Annual Celebration of John Brandl & His Uncommon Quest for Common Ground” in 2020.

“What’s Keeping You Up At Night?” is the driving question that organizers of the annual Brandl lecture series invite you to respond to in an informal roundtable discussion from 1:00 to 3:00 pm in the Josie Johnson Community Room at the University of Minnesota’s Humphrey School of Public Affairs.

With impeachment hearings roiling now and pivotal national and state elections looming ahead determining the fate of our country for many years to come, the organizers of the annual Brandl convocation — the Caux Round Table for Moral Capitalism, Center of the American Experiment, Citizens League, Growth & Justice and the Humphrey School — reach out to you to help determine a fitting topic and frame for a 2020 gathering in the ecumenical spirit of the late John Brandl, a remarkable scholar, public servant and friend.

We’ve planned and implemented 10 years of annual Brandl gatherings. In year 11, in honor of John’s memory and his uncommon quest for common ground, we invite all people of goodwill — with open minds, firm convictions and welcoming spirits — to join us in this planning discussion.

Representatives of each group will facilitate segments of the conversation.

There is no cost to attend.

To register, please click here.

Please Give to the Max!

This year marks the 25th anniversary of the publication of the Caux Round Table for Moral Capitalism’s (CRT) Principles of Business, a groundbreaking compilation of rules that can be used to create a sustainable economic system guided by ethical values – what we call “moral capitalism.”

In the years since their publication, there has been a growing and increasingly urgent interest in how to promote sustainable business practices that will ensure a more equitable and fair economy. The U.N. drew upon our principles in composing its 17 Sustainable Development Goals. In more recent years, the call for a moral capitalism that puts the needs of a company’s full range of shareholders, including employees, the local community and the environment itself at the center of corporate responsibility, while public figures like Robert F. Kennedy, Jr., have also adopted not just the principles, but moral capitalism.

Headquartered in St. Paul, Minnesota, the CRT has chapters in several countries in Europe, Central America and the Far East. In addition to holding round table discussions, we also conduct annual global dialogues that bring together business executives, academics and activists from around the world. We also hold workshops and created Arcturus, a comprehensive way for businesses to measure and record their sustainable practices.

Despite all the effort and work, ours is neither a large nor heavily endowed organization. All of our work is supported by donations from private sources.

Would you please consider helping our efforts with a donation of whatever amount you can give for this year’s Give to the Max Day? You can donate to the CRT here.

Any amount you can give would be greatly appreciated.

Valuation in the News

Some say money makes the world go round. Saint Paul advised that “love” of money is the root of all evil. I would say that prices create transactions, transactions create markets and markets create wealth.

So, depending on price, the world gets richer and people get or don’t get what they need or want (and if prices are too high, transfer payments of one kind or another are necessary to empower those without money so that they can access goods and services).

I recently read that the Institute for Clinical and Economic Review uses a novel way to set a price for expensive drugs. It puts a dollar figure (an assumption) on a year of healthy life, calculated how much health a drug restores to a sick person and then prices the drug according to the benefit bestowed on the patient. This method, said Dave Lennon, President of a Novartis unit, brings uniformity and transparency to drug prices, reducing the rent extraction available to makers due to their IP rights. Drug company prices can be compared to the computed “benefit” price.

But, how does one put a dollar amount to a year of my life – say, at age 36 or at 55 or at 87?

The intangibles of a life well-lived seem hard to evaluate in market terms.

Secondly, the Saudi state oil company, Saudi Aramco, launched its first public offering of shares, some 2% to 5% of its total shares. What is a share of Aramco worth today? What factors should be taken into account in coming up with a cash figure? The shares will first be sold domestically in Saudi Arabi and then internationally. Saudi Arabia’s Crown Prince has valued the company at $2 trillion, but market-savvy advisors don’t agree that potential purchasers will want to pay that much per share. They estimate buyer acceptance in the $1.6 to $1.8 trillion range.

Thirdly, the value of shares in still privately held, high-tech start-up companies is uncertain. Many mutual funds which invested in high-tech start-ups saw the value of their shares drop after the companies went public. Investors did not accept the valuations previously put on the prospects of such companies by their initial owners. Multiple funds valued Uber before a public sale of shares at $56.02 per share. Its initial offering price was only $45 and its share prices dropped after that.

The collapse of the initial public offering of We Company, the parent of WeWork, was a second notable example of mispricing by early owners of the company.

Mutual funds have invested $6.7 billion in unicorn companies – privately held start-ups estimated to be worth $1 billion or more. Mutual funds carried these investments on their balance sheets at estimated values, as they have to value their holdings daily. Thus, fund managers must write down the estimates and so take a theoretical loss in the value of their holdings.

The We Company saga of misvaluation was dramatic. WeWork’s estimated value plunged from $47 billion in January 2019 to $8 billion in October. An initial owner and promoter, SoftBank’s Venture Fund led by Rajeev Misra, had to step in with $10 billion to restructure the company and so forestall greater losses. The founder, Adam Neumann, agreed to leave and give up his voting rights in return for $1.7 billion – a nice price for one man’s human capital.

A Capitalist “Revolution” in France

This past summer, France took a happy step in the current march towards rethinking capitalism as a complex, interdependent system of mutual advantage.

The French National Assembly passed a law permitting companies to define for themselves their “raison d’etre” – their more transcendent meaning for the owners, customers, employees and society. This will give companies clear focus for their organizational mission and the ability to create cultures of achievement around that mission.

One commentator has written:

“Under the new law on Business Growth and Transformation (the so-called “PACTE Law”), the management of French companies must take into consideration social and environmental issues. Companies are also encouraged to incorporate social objectives into their corporate purpose.

The PACTE Law contains multiple provisions, some of which are of particular interest for those who follow business and human rights developments. Indeed, the PACTE Law provides (i) for “social and environmental issues” to be taken into account in French companies’ management alongside the corporate interests and (ii) for the possibility of enshrining the company’s “purpose” (raison d’être) in the corporate bylaws.”

More precisely, Article 169 of the PACTE Law introduces the following amendments into French law:

-Article 1833 of the French Civil Code now has a second paragraph stating that corporations must be managed in their own “corporate interests” by taking into consideration the “social and environmental issues” related to their operations.

-Article 1835 of the French Civil Code has been amended to allow corporations to specify in their bylaws a “purpose” for the corporate operations; this means that companies are encouraged to incorporate social objectives to their corporate purpose as part of their bylaws.

-Articles L. 225-35 and L. 225-64 of the French Commercial Code have been adjusted so that corporate and management boards take into consideration “social and environmental issues” as part of their respective managerial assignments.

In short, if the PACTE Law will not directly change the nature and objectives of corporations, it explicitly intends to give them the possibility to go beyond the objective of being profitable.

I find the French express of “raison d’etre” – literally a reason for being – more powerful and existentially directive than the English word “purpose.”

Can You Join Us November 22 and 23 in Minneapolis?

Well, our world keeps turning this way and that towards the “last syllable of recorded time.” Turkey invades Syria; the U.K. Parliament befuddles Brexit efforts; private equity houses reduce their presumed valuations of Unicorn start-ups; clouds appear over global economic growth.

Paul Gauguin once asked, “Where do we come from? Who are we? Where are we going?”

President Abraham Lincoln asked, “If we could first know where we are, and whither we are tending, we could then better judge what to do, and how to do it.”

To answer these and similar questions of our own, please join us for our 2019 Global Dialogue on November 22 and 23 in Minneapolis, Minnesota.

Additional information, as well as registration information, can be found here.

Proceedings of Istanbul Workshop on Covenants of the Prophet Muhammad

As I have reported to you before, the Caux Round Table for Moral Capitalism (CRT) has taken an interest in learning more about certain covenants made by the Prophet Muhammad to respect and protect Christian communities. The CRT’s search for common values, which call forth responsible behaviors in our economic enterprises supported by just societies, has drawn us to the study of our different wisdom traditions. In our study of Islam, the covenants were brought to our attention. Our first workshop to learn more about them from Muslim scholars in the CRT network was held in the Vatican on January 19th of this year.

Our second workshop was just held on October 5th in Istanbul at Istanbul Sehir University. Our former Chairman, Lord Daniel Brennan, convened the meeting with the very able assistance of Professor Abdullah Al-Ahsan and his colleagues at Sehir University. Important presentations were made by Professor Ibrahim Zein and his associate Ahmed El-Wakil of Hamad Bin Khalifa University in Doha, Qatar.

Ahmet Davutoglu, former Prime Minister of Turkey, attended the dinner after the workshop.

The proceedings of the workshop can be read here.

My assessment of our study, so far, is that these covenants of the Prophet Muhammad should be accepted as part of the Sunnah of the Prophet and so should become guidelines for mutual respect between Muslims and Christians everywhere. Such respect would bring much needed tolerance and harmony to our global community.

Lord Brennan, Archbishop Silvano Tomasi and I called on His All-Holiness Patriarch Bartholomew of the Eastern Orthodox Church while we were in Istanbul to brief him on the results so far of our workshops. The Patriarch graciously expressed his thanks for our efforts and offered his support as we continue our studies. Previously, we had received very thoughtful encouragement from Pope Francis and Secretary of State Cardinal Pietro Parolin.