Looking ahead – purpose beyond profit
As part of our Looking ahead series, Jake Standing discusses the future of capitalism where purpose is put on an equal footing with profit. Will COVID-19, asks Jake Standing, mark a shift from shareholder capitalism to a broader stakeholder model?
The coronavirus pandemic has changed the lives of many thousands of people in ways that just a few months ago could not have been imagined. Its devastating impact will be felt by many for years to come. But it has also reminded us of what is important to our lives – the value of a professional care system, a strong sense of community and collaboration, and the fragility of our environment.
Businesses have, of course, always found themselves under close scrutiny with unacceptable behaviour and practices splashed across the front page – take for example Boohoo’s rapid and painful fall following questionable labour practices.
There are changes that corporate Britain will need to embrace as we emerge into a post-coronavirus world where profit needs to be matched with purpose. Three areas are likely to be at the front of society’s mind.
One of the noticeable and perhaps surprising effects of the recent lockdown and slowly emerging recovery has been our renewed appreciation of green spaces and the environment. The air was cleaner, wildlife was more noticeable, and our gardens have never looked better. Its something many of us would not want to lose.
The Government has ambitious plans to be carbon neutral by 2050 and, in its Summer Statement, announced a £3bn package of measures to help homeowners make property more efficient, with a further £1bn to improve the efficiency of public buildings. Other measures will undoubtedly follow in its Autumn Budget.
But there was no direct support or stimulus towards businesses. Questions are already being asked whether a green recovery is nothing more than greenwash, and is 2050 too late to be carbon neutral?
Yet business is responding. For example, in July 2020, Johnnie Walker announced its famous Black Label whisky will be sold in stylish and fully recyclable paper bottles. It is more than just a PR stunt, with its owners Diageo launching a company, Pulpex, to make paper packaging for the likes of Unilever and PepsiCo.
Businesses are not just responsible for their own actions but for every step in supply chains – something that Boohoo is only too aware of following a 50% fall in its share price when it was reported earlier this year that its clothing manufacturers in Leicester were being paid just £3.50 an hour.
And there is no place to hide with social media posts from disgruntled shoppers and influencers ensuring any rumours quickly go viral and shoppers quick to switch brand loyalty.
So what practical steps can businesses take?
One area is the consideration of business travel. Businesses have quickly adapted to meetings via Zoom and Teams, and whilst there is clearly a benefit for in-person meetings, are all really necessary? Do you really need to jump on a plane for a meeting that could as easily be conducted via video? The decisions made by those leading businesses will shape much wider behaviours.
A decade ago, Prime Minister David Cameron introduced an idea called the Big Society, where capitalism and volunteerism worked hand in hand. It never really took off. Yet when in March the country went into lockdown, we saw communities come together to help those most vulnerable. Whilst thankfully not needed, over half a million people signed up to the NHS volunteering app offering to deliver medicines and care packages for the sick and elderly. Many more stepped up to help neighbours, family and isolating friends with shopping and daily chores. COVID-19 saw the UK become a nation of volunteers.
Businesses too are an important part of our communities and they stepped up, with retailers creating dedicated shopping hours for key workers and the elderly, and life sciences collaborating to deliver PPE and the medicines desperately needed.
Local and professional communities can be a powerful force when need is at its greatest.
It raises an interesting question: just what else might we achieve with the right incentives? Why can’t businesses and society look to tackle some of our biggest challenges – global warning, childhood poverty and other areas of medicine – hand-in-hand.
So what practical steps can businesses take?
Kreston Reeves is proud to count many charities as clients, and we often encourage them to think more like a business, albeit one with strong charitable objectives. Perhaps, it is time for businesses to think a little more like charities, where profit is underpinned by a strong ethical cause. Government and regulators too have an important role to play in encouraging the right economic behaviours, and to ensure that social and environmental impacts are built into core decision making process.
The caring professions
The NHS is one of the jewels in the UK crown. Its staff show day-in-day-out dedication in often unimaginable circumstances, winning praise and admiration from all quarters. Yet it is a fractured service and the recent COVID-19 pandemic has shown its weaknesses, particularly around social care.
Social care reform has been long promised and the Government’s green paper has been repeatedly delayed. Reform and funding for the elderly and most vulnerable in our society is desperately needed.
Yet we all share some responsibility for our own health and wellbeing, both to improve the quality of our lives and to reduce the burden on our healthcare system. The Nuffield Trust estimates that obesity alone costs the NHS some £5.1bn a year.
And here too employers have a role to play. Businesses need to encourage healthy physical and mental wellbeing in their staff. There are good reasons to do so beyond a healthy workforce. Employees increasingly choose employers on what they offer staff over and above the role and salary. A good, healthy and caring workplace is vitally important for staff retention reducing turnover.
So what practical steps can business take?
Employers can take simple steps that have a big impact. Recently, we saw a vast number of our team take part in our annual ‘Pedometer challenge’ – covering nearly 28,000km over the course of 4 weeks! Businesses can encourage this type of activity, which is not only great for wellbeing, but can bring teams closer together in a world where face-to-face meetings have been restricted.
There are also healthcare plans in the marketplace which employers could utilise, which reward good healthy lifestyle. Walk a certain amount of steps each day, and earn yourself a coffee!
COVID-19 will not in itself change the way businesses behave, but it has helped to remind many of us of what is important in our lives. Businesses will, and quite rightly, find their actions under closer and increased scrutiny, and those that do not stand up to the high standards that society demands are likely to find corporate life just a little harder.
Businesses with a strong purpose that is on an equal footing with profit may find that makes good commercial sense.
We are hosting a series of practical webinars helping businesses to look ahead and plan for a post COVID-19 future.
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