Linda Hull, vice president of the Rotary Club of Los Alamos with James Wernicke. Photo by Maire O’Neill/losalamosreporter.com
BY MAIRE O’NEILL
maire@losalamosreporter.com
Outdoor enthusiast and LANL scientist/researcher James Wernicke told Rotary Club of Los Alamos members recently that he combines his twin passions of science and nature while raising his family in the safe and quiet community of Los Alamos.
Wernicke started his first business in 2022 and shortly thereafter literally stumbled into studying corporate responsibility when he accidentally enrolled in a graduate course on the subject at UNM’s Anderson School of Management.
“I thought it was going to be a clinic on how to be a better business person and it would be a one-day thing and it turned into a whole semester,” he said.
He believes that there is a lot of injustice in the world, and that for-profit enterprise and voluntarism are the keys to eliminating it.
“Our economy runs on capitalism. Capitalism is responsible for the efficient allocation of resources to improve housing, food, healthcare, energy, transportation, manufacturing, information, and entertainment. Our quality of life is objectively better thanks to the miracle of free and open markets. Right?” he said.
He explained that the GDP per person in the United States jumped up and continued to rise after 1850. Up to then, most Americans worked for themselves but by 1900 most Americans worked for an employer.
“The productivity of people just skyrocketed. As capitalism rises so does global prosperity,” Wernicke said.
He quoted 1976 Nobel Prize for Economics recipient Milton Friedman, who said, “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits.”
“In other words, the business of business is business. Would you believe there are a lot of people who don’t like this guy?” Wernicke asked.
With regard to the concept of profit at all cost, he said, “It turns out there is a vulnerability in capitalism. Short-sighted capitalists ignore equality of opportunity and external costs such as pollution in the interest of increasing profit. It may work in the short term but the societal cost eventually cancels the short term gains”.
Wernicke said he likes how Konstantin Kisin, a Russian-British comedian and political commentator who does podcasts and Youtube shows describes capitalism – “Capitalism means you have the opportunity to use your talents to produce things to share with other people and if they are of value to others you will be rewarded in a relatively fair system. We have a fair system where multi-national corporations pay less taxes than Jimmy Carter, where young people have to wait until they’re 40 to buy a house. Is that capitalism the way it was intended?”
“Fortunately, as we as a society become more educated, some entrepreneurs are beginning to realize that stakeholders as well as shareholders are necessary for prosperity. In the modern business model we are shifting from a shareholder business model to a stakeholder business model where stakeholders and shareholders values are considered,” Wernicke said. “We are seeing that the demand for responsible business is rising. There is predicted to be an 84 percent growth in ESG investments by 2026. Eight percent of the world’s largest organizations are using GRI standards – the Global Accountability Reporting system. It’s estimated that by 2026 it will cost $1.3 billion for businesses for climate-related events.
He said other people, too, are beginning to realize the negative impact of short-termism and so the economic winds are changing in favor of businesses that are accountable to more than just shareholders. He said some other tools are available in the battle for corporate responsibility
“In 2010 the Benefit Corporation legal structure was introduced and it was adopted in New Mexico in 2020. It empowers business leaders to use their businesses for the good of society even if that means sacrificing some of the profits,” Wernicke said. “Certified B Corps are businesses, though not necessarily Benefit Corporations, that demonstrate commitment to social, economic and environmental responsibility – things like providing workers with living wages, reducing waste and using energy-efficient technology as well as supporting customer-focused public policies and charities. There are currently 6,321 Certified B Corps.”
Other than feeling good about yourself, Wernicke said the B Corps process can strengthen a business’s mission to do good, which can protect the mission even through change of leadership.
“You can differentiate yourself from pretenders. We see a lot of what’s called ‘greenwashing’ these days. You’ll see it with all sorts of products you buy. They’ll use words like ‘zero emissions’. Electric cars aren’t exactly zero emissions. This is a big marketing thing a lot of businesses do. With Certified B Corps you can rigorously prove your company is committed to corporate responsibility,” he said. “There’s a saying, ‘You can’t manage what you can’t measure’. The B Impact Assessment is a powerful tool measuring your companies’ impact on hundreds of dimensions.”
Wernicke outlined some of the benefits for a Certified B Corps company.”
“You can attract talent. Workers today are also more forward thinking, looking to work for companies that not only provide a paycheck, but also make a positive impact on the world,” he said.
He said B Lab that oversees B Corp certification has a platform called B Work, which is essentially a hiring platform for businesses that helps save costs on hiring and allows socially-responsible employees looking for work to filter down to companies that are committed to that cause.
“You can collaborate with peers through B Hive, which is an exclusive platform for Certified B Corps to engage with each other,” Wernicke.
Businesses can also save money, not only by using the hiring platform but also the B Hive, which is a marketplace where Certified B Corps can get discounts on things like software and legal advice.
“The late Madeleine Albright, the U.S. Secretary of State from 1997-2001, said of B Lab, ‘In my work, I often wonder to what extent business can help society in its goals to alleviate poverty, preserve ecosystems, and build strong communities. B Lab has proven that there is a way—the B Corp movement shows us that business, the driving force of our economy, can be an agent of change and live up to society’s standards,’” noted Wernicke.
“The B Impact Assessment is the primary tool for companies to use to become B Corp Certified. It evaluates companies based on five categories: Governance, Workers, Community, Environment, and Customers. A company must score at least 80 to become B Corp Certified and must recertify every year. Some companies have scored over 200 on the Business Impact Assessment. The assessment is constantly changing to keep up with new information. The BIA is what I studied last semester and what I’m looking to help other businesses with,” he said.
Wernicke concluded his presentation by sharing a quote from environmental activist Greta Thunberg.
“We can no longer save the world by playing by the rules because the rules have to be changed. We need a system change rather than individual change but you cannot have one without the other. So I ask you to please wake up and make the changes required possible. To do your best is no longer good enough. We must all do the seemingly impossible”.
For more information about benefit corporations see https://www.bcorporation.net/en-us/ or https://www.cultivatingcapital.com/b-corporation/.