Sometimes it’s difficult to explain why moving businesses to benefit corporation governance is so important. Why not allow businesses to serve the shareholders who invest their capital by maximizing profit? Won’t that insure that financial capital isn’t wasted on feathering the management nest, or on pet vanity projects, or simply frittered away? And shouldn’t the other stakeholders in a company rely on their own bargaining power, and on the protective hand of the government to look after their interests?
The film The True Cost answers this set of questions by demonstrating how the garment industry imposes staggering human and environmental costs on workers in Bangladesh, farmers in South Texas, tanners in Punjab and many others, hiding the real costs of a $10 tee-shirt you might buy at H&M and wear once or twice. The movie illustrates why a corporate governance system cannot be humane or sustainable if it accounts only for financial capital, while ignoring human, social and environmental costs.
My upcoming book, Benefit Corporation Law and Governance: Pursuing Profit with Purpose, contains a dedication to the 1,129 garment workers who died in the Rana Plaza building collapse in Bangladesh in 2013. The movie details the human cost of that tragedy, and the continuing abuse of workers in Bangladesh that helps create cheap products and high profits for the “fast fashion” industry.
This movie will make you want to buy more responsibly– and you should. But our individual choices are not enough. Systemic change is needed, so that the hundreds of trillions of dollars of global capital is used in a way that accounts for the true costs and benefits of its profits.