Tough talk is over for responsible business. With big issues such as climate breakdown, plastic pollution and modern slavery making headlines every day, surely the time to act is now? According to Dr Wayne Visser, professor of integrated value and sustainable transformation at Antwerp Management School, the question is not whether companies act, but how. “It matters whether their responsible action is defensive, charitable, promotional, strategic or transformative,” he says. “Most are in the first four stages, when what we need is transformation.”
Corporate purpose cannot be just window dressing
The responsible business community is not short of progressive real-world trailblazers, whether it is BASF using value-to-society metrics, Randstad developing a future resilience index, Caterpillar remanufacturing or Philips leasing light. All share fundamentals of approach, says Professor Visser. “What differentiates the pioneers from the pretenders is admission and ambition: admitting the scale and urgency of the problems, plus the complicity of business; and setting ambitious purpose-driven strategic goals,” he says.
Purpose cannot be mere corporate window dressing, though; it must be core to the commercial offering, adds Tara Prabhakar, global qualitative director, Insights Division at Kantar. She says: “For brands to become truly responsible, they must be authentic and that means making purpose part of their business strategy. One company getting this right is shoe brand TOMS, whose business model sees social contributions coming out of the profit and loss, rather than being conditional on success.”
However, as Kantar’s Purpose in Asia research shows, issues that matter to people vary drastically country to country. So customising purpose to local needs can help ensure greater impact across different communities. Ms Prabhakar says: “TOMS takes the approach of ‘giving locally, globally’ to best represent causes customers care about. So, while the focus is on gun control in the US, in India it’s safer birth services, elsewhere it’s making it easier for children to go to school.”
Responsible business must work top-down and bottom-up
Sustainability should effectively be written into the job description for the board of directors of a 21st-century company, argues Alice Korngold, president and chief executive of Korngold Consulting, and chair of Better World Leadership. “Companies grow value by applying their unique expertise and capabilities to find innovative solutions to social, economic and environmental challenges,” she says. “Sustainability – global problem-solving – is not separate from company strategy, it is integral to it.” Leadership itself is also changing, says Ms Korngold, author of A Better World, Inc: How companies profit by solving world problems… where governments cannot. “Studies show that boards comprised of people from diverse backgrounds and perspectives are more successful financially,” she points out.
McKinsey & Company’s Delivering through Diversity study found that companies in the top quartile for gender diversity on executive teams were 21 per cent more likely to outperform on profitability, and those for ethnic and cultural diversity were 33 per cent more likely. Cultural change cannot just start and end in the C-suite, though. First on the to-do list for a responsible business turning words into action should actually be to edit its terminology, says retail expert and consumer champion Martin Newman.