The issues on which a company is expected to demonstrate integrity have expanded enormously. They go beyond commercial issues and now relate to the wider societal issues to which a company is integrally connected: employees’ well-being or executive pay; issues around gender, diversity and inclusion. They include technology issues such as data security, privacy and the impact of automation on your workforce. They span the range of environmental issues from greenhouse gas emissions and climate change to waste, water and plastics.
The pressure to deliver financial performance has not lessened but it is now joined by a host of fast-changing, new priorities. The integrity and trustworthiness of a company are now as likely to be judged on this broader agenda, in the way they always have been on financial metrics.
The recent letter from US business leaders in the Business Roundtable marks the scale of the shift that, in Brunswick, we have seen under way for some time. It highlights, in the voices of CEOs, the growing recognition of the wider responsibilities of their organizations and the need to step beyond Milton Friedman’s “shareholder only” focus.
For some time, one of our fastest-growing areas has been working with companies on a social narrative that can sit alongside—and reinforce—the financial narrative. But words alone will not suffice; to demonstrate integrity, such a narrative has to be brought to life. It is tough out there; it remains a hostile environment for business leaders. Organizations of all kinds are being challenged as to whether they are really “living” their values, whether they are integral to the purpose of the company and represented in how the company talks about itself and how it reports performance.
One of the most exciting aspects of this conversation is how the rise of environmental, societal and governance factors (ESG) is taking hold in the investor community and, along with that, employee engagement and even activism in these subjects. Many of the crises we deal with stem from the breaking of a societal pact with one or more of those stakeholder groups on one or more of these issues. Customer data has not been properly protected; the bank has not been transparent; food or beverage ingredients raise health concerns; cars, trains or planes have failed to perform as they should from personal safety to carbon emissions. These are often breaches of customer trust, but the same can be said of dealings with regulators, suppliers, distributors, social advocates and, increasingly, employees.
