1F235 Ecological cycle economy and participatory enterprise management based on economic, social and environmental sustainability

Ecological cycle economy and participatory enterprise management based on economic, social and environmental sustainability:

Participatory enterprise administration

Generally, a new corporate governance must ensure that within an organization no party gains so much power that they can dominate the important company decisions in their favor. Specifically, the capital providers (investors) may not claim the automatic right to divide the profits made amongst themselves. The continued accumulation of capital and its sole private disposal by the capital providers must end. Entrepreneurial action must be guided by three equally weighted objectives:

Economic Sustainability, i.e. the ability to sustain the value creation process permanently and for future actors and generations.

Social Sustainability, i.e. the preservation of life and participation opportunities for future players and generations, through the economic process.

Ecological Sustainability, i.e. the permanent preservation of the natural foundations of life and the economy for future generations and actors.

Important in such a participatory corporate governance are:

Expansion of accounting onto social and environmental criteria: Companies are obliged by the legislature to set next to the financial also prescribed ecological and social balance criteria and performance measurement systems (there are already differentiated procedures – see also Economy for the Common Good). Through different incentives and promotional tools (tax, credit terms, public assignments, duties etc.) the application of these criteria will be rewarded or „punished“ in the negative case. Thus, the entrepreneurial success accounting is placed on a broader basis and guided through market-based incentive mechanisms consistently towards economic, ecological and social sustainability. In the income statement in addition to the usual business related figures, now also ecological and social costs and gains are included.

Participatory management: In the production and distribution of goods and services different groups are involved: the investor (both equity and debt capital), the staff, the members of the public (municipality, province), the customers and the representatives of ecological interests as „advocates“ of nature. These groups carry both the responsibility and the risks of production. If one accepts that the production of goods and services should be a core business of the society, these groups must be involved in the corporate decision-making processes. Thus, initially neither the entrepreneurial action nor the market (and the price) as a means of distribution are questioned. It is rather a matter of at first creating conditions, within a solidarity-organized market, which lead to a common good oriented control.

Cooperative economy

A special form of participatory corporate governance is the cooperative economy. Since the members of a cooperative are also investors, owners, producers, and possibly also customers, an essential condition for a participatory management is given in itself. However, even if the conflicts of interest appear smaller in a cooperative, the formation of an Economic Council is required to consider the interests of society. Cooperatives only then operate fully in the sense of solidarity economy if they work according to environmental, social and public welfare balance criteria and are incorporated into the system of the Economic Councils. An advanced form of cooperative economy are reproduction cooperatives. In them cooperative production and customers / consumers join to form a cooperative in which the economic process works directly through the specific needs and requirements satisfaction – possibly even without the medium of exchange money.

Ecological cycle economy

As already explained the capitalist economy of profit maximization and continued growth forces the externalization of social and environmental costs. This leads to exceeding the environmental load limits – with the consequences of impending climate disasters, wars over increasingly scarce resources and serious social unrest that threaten the existence of humanity. It is clear that the environmental issue is closely linked to the question of justice and peacekeeping. The goal of a more human economy is, therefore, to enforce the primacy of ecology with respect to business and economy, without which the industry itself cannot work sustainably. The guiding paradigm is a return to the natural cycle economy in the broadest sense:

  • Consequent up-taking and incorporation of the energy cycles of nature (renewable energy economy);
  • Reconnecting all material usage as much as possible in cycles of recycling (recycling economy);
  • Reducing dramatically, possibly down to zero, the impact upon the ecosystem and the use of resources that cannot be regenerated and replacing them with other materials or uses.