Change the World 2019: Where Business Creates Virtuous Circles

You might not expect modern corporations to tackle an urgent problem of the 21st century by looking back to the 1950s. But that’s what one group of companies is doing with a new service called Loop, whose backers refer to its approach as “the milkman model.”

As that Leave It to Beaver–era nickname implies, Loop delivers supermarket and drugstore staples—including toothpaste, detergent, mayonnaise, and ice cream—to consumers’ homes in durable, reusable containers. It’s a “zero waste” initiative, an effort to alleviate the planet’s plastic-pollution crisis. Several consumer-goods giants are Loop partners, including Unilever and Nestlé (which are packaging their brands in Loop’s bottles and tubes) and retailers Kroger and Walgreens. The company that conceived Loop, however, and will distribute, clean, and refill all those containers, is tiny TerraCycle, a 302-employee startup in Trenton, N.J., whose CEO, Tom Szaky, founded the business 18 years ago in his Princeton dorm room.

TerraCycle holds the No. 10 spot on Fortune’s fifth annual Change the World list. The list honors companies that recognize public health, environmental, economic, and social problems as major challenges—but also as opportunities to initiate a so-called virtuous circle. They understand that doing good for society and the planet can help them bring in more revenue, which can help them do more good, in a self-reinforcing loop.

The TerraCycle project embodies another kind of virtuous circle: As the threats posed by pollution become increasingly urgent, more companies are embracing the idea of a “circular economy,” one in which products last longer and are close to 100% recyclable. That idea animates Daisy, Apple’s iPhone-repurposing robot (No. 16); the reusable “smart grid” circuitry manufactured by French giant Schneider Electric (No. 9); and many other innovations featured here. Expanding opportunities for your own employees can create another positive loop. That ideal guides $514 billion retailer Walmart (No. 5), which is paying for higher education for thousands of its employees, and $398 million restaurant chain MOD Pizza (No. 28), which has built its workforce around formerly incarcerated people and others who struggle to get hired elsewhere.

We selected the 2019 list in collaboration with our expert partners at Shared Value Initiative, a consultancy that helps companies apply business skills to social problems. As MOD shows, small companies are just as capable as multinationals of fitting that bill. This year’s smaller candidates were particularly potent. Our 52 honorees include at least nine companies with less than $1 billion in annual revenue.

“Small” doesn’t mean “money-losing,” however. These companies here have built their do-gooder ideas into real business models, and are either turning a profit with their help or have credible plans for doing so. (Please see more about our methodology here.) The Change the World list doesn’t score companies on their charitable generosity, nor does it rate them on some cosmic scale of good and bad. It celebrates the nexus where daring ideas overlap with the desire to make the world better.

Loop, which has signed up 80,000 customers in the U.S. and Europe since its launch in May, sits in that sweet spot. It’s not going to make the Great Pacific Garbage Patch disappear. But be patient: Many world-changing ideas start small. —Matt Heimer

What Change the World Companies Have in Common

Serving Multiple Stakeholders

World-changing companies recognize that a narrow focus on shareholder value can hurt a business in the long run. (For more on that philosophical shift, see “A New Purpose for the Corporation” in this issue.) They strengthen their businesses by investing in their employees and bolstering the communities where they operate.

Pleasing shareholders

On average, the global, publicly traded companies on each of Fortune‘s four previous Change the World lists have outperformed the MSCI World Index since those lists were published. Eight of the companies on our inaugural list (2015) have delivered total returns of 100% or more since then; the MSCI benchmark returned 42% over that span.

Listening to employees

Many companies elicit transformative ideas from their rank and file. Lloyds Banking Group (No. 31) devoted resources to helping customers with mental-health issues after its staff chose that issue in a companywide vote. Hilton (No. 41) relies on individual hotel managers to devise plans for reducing environmental impact at its more than 5,600 hotels.

Changing the conversation

Salesforce (No. 49) was a pioneer in discussing environmental and social issues in public filings. Now that’s almost de rigueur among progressive-minded companies.—M.H.

Head Writers: Erika Fry and Matt Heimer

Lead Researcher: Natallie Rocha

Contributors: Danielle Abril, Eamon Barrett, Lydia Belanger, Katherine Dunn, Robert Hackett, Emma Hinchliffe, Clifton Leaf, Rey Mashayekhi, Jake Meth, McKenna Moore, Sy Mukherjee, Brian O’Keefe, Aaron Pressman, Anne Sraders, and Jen Wieczner.

A version of this article appears in the September 2019 issue of Fortune with the headline “Where Business Creates Virtuous Circles.”