I was interviewed at a tech conference this week and we covered what you might expect – the evolution of AI, digitisation and the future of work. However, I also had the opportunity to touch on corporate responsibility as technology pervades our lives and hoovers up the data trail that we all leave in our wake each day to gain ‘insights’ into our lives and preferences.
I also noticed that Cemal – the founder of Change Please which is helping the homeless get off the streets through Barista training – has joined the group. Hello! I will see if he reads this now. As a member of this group, you are in great company.
This reminded me of the time I have spent with Virgin Unite (the non-profit foundation that Sir Richard Branson now focuses most of his time on) as Virgin Trains and Virgin Atlantic stock Change Please coffee. Last week, I also had the opportunity to meet John Cauldwell, a UK-based billionaire (which means he is the UK’s highest tax-payer) who now focuses on his various charities that support children and their families. The Bransons and John Cauldwell have joined over 200 of the world’s ultra-wealthy by signing up to the ‘Giving Pledge’, which also includes the likes of Bill and Melinda Gates (Microsoft), George Lucas (Lucas Films = Star Wars), Sir Stelios Haji-loannou (EasyJet) and Marc Zuckerberg (Facebook). Business can be a force for good directly or the wealth created can be used for good. It is interesting just browsing the profiles at: https://givingpledge.org . As a determined entrepreneur, perhaps look beyond your own years of hard work and wealth creation, and even beyond your life, and make it a goal to sign up too.
I wrote a thesis for my Accounting & Law degree with the lofty title, “The Social Contract: A New Paradigm”.I could deep dive into the works of philosophers such as Rousseau, Kant, Locke, Hume and Hobbe. I could include Adam Smith, the founder of classical economics, and his doctrine of laissez-faire (i.e. the market and the pure forces of demand and supply will allocate resources efficiently without governmental interference), but I won’t because I have forgotten it all.
What I can remember is the core premise – which you should consider if you are in, or going into, business.
Corporations exist at the behest of society. Through company law ‘we’ have allowed legal persons to come into existence that can contract, create wealth, own assets, create liabilities, provide goods and services to individuals, commit criminal offences and die. As a result, they should serve society and have a positive overall impact, otherwise, what’s the point?
The problem is that the law, and the many regulations that have been applied to regulate corporate behaviour, lag behind societal mores – that is to say that what ‘we’ consider as acceptable and responsible behaviours changes over time, but the law takes time to catch up as issues are recognised and new laws are enacted, or following challenges in the courts that lead to case law. This lag can be 10 – 50 years and digital commerce is evolving at ever-increasing speed – case in point are the social media giants and their use of personal data.
WHAT IS THE RELEVANCE ??
This is the point – think of the stakeholders of a company as concentric rings expanding outwards from the selfish mill owner to the global environment.The first global corporation, the East India Company, sold opium and was involved in the slave trade. Mine and factory owners, in what is now the developed world, used to employ child labour and pollute local rivers with whatever they needed to get rid of. The objective was to maximise profit for a small group of shareholders. Some factory owners built villages with amenities for their workers (a UK example would be Sir Titus Salt who built Saltaire in Yorkshire - https://saltairevillage.info), but their tenants usually lived to strict rules based on the beliefs of the factory owner.
The body of law and regulations applicable to corporations expanded massively to regulate everything from working conditions and hours, to product liability, to consumer protection. Adam Smith’s “invisible hand” (market forces) results in winners and losers due to the human condition (self-interest) and concentrated power. Over time the acknowledged stakeholders and concentric rings of impact have expanded outwards from private shareholders to include, employees, the local community, consumers, suppliers, public shareholders and even the global environment through the impact of corporate behaviour on the natural environment and climate.
For many years corporate and social responsibility was something corporations ‘did’ so that they could include happy smiling people in their annual accounts. That no longer works as consumers (ageing millennials onwards) can see through the BS and will make buying decisions based on the stakeholders your business takes into account.
Yes, you need to make a profit, but they want you to go about doing that in a responsible way that doesn’t include a supply chain that relies on child labour or environmentally unacceptable activity. Provenance, the founder’s motivation, your environmental, social and corporate governance and how you give back, all matter.Some companies still think it is a PR job – it isn’t. It needs to be part of your corporate DNA. Even if you are not naturally inclined to get out and involved, treat your stakeholders you interact with fairly (e.g. employees) and factor as many of the public costs (e.g. carbon) that your business generates into your cost base and pricing instead of just the private costs and you will be contributing. Yes, your prices may have to be slightly higher, but the corners that your competition are cutting will eventually show.
Although Change Please is a non-profit, it has a business that generates revenue to sustain the model. I am often asked, “Is it easier to start a not-for-profit?” The answer is a resounding ‘no’, as in the long run you still need funding and without an income stream you are reliant on donations or government funding and that can dry up due to a change of policy, or due to falling disposal incomes in a downturn. You also still need to execute on a plan.It would be great to see a private sector ‘social business’ that can raise capital to scale and deliver to all stakeholders.
Use your common sense to assess where you can do better or refer to frameworks such as the Global Goals (https://www.globalgoals.org/) and work out where you can contribute, even if you start small and ‘you’ are your business. Your business will have more chance of success and you will have more chance of supporting the lifestyle you want. If you ambition is to generate great wealth, then consider how much the family you will inevitably leave behind really needs to live in comfort. Perhaps your goal is to generate unimaginable wealth so that you too can give the majority of it away to do good.
Either way, it means that you and your business are forces for good.