A More Powerful Path

Business changes the world--at every moment, in myriad ways, for good and ill. Decisions in boardrooms or on factory floors set in motion both staggering progress and far-reaching disasters: Microsoft tweaks its software and rearranges the virtual desktops of millions of people, shaping how they work every day. BP apparently shrugs off maintenance, and oil pours from a corroded pipeline into Prudhoe Bay. Wal-Mart shifts its gaze, just slightly, and drives organic produce to folks whose income once limited them to preservative-laden processed food.

But unlike the chaos-theory butterfly, business is not an uncalculating force of nature. It can behave with intention. Indeed, we have left the era in which business leaders were expected to treat their companies as mute, dumb giants, merely swinging pickaxes in a profit quarry. We are waking to the idea that if business inevitably shapes the future, it has a responsibility to choose what that future will be.

For guidance in this new realm, business is looking to social entrepreneurs. Not because they excel at that do-gooder thing, but because they have sophisticated, tested theories of change. They know their markets. They understand systems and levers of action as few others do. And, as many clever companies are learning, they can be great partners in endeavors that are good for the world and good for the bottom line.

Our fourth annual Social Capitalist Awards honor these leaders, who combine savvy business models with solutions to pressing social needs in ways that challenge our assumptions about making a profit and making a difference. The 43 honorees meet our partner Monitor Group's stringent standards for social impact, entrepreneurship, innovation, sustainability, and growth.

On these pages, you'll find evidence of a movement that's not just changing the world, but changing how we think about creating change. Increasingly, we're witnessing the blurring of commerce and charity: Companies now tend to their citizenship; nonprofits hitch income-earning solutions to markets. That phenomenon led us this year to assess the most innovative corporate partnerships among our winners--alliances that represent both business value and a choice about what kind of future to create.

Perry Odak, CEO of the Wild Oats Markets grocery chain, realized he had such a choice in 2003, in the middle of a Mexican coffee field. Amid rows of berries, he listened to a farmer explain how joining a fair-trade cooperative had meant scholarships for his kids to attend school, an addition to his tin-roof home, a better future. "I was touched very deeply," says Odak. Afterward, he vowed to his host that he would paint fair trade on his walls.

That host, Paul Rice, CEO of Social Capitalist winner TransFair USA, which certifies fair-trade products, figured Odak was speaking metaphorically. But soon, Wild Oats rolled out giant signs in all 113 stores to describe to customers the effect of the labor, price, and environmental requirements of fair trade. The strategy played well for Wild Oats and for farmers. Volume sales of the retailer's coffees went up 20% despite a $2-a-pound price increase--organic beans cost more to grow--leading Odak to introduce fair-trade loose tea, bulk sugar, and fruit. Meanwhile, the company's purchase of 2.1 million pounds of fair-trade coffee has yielded more than $1.5 million in additional revenue for 100,000 farmers and their families, Rice says.

This blended-approach partnership comes in many flavors, some reflected in the profiles that accompany our list of winners:

Scout new markets. The so-called "base of the pyramid" approach targets the poor as credible customers. Procter & Gamble's PuR water-purification product is one high-profile example in the developing world. But the strategy has power domestically as well, as evidenced by Merrill Lynch's deal with Housing Partnership Network to access the low-income housing market.