The Responsible Company Is A Citizen of The World
Business can be — must be — at the heart of an inclusive society. Ethical, sustainable, responsible business makes sense not just for the planet, nations and communities but for businesses themselves. This is the theme of my new book, The Company Citizen.
Progressive thinkers largely agree what is meant by terms like ‘responsible company,’ ‘triple bottom line sustainability’ and ‘ethical behavior.’ Debates rage on ‘purpose’ and ‘mission,’ largely with positive outcomes. Thankfully, too, the circular and inclusive economies are becoming established in mainstream thinking — witness the non-exploitative fashion industry built on zero waste, low energy usage and maximum re-use of fabrics envisaged recently by Ellen MacArthur and Stella McCartney.
Business can be a force for good — and when companies make up more than 40 of the world’s 100 biggest economies, they must be. When picking up the gauntlet for good, business should look to:
- Practice what you preach
- Look to the long term
- Make it mainstream
Practice What You Preach
You don’t have to look far to find companies committed to social and environmental responsibility: the automobile industry is actively moving away from petrol and diesel, and even tobacco and energy companies are turning from their traditional wares. The American business backlash to Trump, both in banning Muslim migrants and quitting the Paris agreement, was profound. Every company with any clout must ask: do we practice what we preach? Trading ethically, without corruption, exploitation or falsification are table stakes now, so too is paying fair taxes.
But if you want to practice what you preach, you must integrate your stated goals into the way you manage your company. If you set environmental goals, do you reward senior management for achieving progress towards them, or still pay their bonuses in the traditional way, on merely financial criteria? Do your internal pay policies help eradicate excessive inequalities? Do you pay a living wage to your lowest paid workers? Or do you let others — government, charities, etc — subsidize your lowest-paid workers?
Do people know what your company’s mission actually is? And is that mission more than just making money and maximizing profit? Is that something that your employees and stakeholders can all ‘get behind’?
Have you asked what your impact is on the community and environment? Do you measure the positive social value that your company generates?
Long Term Thinking
On the day that his company pledged to reach global zero net carbon within seven years, a company CEO told me “this isn’t about climate change; it’s about long-term thinking.” A company’s shares are digitally traded in milliseconds, but companies generally report to shareholders quarterly. We’ve lost the generational perspective — the heart of family-owned companies. Long-term thinking helps with horizon-scanning, risk management, budget planning — and it calms the blood pressure. When business adopts a longer term perspective, many current resource challenges seem far less ominous and threatening.
Make It Mainstream
‘Corporate Social Responsibility’ is too often optional, a superficial box-ticking exercise measuring inputs — like the number of volunteering hours the company donates to charity. Progressive companies have moved on from CSR’s image of fundraising through lycra, litter-picks and cake stalls. Business as a force for good only makes sense if it’s embedded in the company’s culture — it must be both sustainable and sensible from a traditional business perspective.
Fortunately, it can be. Companies committed to long term environmental sustainability and reporting show more long-term profit than comparable companies which don’t. The same is true for companies that include a degree of employee ownership in their governance model, as well as companies whose mission and sense of purpose motivate high levels of employee and stakeholder engagement.
As mentioned before, of the world’s 100 largest economic systems, almost half are companies (the rest are countries). Business influences every community and environment, yet too much of this influence is negative. We’re always close to a product made from slave or child labour, or manufactured by workers living in poverty or in unsafe workplaces, adopters of wasteful energy and other practices or unsustainable resource acquisition. And it’s easy to dismiss business as the root of all of such problems. The fact is, as the UN recognized in setting its Sustainable Development Goals, we literally will not survive unless business becomes far more of a force for good than it is today.
‘The Company Citizen: Good for Business, Planet, Nation and Community’ by Tom Levitt is available now from Routledge.
Tom Levitt is a British writer and consultant on responsible business and co-founder of a social enterprise, Fair for You. From 1997 to 2010 he was a Member of the UK Parliament.