Corporations and big business in general have gotten a reputation for being everything that’s bad with capitalism and the marketplace. Unlike small businesses, conventional wisdom tells us, big corporations take shortcuts like paying employees bad wages and benefits, engage in environmentally unfriendly practices, have homogenous and boring goods, and will do anything it takes to please stockholders.
Sometimes, I like small businesses a lot more than big ones. I like independent coffee shops more than Starbuck’s. I like to buy my bacon from the monthly farmer’s market in St Andrews instead of the bland stuff at the grocery store. But I also like my iPod, my Nike sportswear, Coca Cola, and being able to find anything I want at a monolith of consumerism like Target. I’ve always thought big businesses get a bad wrap and that the nostalgia associated with mom-and-pop shops is generally undeserved. In my experience with working for several small businesses, I’d also say that they do not necessarily pay better wages or treat their employees better than big businesses.
The op-ed Benji sent me talks about how the greatest force for environmental action is not coming from governments but actually from big business. Profit-seeking, it turns out, is a pretty good mechanism for helping the environment.
The embrace of environmental concerns by chief executives has accelerated recently for several reasons. Lower consumption of environmental resources saves money in the short run. Maintaining sustainable resource levels and not polluting saves money in the long run. And a clean image — one attained by, say, avoiding oil spills and other environmental disasters — reduces criticism from employees, consumers and government.
The op-ed looks at three businesses almost always associated with evil corporate practices: Wal-Mart, Coca Cola, and Chevron. All three are doing significant things to cut carbon emissions and decrease use of resources. One excerpt about Chevron:
The third company is Chevron. Not even in any national park have I seen such rigorous environmental protection as I encountered in five visits to new Chevron-managed oil fields in Papua New Guinea.
There is one thing the op-ed doesn’t mention that I think is vital to understanding why the mere nature of big companies can be good for the environment. There’s a concept in economics called “economies of scale“. It essentially says that for some industries each marginal addition of product is very cheap when the business reaches a certain size. Think of delivering mail. If we had a thousand small companies delivering the mail, it would be a lot less efficient than one big company. Small businesses would have to travel long distances to remote villages to deliver one letter. But if there’s one big company, all the letters to that village would be delivered in one trip. This efficiency means that fewer resources are used. Cheaper business operations usually mean fewer resources are used – whether it be labor, fuel, or cardboard boxes.
There are some big, bad evil corporations out there. But before we assume that all of them are worse than small businesses at everything virtuous, let’s appreciate some of good they actually do for us.
Check out this list put out by Newsweek about the “greenest” U.S. companies and I think you’ll see some surprising names pop up on the list.