TRENDICATORS SPECIAL REPORT
Headspring
How HR and L&D leaders can unlock the value of purposeful business

Growing concerns over the perceived failure of governments and corporations to tackle issues which affect us all - such as climate change and social inequality - have paved the way for commercial activism.

Now, the dial has begun to shift. In the summer of 2019, influential US business group The Business Roundtable (BRT) effectively redefined the purpose of business to be in the service of multiple stakeholders, not only investors. In a stark departure from decades of prioritising shareholder value, BRT has urged leaders to consider the broader social and environmental impact of their companies and to invest in the radical reforms necessary to promote a more responsible ethos.

The trend was affirmed when Larry Fink, CEO of the BlackRock, announced his intention to double down on sustainably focused exchange-traded funds (ETFs) while moving investments away from fossil fuel reliant investments.

The theme was revisited in January 2020 in Davos. At the World Economic Forum, public and private representatives explored the potential for business to shed the doctrine of shareholder primacy in favour of serving a partnership of stakeholders that includes workers, customers and suppliers as well as communities.

Key Takeaways

About This Report

1. JUSTIFICATION TO SHAREHOLDERS Responsible business is fundamentally an ethical issue. It has grown in importance as consumers and society as a whole have become insistent on more comprehensive corporate responsibility.

2. BRAND ALIGNMENT A company's ESG activities must be materially aligned with its brand and commercial activities and, for optimal impact, ought to be aligned with its core values. By demonstrating correlation and coherence with the company (and, perhaps, even with its purpose) policies will be more powerful and resonant.

3. MEASURABLE IMPACT In many cases, the tools may be blunt or not-yetdeveloped, but without some measure of impact, ESG activities could be pointless. It is hard to pin down useful data on social impact, which lags behind environment and governance issues in prominence. This has led to woolly statements that vaguely encompass matters relating to the workforce and community.

4. ENGAGEMENT OF ALL STAFF As organisations adopt ESG policies, there has been a tendency to stratify their communication, motivation and implementation at different management levels.

5. HONESTY ABOUT TRADE-OFFS One of the trickier aspects of developing an ESG policy is recognising that positive contributions regularly produce some negative consequences, often in the short term. There may be loud complaints. In some high-profile cases where companies are the object of media criticism and public charges of hypocrisy, there is a danger that introducing an ESG policy can undermine commitment to other projects

6. BIAS FOR ACTION Companies which adopt a grand vision - or even a philosophy around a business's role in bettering wider society - are to be admired and encouraged. But grand concepts and ideals too often do not move beyond the rhetoric in a conference speech.

About the Publisher

Published by Headspring is a global strategic learning partner. In co-creating customised development initiatives, we integrate deep academic insight and practical experience with the leadingedge perspectives of the world's best financial and journalists.

Publish Date

November 2021