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New book exposes how companies pass off "hidden costs" to society

 May 14, 2024 at 9:38 AM PDT

S1: Welcome in San Diego , it's Jade Hindman. On today's show , you know , much of corporate America puts profit and shareholders first. It is the way they do business. But it often comes at the expense of the environment. And society will talk to the author of a new book who lays it all out. This is Midday Edition , connecting our communities through conversation. Welcome back. You're listening to KPBS Midday Edition. I'm Jade Hindman. You know , much of corporate America puts profit and shareholders first. It's the way they do business. But it often comes at the expense of the environment and society at large. Christopher Marqués writes about that in his latest book called The Profiteers How Business Prioritizes Profits and Socializes Costs. He's also a business professor at Cambridge University. Tonight , he'll be speaking about the book at the University of San Diego and joins me now. Professor Marqués , welcome to Midday Edition.

S2: Thanks so much for having me , Jade. Great to be with you.

S1: Glad to have you here. So what inspired you to write this book ? Yeah.

S2: Well , you know , as you described , you know , the book is really a critique of common business practices , which are really about trying to limit the responsibilities of companies to a variety of their costs. You know , things like pollution , waste , inequality , discrimination. But actually , my my inspiration for writing the book was actually many of the companies that are doing the positive things. You know , a number of the companies that I've interviewed and researched over the years , you know , this is now in the hundreds , you know , really think very thoughtfully about how they can actually internalize some of those external costs , because it's just common good practice. You know , we as individuals , you know , we wouldn't be throwing things in other people's lawns or sort of trying to pass our costs onto , onto other people. So , you know , many companies are actually trying to trying to do the right thing.

S1: Well , you write about this concept of externalities. It's something you really dig into in the book. Break that down for us. Sure.

S2: Sure. So it sounds like a real sort of , I guess , wonky economics or accounting term. But really the concept of externalities is really very simple , and it's the idea that , you know , companies , when they produce products , services , you know , who actually is paying for the cost of the of those products and services. So for instance , carbon emissions are a really well known example of this. You know , companies pollute , uh , this creates all kinds of issues , you know , respiratory issues around the area where they are , other community type of damages , climate change. These are the externalities that nowadays for carbon emissions , at least , you know , we're trying to think about ways of having putting prices on them , markets , etc.. But many other , you know , sort of externalities around waste or other pollution or inequality , you know , people are not thinking about that yet. And that's one of the things I try to do in my book is really show how pervasive these costs that companies are not paying for are. And then , you know , hopefully through a variety of , you know , pressure on them through through governments , through consumer pressure , etc. , we can try to get them to take responsibility for that.

S1: But that's something you said there through governments. You're looking for governments to hold them accountable for these things. But in some cases it's it's local governments who will sort of lapse EPA rules and so on to attract business and industry to an area. Am I correct with that ? Yeah.

S2: No , I think you're right. I mean , this is not a situation where there's like one solution that's going to that's going to , you know , resolve this. I think , you know , I think the government can play a role , you know , potentially federal , local , etc.. I think investment markets are very , very important for this. I know that there's been sort of a backlash against sort of all things , you know , ESG. Uh , but I do think that a number of long term investors are still really seeing the importance of , you know , considering long term risks of companies which these externalities represent , and then , you know , companies and individuals themselves. So I think it's a multi-front type of solution that we need to go for. Yeah.

S1: Yeah. Well , in back to externalities , I mean , what's one that we don't often talk about.

S2: Yeah , sure. Uh , so one that that I never thought about it as an externality , but it's actually one of the things that really spurred me , uh , to write the book is plastic. Uh , so , you know , there's a lot written nowadays and sort of examples of , you know , we have this plastic in oceans , low numbers of plastic are being recycled , surprisingly , even though , you know , so much of us are very rigorous in making sure we sort of put things in the right bin. But actually plastic is an externality because , you know , if a company were to want to make things for , you know , virgin plastic versus recycled plastic , that's actually a lot cheaper because it's a lot easier to process. But then who pays that cost , you know , which is actually more environmentally damaging because it's more environmentally damaging to pay to , to sort of produce plastic. It's it's the general public. And many companies actually are being very thoughtful in how they can reduce and even eliminate the plastic. So one company , for example , California based Grove Collaborative , which is a company that , you know , sort of produces , markets and sells a variety of home goods , very sort of environmentally thoughtful , sustainable , uh , green type of goods. And when I interviewed , uh , the former CEO , Stu Landsburg , uh , what he told me is that , you know , they see their biggest responsibility as dealing with their biggest externality , uh , which was plastic , because , you know , in that industry , there's a lot of use of plastic. And they've done a lot of innovative things around product redesign , packaging redesign , you know , working with consumers to actually , uh , eliminate plastic. And I think that's one of the important levers that I really talk a lot about in the book is that there's a lot of innovation possibilities for businesses that can really put them at the forefront of what both consumers and I think future , you know , sort of policy and other environments are going to be interested in.

S3: Well , I mean , how did we.

S1: Get here in the first place ? I mean , we're companies , you know , they're passing off these costs to the public. How did we get here ? Yeah.

S2: Thank you. That's a really , uh , really important question. It's actually and this is why one of the reasons I wrote this book , uh , is because , you know , these are not neutral costs. Companies have been working for decades to really mislead the public , uh , as to their responsibility , because , you know , they want to actually have a lower bottom line , sort of lower set of costs so they can have a higher , uh , bottom line. So there's many , many examples of this , some of the , uh , sort of practices of the , of the oil companies where they have , you know , sort of ignored and denied climate change is one example. Uh , you know , so the whole idea of a litter bug that actually was invented by industry to make people think that they should be responsible instead of companies for sort of redesigning their , you know , products and services , uh , and delivery methods like , like Grove Collaborative. Uh , so what many industries have been doing is , you know , pretty sophisticated PR , communication and lobbying campaigns to really continue to have the onus on , you know , consumers as opposed to actually taking responsibility for the waste that they produce themselves. Yeah.

S3: Yeah. Well , I.

S1: Mean , in earlier you mentioned the plastics , and I think that's one big example as well. You know , there there's yeah , all of this idea that , that we need to be recycling our plastics , which is true. But the bigger issue is , is the , the just the mass pile of plastic that's sent overseas and that's sitting in our oceans and and not being recycled. Yeah.

S2: Yeah. That's exactly I mean , that's exactly right. I mean , I think that's that's really a real sort of egregious type of type of example. And of course , like you mentioned , you know , if you have something's plastic , you should definitely recycle it. I mean , you know , that's sort of , you know , so in some ways , the messages the companies are producing , like for instance , you know , I saw an advertisement recently , it had , you know , some representative from Coke and from Pepsi and Doctor Pepper , you know , they were sort of all talking about how they're working together on recycling and promoting recycling among consumers. You know , the thing is , again , we should all recycle. But I think that's really misrepresenting the situation by them having that ad because , you know , one , you know , there's less than 10% of plastics actually get recycled , even ones that get put in the bin. And to all that money they're spending on advertising , if they actually put that into thinking about how to redesign their sort of delivery of products and services , that would be much better and more responsible use of that money , instead of trying to convince us to do something that actually doesn't work.

S1: Um , all right. So so in the book , you suggest that we're in the middle of a huge societal shift that could change the whole system as we know it.

S2: So one , you know , it's pretty clear that many of the climate issues that we've been experiencing or accelerating , you know , I mean , the disasters , uh , you know , hurricanes , flooding , wildfires , uh , so that's sort of one sort of issue. I think also , you know , you mentioned challenges with governments , but I think that the actually one area and I don't want to get sort of too bogged down in boring details of government policy. But , you know , the EU has actually introduced and passed a number of very strong environmental regulations recently , and these are actually going to be applying to all companies that do business in the EU and those that do business and sort of their entire business , not just the element of them that does business in the EU , plus states in the US , like California , are also really actively , uh , you know , working on regulations for. Firm. So I think that , you know , the floor is starting to to sort of come up. I think combined with , you know , these issues that we're facing that are very visible and obvious around climate , also inequality , I think , you know , means that the time is hopefully right for some of these changes to take place. Yeah.

S3: Yeah.

S1: Well , let's dig into more solutions. I mean , you talk about some companies that are really rethinking how they conduct business.

S2: Yeah , exactly. So I mentioned that one company Growth Collaborative , a bit ago , you know , another company , another California based company that that is really impressive on this is Doctor Bronner's , which is actually San Diego based. Uh , and so they have been sort of been leading the charge on this in a number of ways. So one is in regards to they've actually been working with a variety of other companies to create new standards and frameworks for different industries. So one example is on agriculture. You know , Doctor Bronner's makes a lot of natural , you know , sort of shampoos and soaps etc.. And they worked for with Patagonia and a number of other companies that are not in their industry. Uh , on thinking about agricultural standards and ways to actually make sure that if you're producing agricultural goods , it's done in a way where it's not only organic but actually regenerative. So you're contributing back to the actual soil. It actually treats the employees , the workers , the farmers that are actually producing it in a fair and equitable way. So it's like fair trade as well. And additionally , you know , animal welfare is taken into account. Uh , so that's sort of an example of how I don't think these are things that one company can do. I think there needs to be collective action , collective movements. And so , you know , Doctor Bronner's Patagonia and a number of other companies are working on , you know , new standards and regenerative agriculture. So , uh , so this is this is one example. And I think that , you know , working together is a really , really important element of this and one set of companies and they're involved in this event that I'm going to be speaking at at the University of San Diego , uh , or B corporations , which are companies that are certified for their social and environmental benefit. And I think that through these examples , you know , we can see that actually being responsible business actually can lead to many positives , not just financial but also the community.

S1: Well , you know , we've talked at length about how this is a systemic issue rather than an individual one. But can we as consumers do anything.

S2: I do think a lot of the responsibility frequently is put on consumers. It's like , oh , you know , we need to have conscious consumers or sustainable consumers or O millennials and Gen Z. So , you know , they care about the environment. They're going to they're going to save us. And I think consumers are totally I mean , consumer choice is important. I'm not saying it's not. But I really appreciated the fact that you picked up the idea that , you know , this is about , you know , systemic , broader issues that we need many different constituencies from policy investors and companies working together. But for consumers , I think , you know , one , money actually means something. And think about how you use it , where you use it. Buy local , buy from responsible companies. The Patagonia CEO , a former CEO or founder had the saying sort of consume less but consume better. I know it's a real challenge with fast fashion and lots of trends that people see online and in social media. But I think , you know , thinking about being responsible with your with your dollars is the responsible thing to do. And I think also as individuals and consumers , you know , voting and working in one's community are also very important things to do to try to help make our world more sustainable.

S3: Well , finally.

S1: You have this event coming up at the University of San Diego.

S2: I will say a little bit about the book , but then actually , one of the things that I really like to do when I'm speaking places is get local businesses involved. And we have a variety of different San Diego businesses. Doctor Bronner's , like I mentioned , classy. Uh , and also rescue , you know , so there's a number of local San Diego businesses that you can sort of learn from , uh , see what they're doing in the community and see actually in your own backyard , there's actually companies that are innovating in ways that actually are helping the planet , helping the people that work for them. And they're doing well financially , too.

S1: I've been speaking with Christopher Marquis , professor at Cambridge University , and author of the book The Profiteers How Business Prioritizes Profits , and. And socializes cost. You can see Professor Marqués talk about the book at the University of San Diego tonight. The event starts at five. Professor Marquis , thanks so much.

S2: Jade , thanks so much. It was great talking to you.

S1: That's our show for today. I'm your host , Jade Hindman. Thanks for tuning in to Midday Edition. Be sure to have a great day on purpose , everyone.

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The General Electric logo appears above a trading post on the floor of the New York Stock Exchange in 2018.
The General Electric logo appears above a trading post on the floor of the New York Stock Exchange in 2018.

Much of corporate America puts profit and shareholders first. That’s the way some do business. But, it often comes at the expense of the environment and society at large.

Christopher Marquis writes about that and more in his latest book “The Profiteers: How Business Privatizes Profits and Socializes Costs.” It exposes how some corporations will pass off social responsibility to the public.

Marquis will celebrate the book launch at the University of San Diego. As part of the event, he will also moderate a panel with local businesses that are focused on their social and environmental impact.


  • Christopher Marquis, professor at Cambridge University and author of “The Profiteers: How Business Privatizes Profits and Socializes Costs.”