Employee Ownership and Ecological Sustainability

Image: Solar installers from PV Squared, a worker cooperative and certified B-Corp

Are mission-controlled, employee-owned companies better environmental stewards than conventional corporations? Is transitioning to employee ownership a more likely path to keeping a firms’ ecological mission alive, compared to selling a firm to a large competitor? The answer to these questions is critical to enterprise design for the 21st century and beyond. If we understand the relationship between enterprise design and a sustainable, equitable economy, we can be more deliberate in the choices we make.

To illuminate this issue, the Fifty by Fifty project is launching a series of company profiles and interviews of thought leaders, as part of a research project funded by Partners for a New Economy.

We are looking in part, though not exclusively, at B Corporations that are employee owned, because these companies have a commitment to social and ecological benefit embedded in their governing documents. We’ve identified several dozen of these firms and will be profiling them, and others, in this series. Ownership by workers, combined with mission-driven governance, may be an emerging model — viable in today’s economy — that embodies critically needed design elements required for environmental sustainability.

If the goal is system change, we as a society want to build and invest in durable enterprise designs that create and preserve environmental and social missions over the long term.

Our hypothesis is that firms that have shares predominantly trading in public markets are less capable of having a deep and genuine sustainability mission. Shareholders in publicly traded companies are large in number, geographically remote, disengaged from companies, and structurally unable to effectively voice social and ecological responsibility. Creating shareholders with different characteristics — fewer in number, close to the firm, engaged, committed to a common social or environmental mission — could help create companies compatible with an environmentally sustainable economy.

In this configuration, owners can become moral agents. Sustainability expert Carina Millstone, in her book Frugal Value, emphasizes that true sustainability cannot be driven by purely commercial concerns. The “business case” for sustainability is true only one-third of the time, MIT research has found. In two thirds of cases, there is no business case. True sustainability requires moral decision making. The question then is: in what ownership configurations is this possible?

We’re on a journey to explore these questions and look forward to sharing what we learn along the way.

—Marjorie Kelly and Sarah Stranahan, for the Fifty by Fifty project.


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