Can capitalist companies do good as a matter of law? That was the question on the table at a "business salon" I recently attended with some big thinkers in Oregon's corporate sustainability movement.

As we lunched on an environmentally correct meal of Alaskan halibut, locally raised vegetables and organic rhubarb pie (courtesy of like-minded Portland chef Greg Higgins), we mulled over whether it's possible — and advisable — to write sustainable business practices into a company's bylaws. This would obligate the board of directors and executives to do more than deliver a good return on investment to shareholders. They might also have to make corporate decisions that benefit the environment, provide stable employment and health coverage, or enhance the economic viability of their communities.

Why would a company want to do this? Isn't there already enough pressure to "do the right thing" from politicians, bureaucrats, employees, meddlesome institutional investors and litigious shareholders?

The answer offered by Bryan Gooch Redd of Upstream 21, a holding company that is acquiring mid-sized private firms in the Northwest and will run them on sustainable principles, is simple: to make the corporation an agent for wealth, health and vitality at the local level and for the long term.

Redd says the current model of corporate accountability isn't working. He calls it "short-termitis" in which "all corporate decisions have to answer one primary question: 'What's in the interest of shareholders?' And this translates into: 'What's in the best short-term interest of shareholders? What's our stock going to be tomorrow or next quarter?'" But for shareholders who see themselves as owners, not speculators, short-termitis is counterproductive.

Companies put short-term profits first, which leads to downsizing and outsourcing of American jobs instead of investment in high-skilled local manufacturing; continued dependence on globe-warming imported oil instead of development of local renewable resources; and more uninsured families instead of universal health care.

Upstream 21's articles of incorporation define the "best interest of the corporation" to include its impact on employees, shareholders, the environment, customers, suppliers and community.

What might this mean? Could a local supplier of widgets demand that your company not buy cheaper widgets from China because of your sustainable corporate charter? David Williams, CEO of ShoreBank Pacific, speculates: "The job of the purchasing agent would change from 'how do I get this product cheapest?' to 'how do I help this local supplier — with whom I have a relationship — to supply it cheaper?'" Redd emphasizes the point: "We're not interested in investing in companies that oursource everything to cheap labor abroad, even if there's some financial cost."

David Griswold is following Upstream 21's lead with his own company, Sustainable Harvest Coffee Importers.

Griswold recently lost out on a deal with a publicly traded coffee company whose buyer couldn't purchase Griswold's fair-trade, shade-grown Peruvian coffee because it was more expensive than coffee grown under less environmentally friendly conditions.

"In light of the shareholders, the buyer couldn't make the decision" to purchase the costlier but more sustainable coffee, Griswold says. "There's never been a way taught in business school to put a value on 200 coffee-growing families in one Peruvian village. But everyone wants a way to consider more than short-term value."

In a brave new world of sustainable accounting, capitalist corporations can save local jobs and the global climate. But first, the lawyers and number crunchers have some work to do.

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Copyright 2005 Oregon Business magazine