By Rinaldo S. Brutoco

Sustainability has been the “North Star” of the World Business Academy since our incorporation in 1985 as a non-profit organization committed to “Sharing the Vision, Building the Network, and Healing the Planet.” Any purpose statement that ends with healing the planet carries, at its core, the fundamental concept of sustainability.

From the beginning, the Academy has recognized that the imminent danger to the biosphere had to be reversed – an understanding that was neither popular nor well understood in 1985. Today, it has become common wisdom for all but the most intentionally self-blinded individuals.

The Academy’s foundational principle is straightforward: business is the only institution large enough to counterbalance the inability of other major institutions – politics, academia, and mainstream religions – to prevent human civilization from running off the proverbial cliff. To succeed in that role, the consciousness of business itself had to shift from that of a predator – “get all you can and let everyone fight for themselves” – to that of a steward. Why? Stewards take responsibility for the consequences of their actions.

At the Academy, we believe that business must undergo this shift in consciousness if it is to address the terminal damage being done to the biosphere. However, the desire to make environmental sustainability central to corporate strategy naturally led us to a broader understanding: sustainability must become an end in itself for all strategic planning – not only what is “good for the environment,” but what is required to ensure long-term resilience across the entire system in which business operates.

That insight led us to develop the model of “Stakeholder Capitalism,” in clear juxtaposition to Milton Friedman’s now-discredited doctrine of “Shareholder Supremacy.”

In Friedman’s model – popularized by the Chicago School and championed by President Reagan – corporations exist primarily to maximize financial returns for shareholders. Stakeholder Capitalism holds the opposite view: a public company delivers greater long-term returns when it fulfills its duties to all stakeholders – employees, customers, vendors, shareholders, the biosphere, and the communities in which it operates.

In 2014, the Academy launched JUST Capital, Inc., a highly influential New York-based non-profit that developed a specialized index of the 1,000 largest public companies practicing Stakeholder Capitalism. That index is grounded in hundreds of thousands of interviews with average Americans and is updated annually. The interviews reveal how ordinary people define a “JUST” company, and based on those perceptions, companies are ranked each year from #1 (best) to #1000 (worst).

A little over eight years ago, JUST Capital launched a new Exchange Traded Fund (ETF), with active underwriting by Goldman Sachs, which continues to manage it today. That ETF has outperformed the comparable Russell index of public corporations by significant margins each year of its existence. We believe this demonstrates something powerful and conclusive: even shareholders do better under Stakeholder Capitalism. When a company commits to sustainable management across all stakeholder classes, shareholders ultimately benefit.

This framework is not only morally superior – because it is more moral to preserve the environment for future generations, more moral to care for employees, and more moral to contribute positively to society – it is also a superior long-term strategy for profitability and survival.

One can also see this truth reflected in the marketplace historically. Many of the most profit-greedy industrial companies (excluding extractive industries, which require separate analysis) have disappeared after only a few decades. Their rise and fall can be observed in how quickly they entered and exited the Dow Jones Index of major industrial companies. Very few firms listed 50 years ago remain there today. One notable exception is IBM, which survived the collapse of the global mainframe industry by reinventing itself, shifting from manufacturing dominant physical mainframe computers to focusing on consulting and software analysis.

“Big Blue” was once so dominant that for decades in the mainframe industry, people said, “No one ever got fired for buying IBM.” That is, until they did get fired for not buying personal computers instead.

These themes – technological obsolescence, the need for management to stay current with evolving technologies, and the necessity of integrating long-term strategies with shifting social mores – are inseparable from true sustainability. A manager who understands this reality is precisely the kind of leader most likely to embrace Stakeholder Capitalism when they encounter it.

That is exactly what I observed in a wide-ranging conversation with Captain Viktor Vranic, Master of the 1,000+ foot ship, NCL’s Norwegian Bliss. On the voyage where we met, Captain Viktor was directly responsible for 4,770 passengers and 1,600 crew members – a floating city. The ship contained a municipal-scale desalination plant, 16 major restaurants (not to mention bars), a water amusement park, a two-level go-kart attraction, massive water slides, childcare services for all ages, and an enormous power plant generating electricity for everything on board – including the engines that turned the propellers.

With 20 years at sea, the captain had seen profound technological change: the transition from virtually no hybrid drive systems early in his career to today’s increasingly efficient hybrid systems – improving performance while beginning the inevitable transition toward fully “green” propulsion fuels by 2030. We discussed the evolution of stack scrubbers and how even those will eventually be phased out through regulation as purer fuels are adopted. He noted how relatively small the cruise industry’s total emissions are – around 350 ships globally – compared with the global automobile fleet. Yet he wondered aloud why individuals, through their own purchasing patterns, aren’t behaving with greater urgency and concern for environmental sustainability.

He described his own intense focus on shifting away from low-grade heavy fuel oils of the past toward today’s mixed fuel systems, including hybrid lighter fuel oils and methanol, with the goal of reaching near-zero greenhouse gas emissions by 2030.

But what was most compelling about Captain Viktor was not his technical mastery – it was his understanding that no single individual can manage such complexity alone. He saw his success as a captain as inseparable from his ability to train each crew member to be a strong link in a chain with no weak points. His pride was in building a culture of excellence in which every person was capable, well-trained, and able to work effectively with others.

He was an employee-centric manager who understood that the only reliable path to sustained profitability was to cultivate sustainability at all levels of the system – not only in relation to the biosphere, but in operational excellence, human performance, organizational resilience, and long-term market viability. He wanted a sustainable ship, a sustainable market for the 37 million individuals expected to cruise this year, a sustainable management team – and he knew that such sustainability would lead to sustainable profits.

This is what we have historically called General Systems, or Whole Systems Theory, perhaps best articulated by the late Academy Fellow George Land, and it is from this intellectual lineage that Stakeholder Capitalism emerged.

In addition to advancing ever more effective and humane systems of management, the Academy strongly believes that government intervention is essential if we are to prevent human civilization from being wiped out in the near future.

Just as government regulation of the cruise ship industry is forcing the conversion of these massive floating cities into ever more “green” members of the global economy, it is equally clear that governments must immediately establish guardrails for artificial intelligence. We need to recall Isaac Asimov’s Three Basic Laws of Robotics as a foundation for all base algorithms.

Does the absence of such a commitment – by political and business institutions – reflect a woeful lack of sustainability thinking? Do the rapidly rising and extremely dangerous levels of CO2 (now over 425 ppm) and methane in the atmosphere indicate a terminal failure of sustainable reasoning by the business community? Especially as we begin to see the destabilization of the property-casualty insurance industry and the correlated loss of property values? And, do global political forces think sustainably enough to anticipate the destabilizing threat to historical political structures as desertification creates millions of environmental refugees?

The Academy’s role in this time of accelerating turmoil is to continue researching and writing about sustainable management practices in business and government, and to deepen our existing 30-year inquiry into the development and deployment of sustainable advanced green energy systems.

We will continue our decades-long pursuit of microgrids and fuel-cell-assisted microgrids as an alternative to the traditional electrical grid. We will continue to develop the technologies necessary to reduce methane pollution, and we will continue to study applications of solar, wind, and geothermal energy systems across society. Most of all, we will continue to advance the ways hydrogen can – and will – replace fossil fuels globally.

Hopefully, this work will make the critical difference needed to help humanity preserve civilization as we know it. To make our global civilization sustainable. But as they say in the law business: “No assurance can be given.”