We have, in the course of the changes in our society,

been establishing greater and greater incentives for people

to behave in ways that most of us regard as immoral.

You know, the traditional form of Capitalism is:

Put a product to market, put a service to market

and make money.

The way I contemplate entrepreneurship is figure out

how the world is better off because of your product and service

and bring that into the marketplace.

Business is kind of construct for people to get together

to achieve some kind of result.

So why not take business as a tool to achieve

a more progressive result?

Instead of seeing Capitalism as evil and destroying humanity

and the planet, you can take Capitalism and say,

"Use it with a conscience to create a purposeful result –

a just and equitable society."

Can't we agree that Capitalism is an economic system?

A system for the production and distribution of things

we need and want?

Go back 70 years.

Think about what "Made in Japan" meant in the 1940's and 50's,

post World War Two.

You have Capitalism as a key tool in building economies.

(announcer) It's new, it's automatic, it dictates, records,

seals, sterilizes, stamps and delivers in one operation

without human hand!

"Made in China", "Made in Taiwan", and "Made in Hong Kong"

in the 70's and 80's...

(announcer) What do I bid? What do I offer?

Sold! Who's next!

These are global economies that are major economies of the world.

What is next?

(announcer) Out of the crowds of the Empire City,

the Wonder City, the Windy City, the Passion City...

Is it made in Bangladesh?

(announcer) Get the big money. You make a pile

and raise a pile. That makes another pile!

We come full-face into what happens when Capitalism is left unfettered.

(announcer) We reached a million! Two million! Five million!

Watch us grow!

The 20th century model of Capitalism has one rule

in its operating system, which is:

the purpose of the corporation is to maximize

share-holder value exclusively.

Even if that means that there are significant,

for the benefit of the doubt, unintended consequences.

It's amazing to me how consumers just have this unshakable trust

in what they buy.

(announcer) Pestroy DDT. Used right, it is absolutely harmless

to humans and animals.

(announcer) And when drinking water comes out sparkling clear,

an asbestos cement pipe may have helped guard it

from reservoir to home.

It's laden with chemicals and it's from questionable factories

and I think some of these scares has done us a favor on some level

in raising the dialogue.

New communications channels like social media primarily

are driving transparency into companies.

They can't get away with uncareful behavior anymore.

They need to be very, very diligent about how they

serve their communities that they work in.

That's driving corporate social responsibility,

it's driving better governance,

and it's certainly driving sustainability.

That's been a constant trend over the last 15 to 20 years.

When you consider the world the baby boomers up grew in,

it was post World War Two. Their parents, who lived through the war,

they grew up in a world of scarcity.

People who were successful had stuff.

So the baby boomer generation grew up in a world where

if I had stuff, I was successful.

This shaped the minds of that generation.

So by the time the baby boomers get in control of the economy,

in the 1980's, excess was everywhere.

It became about stuff. And you had the big stories of the 80's,

like the Tycos, the Enrons.

The corporations became about adding book value for share-holders,

not adding societal value for all stake-holders.

In the last 50 years of business, companies are rewarded

based on success of one metric, and that is profit.

CEOs who are successful deliver profit to share-holders.

Our entire stock exchange is founded upon that,

so it's hard for us to criticize CEOs for forsaking other things

like supplier relations or social impact or other causes.

As companies began to feel the pressure of global competition,

the sole focus on making profit, without regard for society,

seemed like a promising idea.

Inspired in part by a 1970 New York Times article by Milton Friedman,

the most respected and influential economist of the late 20th century.

And now, ladies and gentleman, the Milton Friedman choir.

We had a very simplistic view of the world, where we would

just define profit as "dollars in" minus "dollars out"

equals profit. What we need to do now is quantify

all the soft costs.

It's very competitive in the international marketplace

to find really low cost labor.

When you manufacture something in another country,

and you import it, they put on a duty rate.

Countries like Bangladesh – there is no duties.

Because of that, you can save 18%.

That's a huge amount of money.

So what they do is they go to a lot of these countries that are exempt.

My auditor of fabric mills told me that they had gone to Bangladesh.

He said to me, "Do you know how many factories had

a waste water treatment plant?"

And I said, "No. How many?"

Two. Out of 300 that they visited.

And there's a lot more than 300 fabric mills in Bangladesh.

Where's the chemicals and dye stuffs after dying it

pink and blue? Where's that going?

Straight into the river. Straight into the creek.

Are those creeks and rivers connected to oceans

that we live beside? Yes. This was all connected.

This is what people forget when they buy a product that comes from

a country that has no regulations. But they have to,

for the corporate culture. They have to make profit.

There's been another horrific incident at a garment factory

in Bangladesh.

It came crashing down, trapping hundreds of people inside.

Officials discovered cracks in the building yesterday.

Producing clothes bound for some major American retailers...

This afternoon, a British retailer, Primark, announced it would

compensate victim's families.

Loblaw is reacting. The company said late today

that it will provide compensation to the families

of those killed in Bangladesh.

There's something to be said if you're going to be

in factories and pushing for low cost labor.

There's always a cost.

And, on some level, I think a lot of those brands

are stepping up and paying a cost at the end

of what they didn't pay at the beginning.

The core indicator of a country's health is the GDP.

It's the total market value of goods and services

produced in a single year.

Social impact is not considered.

The environment is not relevant.

The health, happiness, and fulfillment

of its citizens doesn't matter.

Financial metrics are all that count.

We've got to a point now where quarterly returns

are more important, it seems, in the news and more important

to the way we cover businesses, than the longer term work that they do.

So we're trapped in this short return cycle,

when most of these big problems and these big contributions

to society actually take far longer cycles.

They can be three, five, seven, 10 plus year cycles.

If we're judging companies on quarterly cycles,

we're never gonna get the traction on these long-run goals.

So there's something in the way that we look at companies,

there's something in the way we judge companies

performance that needs to change.

It's 1987.

- Open this gate. - (crowd cheers)

Reaganomics is in full swing...

The Simpsons debuts on television...

- Change the channel. - No.

and the Unabomber is on the loose.

It's business as usual in America.

Then it hits.

There's only one word to describe what's happening

and that is "panic".

Black Monday, the worst day ever on Wall Street.

The market has fallen over 400 points.

508.32

500 billion dollars in paper values have been lost.

When you see around the globe the mal-distribution