Latest news with #economic system
Forbes
18 hours ago
- Business
- Forbes
Retirements And Businesses Face Risk From Administration Actions
The topic of regulation often sits in the penumbra of companies. Many executives hate them. Some regulation is overdone. Much of it isn't, being instead expressions of restraint when corporations behave recklessly, damaging the public and the balance of the economic system. Large regulatory packages have often enabled greater trust, attention to operations, and ultimately higher profitability overall. As often as regulation is necessary for companies, it is also required through laws and constitutional guarantees for government entities and officials who otherwise would misuse their powers over businesses and the many millions of retirement accounts that require economic success to thrive. Tech Companies And Law Firms Under Attack Donald Trump has established a practice of singling out both individuals and particular companies. Criticism on the part of the nation's chief executives, whether publicly or privately expressed, isn't new. They are people and will act as people do. However, the newest expression of it is unusual. Trump reportedly demanded that U.S. chip companies, Nvidia and AMD, pay the government a percentage of their revenue from sales to China, according to the Financial Times. The two companies agreed so they could get the export licenses necessary to ship products, reportedly admitting it to the newspaper. Also, according to the story, unnamed expert sources said that this type of arrangement was 'unprecedented.' Companies have never before paid commissions for permissions. On August 7y, 20205, Trump called on Intel CEO Lip-Bu Tan to resign because a Republican senator was concerned about Tan's reported investments in Chinese companies, Business Insider reported. Holding shares in Chinese companies is a common part of investment portfolio diversity. Days later, Trump praised Tan's 'success' online, Business Insider separately wrote. However, in a broader sense, this is not the first attempt by Trump at deals following economic threats. In April, Trump announced a deal with five major law firms for $600 million in free legal work, as The Hill and others reported. The payoff for the firms was that the Equal Employment Opportunity Commission would withdraw letters asking about hiring practices in an alleged attempt to target diversity, equity, and inclusion programs. 'The EEOC is prepared to root out discrimination anywhere it may rear its head, including in our nation's elite law firms,' acting EEOC Chair Andrea Lucas said in a statement, as The Hill reported in a separate article. Trump had also chosen law firms for their past clients and cases. Banks And Pharma Join The Ranks Trump accused banks in early August of political discrimination, wrote The Wall Street Journal. He wrote an executive order claiming that banks 'have engaged in unacceptable practices to restrict law-abiding individuals' and businesses' access to financial services on the basis of political or religious beliefs or lawful business activities.' According to the Equal Credit Opportunity Act, there can be illegal discrimination if based on 'race, color, religion, national origin, sex or marital status, or age.' Political beliefs are not a protected category. Last week, Trump told major pharmaceutical to lower prices or face punishment, as Agence France-Presse wrote. He wanted the companies to work with the administration to make changes within two months, including a 'most favored nation' policy that would require the companies to sell at the lowest price paid by other countries. Foundational Problems For Commerce And Retirement The efforts to force companies in multiple industries to act one way or another remain highly unusual and speak to the reason why such actions are considered so unusual and undesired. A president can exert enormous power from the bully pulpit alone. Extend efforts to the powers of the state and what a president can do is terrible. It harkens back to Richard Nixon's famous enemies list and his willingness to use such agencies as the IRS and FBI to attack political adversaries. In the present, the actions the Trump administration has taken show the reasons why such activities have been either illegal or considered unacceptable as norms. They can unbalance industries, upend commerce, and disturb complex social and financial mechanisms without consideration of the extent of damage that might happen. All these perturbations, as tariffs on GM profits showed, can effectively become taxes on everyone's retirement funds. With a large aging segment of the population, this ultimately is not good for anyone.
Zawya
2 days ago
- Business
- Zawya
A new economic logic for sustainability
Companies have long justified sustainability initiatives as a way to boost their reputation, comply with external and internal standards, or generate incremental profits. But the initiatives are rarely transformative, because markets disregard ecological limits and social goals, rewarding firms that burn through resources and often punishing those with regenerative models. No matter how compelling the business case, corporate sustainability strategies cannot escape their structural misalignment with the logic of our current economic system. The problem runs deeper than many realise. In the absence of the narrative infrastructure needed to reshape economic logic, all the sophisticated sustainability standards and metrics we have developed — the technical infrastructure — are insufficient. Our efforts remain hostage to the quarterly earnings dance and companies that should be leaders on sustainability are instead cautionary tales. Consider a hypothetical manufacturing company that designs products for complete circularity: every material input retains value indefinitely through continuous reuse. This would dramatically reduce the company's material costs and insulate it from volatile commodity prices. But today's markets — which are accustomed to business models based on linear extraction — would see only the high upfront investment demands. With investors favouring immediate returns over long-term value creation and credit agencies struggling to price the benefits of resilience into ratings decisions, the circular manufacturer ends up starved of investment, while its resource-burning competitors have ample access to lower-cost capital. Rewarding companies for externalising costs is economic insanity disguised as financial prudence. That is why we must initiate a shift to what I call 'aligned capitalism'. In such a system, ecological impacts would be priced into markets, regulators would reward ecosystem restoration and investors would compete on resilience. Financial statements would capture natural and social capital, while credit ratings would factor in equity and environmental preparedness. In other words, sustainability would move from cost centre to profit engine. Under this system, our hypothetical circular manufacturer would flourish. The resource efficiency and supply-chain independence of such companies would deliver huge advantages. As materials become scarcer and more expensive and trade becomes increasingly fractious, these companies would be able to build competitive moats that strengthen over time. Of course, to change the economic logic, all stakeholders in the political economy — from board members to regulatory agencies, trade unions, local communities and civil-society organisations — must do their part. But smart corporate leaders will not wait for others to act. They can demonstrate what good business looks like when systems align with environmental and social realities. The recent backlash against environmental, social and governance (ESG) commitments makes this even more important. The first and most important step is to construct the missing narrative infrastructure. Business leaders must engage in strategic, evidence-based storytelling that links corporate actions to broader realities and build trust within and outside boardrooms by entering into dialogues with stakeholders that outlast political cycles. They should also invest in research that demonstrates the superior outcomes of aligned practices. Some companies are getting it right. The Brazilian cosmetics group Natura's partnerships with indigenous communities have improved business results and social outcomes. Interface, the global flooring manufacturer, has inspired other companies with its Mission Zero commitment, which resulted in a 74 per cent reduction in its carpets' carbon footprint. Schneider Electric, an energy-management and digital-automation company, has made sustainability a central part of its business strategy, embedding it deeply into its operations. These companies' narratives helped create the economic logic that rewards their sustainability practices, setting the stage for regulatory and market shifts. But corporate behaviour is just one piece of the puzzle. To promote coordinated action, firms must adopt governance structures designed for advocacy, not just compliance, and then advocate for regulatory reform that entrenches environmental and social criteria in financial disclosures and decision-making. Regulators, for their part, must mandate the inclusion of comprehensive ecological-social disclosures in financial statements and set ambitious timelines for system realignment. Investors also play a crucial role, especially because regulation follows, as much as it leads, market pressure. Investors must integrate resilience criteria into their mandates, develop new valuation methodologies and compete on long-term value creation rather than quarterly profits. The smartest asset managers are already building these capabilities, recognising that tomorrow's winners will be companies that thrive within ecological and social boundaries. Lastly, business schools should teach ecological and social literacy, as well as how to shape future economic realities as part of their core curricula. Today's MBA students will inherit an economy in transition — whether orderly or disorderly — and need the tools to lead that transformation, instead of just managing resources within existing constraints. Under aligned capitalism, today's marginal business models can become profitable. Product-as-a-service companies could generate steady returns. With environmental benefits bringing cost advantages, carbon-negative manufacturers could scale rapidly. Firms focused on workforce development and community health care could earn direct payments for delivering positive social outcomes. To create a system where sustainability is the natural winner, business leaders must first recognise that the current economic framework is fundamentally misaligned with ecological and social realities — the markets rarely reward transformative ESG initiatives and that is unlikely to change. A better form of capitalism, under which the most regenerative and sustainable strategies are also the most profitable, is possible. But it will require executives to spur coordinated action among investors, regulators and all of their stakeholders. When the dust settles, those who had the courage to act first will be the new market leaders. 2025 © All right reserved for Oman Establishment for Press, Publication and Advertising (OEPPA) Provided by SyndiGate Media Inc. (
