Richard Lambert, an expert on the world of business, recently wrote in the Financial Times that there is something fundamentally wrong with the British version of capitalism. His assertion is based on a view that too many companies exploit customers to maximise short-term profits and that a preoccupation with financial performance is hampering long-term investment.
As usual, Lambert has a point. In the years leading up to the financial crisis that began in 2008, observers of the private sector might be forgiven for thinking that many companies’ sole objective was to prove economist Milton Friedman’s assertion that a business’ social responsibility is simply to boost its profits.
A broader concern with society and sustainability began to rise up some business agendas before the crisis. The plummeting levels of public confidence in businesses following the financial meltdown have sent a jolt through those that hadn’t engaged seriously with this issue. For most businesses, the issue has now moved from being the domain of corporate affairs teams to the centre of strategic and operational thinking.
Some sectors have suffered more than others from a loss of consumer faith, banking being the most obvious. Many are taking meaningful action to rebuild trust and meet society’s expectations. For example, Barclays has undertaken a fundamental review of its business, moving to a structure that aligns it with a clear social purpose and closing its tax-avoidance unit.
However, for many other businesses, the challenge of reconnecting with society is not a case of taking dramatic action. It is about understanding how what they do on a daily basis makes a meaningful contribution to the communities in which they are embedded and, having pinpointed their social purpose, putting it at the heart of decision-making and the corporate narrative.
Research by StockWell has reiterated that businesses’ financial and societal brands cannot be uncoupled. The research also highlighted a discrepancy between what matters to the corporate audience and to society. For ‘society’ respondents, a good customer product was the second most important corporate hygiene factor, cited by nearly 50 per cent of respondents, compared with just over 30 per cent in the corporate audience.
Beer is a good example: it’s a highly regulated product that must adhere to stringent codes of production, promotion and sales. But many of our 300+ brands around the world have been part of their communities for centuries. They are brewed, distributed, sold and consumed locally and often contain locally sourced materials; our businesses create and support jobs and our beers play an important role at the heart of social occasions.
Going back to Friedman, it should be possible for a firm to have a social purpose that is an inherent part of how it delivers growth for shareholders. You don’t have to exploit consumers, suppliers or natural resources to be successful. In fact, the opposite is true – and shareholders realise that more and more. Firms that nurture employees, protect resources and meet customer expectations are those that will be in profit 50 years hence.
Catherine May is corporate affairs director at SABMiller