Existential crisis vs social purpose: Ipsos/CORE debates highlight the challenges businesses face in addressing sustainability
As part of its mission to use its global reach to bring sectors together around the Sustainable Development Goals (SDGs), in October Ipsos was delighted to host a series of debates and events in Boston, New York, and Washington DC alongside Neil Gaught, author of the book CORE: How a Single Organizing Idea can Change Business for Good, which proposes that businesses need to reform around a societally- and economically-driven “single organizing idea” if they are to guarantee longevity and growth.
During the debates, leaders from private sector multi-nationals, non-profits, academia, and the public sector discussed the changing role of business in society, and the incentives for businesses to deviate from the ‘driving profit to shareholders’ mindset of doing business. The participants agreed that while the main drivers of consumer behavior would continue to be price and convenience, businesses were nevertheless under significant pressure to change how they operate.
There was a strong view that without a leader with a strong social mission, like Unilever sustainability poster-child Paul Polman, it typically takes existential crisis and threats to business continuity to force change in an industry. This prospect is most obvious in businesses that rely on commodities that originate in the context of the major global development challenges – poverty, conflict, and climate change – and these are the businesses that seem to be the farthest along in their attempts to address these challenges collectively (for example the chocolate industry).
Despite some organizations not suffering from immediate existential crisis, reputational pressure can still be a major incentive to address unsustainable business practices. This may be more palpable for consumer-facing brands who need to maintain the trust of their customers. However, regardless of the nature of the business, reputational pressure comes from investors and competitors who are working towards better innovations, productivity and efficiency. One of the examples discussed at the events was McDonalds’ decision to use cage-free eggs and antibiotic-free chicken, which has the potential to disrupt the entire fast-food industry.
One of the strongest messages from the discussions was that to attract the best talent, companies must cater to the increasing expectation employees have of furthering a social purpose through their work. There was some debate around whether this phenomenon is a result of increased exposure to the consequences of bad business practices, or the long hours and lack of detachment from work leading people to crave social purpose (has work replaced the church as people’s primary community?). Regardless of the reasons, business must respond to their employees’ expectations.
Debate participants were not sold on this being a shift brought about by “Millennials”. Several pointed out that economic opportunity remains key driver in where talent (of any generation) goes. In the early 2000s this was Wall Street. In 2017, it is Silicon Valley. In addition, it was discussed that age changes people, and workforce priorities align more with established norms than creating change. Ipsos data concurs that employees of all ages place great importance in working for businesses that promote ethical behavior. What is driving this shift may therefore be more about a broader shift in thinking around the role of business in society, at a time where trust in business, its leaders, and institutions of all kinds including the media and government are greatly diminished.
Participants discussed that in an environment where the prioritization of shareholders leads to short-termism, and leadership tends to focus exclusively on the bottom line, making the business case for change is critical. The problem must be framed in term of limited time, limited resources: “unless we change, we won’t be around”. However, this also needs to be shown in metrics that business leadership understands. It is virtually impossible to show an economic ROI on investment in sustainability measures, they told us, since such measures are frequently more focused on mitigating risk than producing profit. While some organizations are trying to fill this gap, there is still a long way to travel before industries collate around a set of standard measures.
Industry standards play a role in helping businesses to evidence their social value, although industry-led standards can be criticized for being self-regulated and lacking in rigor. Independent standards may have less skin in the game, but they suffer the same challenge to moving beyond auditing and understanding true impact. The SDGs potentially present an opportunity to align standards and metrics across sectors, and to understand the relative contributions of public, private and non-profit sectors. However, most businesses are very early in their journey of understanding the landscape of their needs, let alone determining how to address these needs and formulating a system for reporting back on success.
The debates left a lot of open questions and challenges to be addressed, but the clear message was that business has an opportunity to fundamentally evolve the way in which it engages with the world, regardless of whether that change is driven by a focus on longevity, the desires of consumers, the preferences of their employees, or the demands of leaders and investors.