Times are a changing in the boardroom
Over the past couple of months, my attention has been drawn to the debate about which indicator matters most. GDP or CSR?
A couple of months back I was discussing Donald Trump with my much-loved and respected father. “Well, he’s a business man. It’s all about the deal.” said my dad, as if this very fact explained the lies, the mysogony, the racism and the bullying. As a business woman, I was shocked and disappointed at my father’s lack of respect - and, I thought, understanding - for my trade. He qualified as a lawyer and spent his career in social housing. I decided he was either misinformed or cynical - or both.
However, the comment stuck with me and over the past few weeks, others have too. I read Yvon Chouinard’s enlightening book; “Let my people go surfing”. In it he states “I knew that I would never be happy playing by the normal rules of business... If I had to be a businessman, I was going to do it on my terms.”
His company, Patagonia, defined its business values, which included the following statements. “All decisions of the company are made in the context of the environmental crisis” and “Without giving its achievement primacy, we seek to profit on our activities. However, growth and expansion are values not basic to this corporation.” Patagonia set out these values in 1991 and the business is still thriving today.
Meanwhile, Tara Button devotes a whole chapter of her book ‘A life less throwaway’ to Planned Obsolescence, heralded in 1930s America as a great way to rescue the economy from the Great Depression. Companies started ‘building it to break’ or at least stripping quality in favour of lower costs. The advertising industry focused more on fashion than features. The cost of repair overtook the cost of replacement.
Citizens gradually became consumers and less than a century later, the Global Footprint Network (GFN) estimates that we consume the year’s supply of natural resources in just 8 months. Resource stress is undoubtedly one of the biggest challenges we face in the world today.
The Radio 4 programme ‘Economics with Subtitles’ recently challenged whether economic growth is the best measure of economic success. “GDP is very bad at quality, but excellent at quantity... We are putting too much store by this measure”. The programme highlighted that GDP does not differentiate between good economic activity and bad economic activity, does not measure voluntary work, nor whether we are growing at the expense of our environment or how the gains from growth are distributed. In terms of GDP recycling is bad and drug dealing is good.
The business world may not have been behaving like Trump on an individual basis, but maybe our single-minded pursuit of growth has indeed caused untold societal damage which underlies many of the global challenges we face today.
A fundamental shift is required and a fundamental shift is emerging. Earlier this year, the 2018 Deloite Global Human Capital Trends report found that 86% of Millennials said they believe organisations should be measured in terms beyond financial performance. “Social capital is achieving a newfound status next to financial and physical capital in value”. Consumers are taking a closer look at organisations’ values and Corporate Social Responsibility is becoming more than a tick in the box.
Deloitte’s report argues that the shift is driven by social, economic and political changes that have grown since the global financial crisis of 2008. “Many people feel frustrated that financial gains have failed to improve individuals’ lives, address social problems, support political stability, or mitigate technology’s unintended consequences. People today have less trust in their political and social institutions than they have in years; many expect business leaders to fill the gap.” A fact borne out by Ed Balls’ BBC2 series, “Travels in Trumpland” and by the 2018 Edelman Trust Barometer which reports that worldwide voters trust business over government to “do what is right”.
So, if we’re in the driving seat of a resource-scarce planet, is it not time we all reviewed our KPIs and demonstrate to the world that business really can focus beyond ‘the deal’?