Louise Gatenby believes that doing good is good business. That’s all well and good but just how practical is it?
The challenges facing the planet today are extraordinary. Whilst the importance of sustainability has been recognised more recently, the concept is not new. I am a self-proclaimed optimist. I believe that doing good is good business. I am also a realist and appreciate what a huge and urgent task that is.
A mainstream conversation
It’s just over 50 years since Milton Friedman famously stated that the responsibility of business is to increase its profit, placing shareholder value as the sole measure of success. This strategy is clearly no longer working and the pressure that it has put on communities and the environment, and the inequality it has created is unsustainable.
That may have been a controversial thing to say five years, maybe even two years ago but I am pleased to say not this year. It is now a mainstream view and one that really matters. When the Business Roundtable in America, a group of 200 top US companies which include Amazon and General Motors, redefines its definition of the purpose of a corporation, to include responsibility to consider the impact on all its stakeholders, not just their shareholders you know that things are really on the move.
More and more, the profit-only model of capitalism is being rejected by today’s workforce and by tomorrow’s leaders who want to work for organisations who share their values and have a positive impact.
Environmentally, we cannot continue to use up our planet’s resources at the current rate and almost every day there is new evidence, or a new crisis which demands that we make significant change.
What’s more, investors are increasingly focussed on the environmental, social and governance (ESG) agenda and those publicly traded businesses who can’t demonstrate positive progress in this area are rapidly falling out of favour. And this is being driven by the consumer voice who want to buy from companies who share positive ethos.
The rise of B Corporations
Inextricably linked to this now mainstream conversation we are seeing huge global activism movements, from single-use plastic to fast-fashion, as well as an exponential rise of B Corporation and other ethical business models balancing purpose and profit.
Certified B Corps are a new kind of business committed to balancing purpose and profit: A community of over 3,000 companies, across 64 countries, they include names you will recognise like Toms, Alessi, Patagonia and Bodyshop and many you won’t like locally based Bikmo, Brew Tea Co. and Zen Internet.
It’s not a simple badge handed out to those who request it either. Each company must submit to an independent and rigorous assessment of its entire social and environmental performance, accountability and transparency, evaluating operations and business model impact on your workers, community, environment and customers.
There are similar movements across the world and many other businesses that are not B Corps, yet have committed to actively impacting social and environmental aspects, not only because they think that it is the correct thing to do but also because there is a strong commercial case to do so; they are re-shaping capitalism for today’s world.
The business case
The argument against the concept of responsible sustainable capitalism has been that it reduces competitive advantage and profit. This is the same argument that used to be voiced around diversity. In both cases it is increasingly evident that the premise is false. In fact, a more inclusive and responsible approach embracing both diversity and sustainability is a strong driver of commercial performance.
Closer to home, we know that people want to work for and work with companies that integrate the ESG aspects into the heart of their business model. The economic case clearly supports the longer-term creation of value and sustainable capitalism can help attract the best talent, new customers and investors, serving as a source of commercial and competitive advantage. There is a paradigm shift happening now and an opportunity to create a differentiated talent agenda based on purpose, values and positive change which provides you with a competitive employer brand advantage.
The changes facing the world today are unprecedented and we are going to see incomparable change in the way that we live, work and interact over the next, five to ten years. It represents a huge opportunity for businesses to create positive change and for leaders to work towards an ethical and sustainable future.
Louise Gatenby is founder of The Good Board, an executive search and leadership development consultancy that believes sustainable success tomorrow depends on the leaders we develop and the way we do business today. www.thegoodboard.com /www.bcorporation.net