As part of Framework’s ongoing effort to keep clients abreast of the emerging issues in managing for sustainability, we compiled a list of developments and issues to follow in 2012. While some are client-specific and can’t be shared, several deal with sustainable business practices more generally. So we decided to share our perspective on what individuals and companies will think about, talk about, and work on this year.
Trend 8: Returning to the principle that businesses should provide social good as their core purpose
When corporations were first created, their charters had to explicitly state what social benefit they would provide. No social benefit, no corporate status—and “profit maximization” for shareholders didn’t count. The social good had to be a tangible benefit for the community as whole, such as building a bridge or a train system. The social benefit requirement obviously changed over time. But more and more, the idea that shareholders profit is the only social good companies must create is an endangered idea. Thankfully, it’s not zero-sum game.
a) Public polls show that the majority of people around the world believe companies must contribute to solving social and environmental challenges.
- A Cone study of 10,000 consumers in 10 countries found that 81% believe companies have a responsibility to address social/environmental issues.
- A Havas poll of 50,000 respondents in 14 global markets suggests that consumer loyalty is strongest to those brands that contribute to their sense of wellbeing.
b) CEOs are publicly speaking about the need for a new paradigm.
- Ian Cheshire, CEO of Kingfisher, believes that “Instead of the goal of maximum linear growth in GDP, we should be thinking of maximum wellbeing for minimal planetary input.”
- Paul Polman, CEO of Unilever, notes that the political and economic systems are failing and too many companies have prospered at the expense of society and nature; therefore, he says, capitalism needs to be reframed to work for the common good. “I am not advocating communism or trying to turn the world into a kibbutz,” he says. “[W]hat I want is a sustainable and equitable capitalism. Why can’t we have that as a model?”
- At the GreenBiz Forum in New York, Interface President and CEO Daniel Hendrix twice told the group, “‘Mother Earth’ is in trouble,” and then explained the need for “emotional capital”—employees’ personal engagement—as well as science in order to reach the goal of Misson Zero.
c) One of the top topics at Davos: how to fix capitalism.
d) Corporations’ social purpose has also become a popular topic among academics and consultants.
- “[S]hared value . . . involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress,” Michael Porter and Mark Kramer.
- “[R]eal leaders will ask managers to focus on the real measures of success: making great products, serving customer needs, creating good jobs, and driving both cash flow and long-term profitability, says Andrew Winston. “Seek greatness and sustainability, and the money will follow. . . .”
- “[I]n a resource-constrained, hungry, transparent, winner-take-all world, what we’re used to calling “responsibility” and seeing as a luxury will be akin to table stakes in tomorrow’s game . . . So you made a proﬁt. Yawn. Did you actually have an impact? Did what you do have a positive, lasting consequence that was meaningful in human terms?” Umair Haque, from his book Betterness: Economics for Humans.
Tomorrow we’ll post Trend 8, Part II (related trends e-h), and a PDF of all the trends.