What’s the point of a business?
Ask this question to any friend, and ‘profit’ will not be far from their lips. Along with ‘forecast’, ‘revenue’, ‘growth’ and ‘performance’, these are the corporate watchwords hard-wired into us all.
But now we’re told that profit is no longer enough; a new business vocabulary is needed. At the recent UN Global Compact Leaders Summit, the incoming Executive Director Sanda Ojiambo said: “Now, more than ever, business can and should play a central role in societal transformation.”
The rollcall of corporate sinners during the Covid-19 pandemic has exposed how far actions can lag behind rhetoric when it comes to a business’s social responsibility. It is because of this gap that momentum is growing at local, national and international levels for effective stakeholder capitalism.
The B Corp movement promises a new kind of business that is “legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment”. Danone recently became the first publicly listed company to adopt the ‘Entreprise à Mission’ status in France, whereby its social and environmental objectives are aligned with its purpose and set out in its articles of association.
In a recent interview with the FT’s Moral Money, Danone’s CEO Emmanuel Faber said that being a mission-driven company is a “competitive advantage”.
The delicate balancing act between profit and purpose is being watched carefully. Why? Because businesses want to learn from the missteps and smart calculations of others.
Companies looking to balance the needs of all stakeholders have tough trade-offs to make. But who and what guide these decisions? A stated purpose? An ESG policy? An independent advisory board? These are questions of governance and of moral leadership, and the answers are complex.
As companies recover from the crisis and adapt to the new business environment, their good intentions for improvement will be sorely tested. These challenges are fertile ground for thought leadership.
For some businesses, it’s not a case of whether they build back better but, rather, whether they are back at all. The nuance of customer loyalty, supply-chain governance, employee trust and climate commitments amid the pressure of creating profit is what real thought leadership should seek to understand.
Making business stronger
The crisis has shown how indispensable many companies have become to our daily lives. Which brands did we rely upon to help us function? And how much did we reflect on their social responsibilities, beyond delivering what we ordered?
Simon Kuper wrote a piece last year on green growth. It concluded with this thought: “No electorate will vote to decimate its own lifestyle. We can’t blame bad politicians or corporates. It’s us: we will always choose growth over climate.”
The degree to which companies merely reflect consumer needs is an equally vital debate. How willing are brands to guide consumers towards new behaviours? To collaborate with competitors to create new sustainable industry standards?
The recent advertising boycott of Facebook shows the material consequences of companies acting on their words.
This crisis has shown that those companies who moved early to digitise their businesses were better prepared. Could it also show that those who make a meaningful effort to become more inclusive, responsible businesses will be stronger when the next crisis hits?
It’s a good time to ask the question, and to understand what it means to be a business at a time of genuine social change.
This article is part of a series that explores what is likely to be on the agenda of different audiences in the wake of the Covid-19 pandemic.
Here, Sean Kearns discusses how thought leadership can interrogate corporate ‘purpose’.