How the 2010s remade business

Meaning:Revisionism is the practice of taking a second look at how a period or event is usually remembered and arguing that the standard story is wrong or incomplete. A revisionist historian might claim a famous villain had a point, or that a celebrated victory mattered less than people think. Here the Economist says the 2010s are remembered as an embarrassing decade, and a revisionist look shows they quietly shaped the businesses of today.

Meaning:An artefact (American spelling: artifact) is an object made by people that survives from an earlier time, like a pot dug up by archaeologists or a letter in a museum. It can also describe an idea or document that feels like a relic of its era. The article says the 2019 Business Roundtable pledge to put stakeholders ahead of shareholders now reads like a museum piece from a more idealistic time.

Meaning:Something exacting demands great care, precision or effort. An exacting coach accepts nothing sloppy, and an exacting test leaves no room for guesses. The article calls effective altruism's ethical calculus exacting because it tries to measure, very precisely, how much good each action does and then to pick the best one.

Law and business. A corporation is a company that the law treats as its own legal person, owned by shareholders who put money in. Normally, company leaders in the US are expected to run it mainly to make money for those shareholders, and a shareholder can complain if they put something else first. That makes it risky for a company to say "we will also care about the planet, or about safe technology, even when it costs profit."

A public-benefit corporation (PBC) changes that rule in the company's founding documents. It is still a for-profit business with shareholders, but it must name a public goal it is also pursuing, and its leaders are legally allowed (and expected) to weigh that goal against profit. Think of a sneaker company that promises to give a pair to a kid in need for every pair sold: as a PBC, the promise is part of its legal purpose, not just advertising.

Companies pick the state where they register, and Delaware is the favorite in the US because its business laws are well tested; the article notes that the PBC form there dates from 2013. It is a way of writing "we are more than profit" into the rules, though critics say the promise is weak, since the company still mostly judges itself.

When a company claims to serve society, ask what its legal form actually requires of it.

Finance. Building a giant data centre costs tens of billions of dollars, far more than most companies want to put on their own books. One solution is a special-purpose vehicle (SPV): a separate, small company set up for one job, such as owning one project. Special-purpose means it exists only for that job, and vehicle means it is a container for money and risk.

Here is how it works. A tech firm creates an SPV to own a data centre. The SPV borrows money from investors and banks, using the data centre itself, and the rent the tech firm pays to use it, as the promise of repayment. If the project fails, the lenders can claim what is in the SPV, but usually not the parent company's other assets. That separation lets the parent borrow without that debt showing up on its main balance sheet, and lets investors choose exactly which risk they want.

SPVs are useful, but the same hiding of debt in separate boxes helped make the 2008 financial crisis hard to see coming, which is why rules on banks were tightened afterwards.

When a huge project is funded, ask which company actually owes the money, and who is left holding the loss if it goes wrong.