In business we trust
Hard won yet easily lost, trust is a critical component of business success, and earning it starts from the top.
If you missed the session Gigatrends and the drive to net positive at the 2023 IoD Leadership Conference, we’ve captured some outtakes from it. These highlight some key themes and insights from the session and provide food for thought for directors.Key considerations for directors and boards looking to embrace a longer-term focus, including on stakeholders:- Legal and fiduciary duties
- Long-term value creation
- Stakeholder expectations
- Corporate culture and values
- Risk management
- Reporting and transparency
- Regulatory environment
- Investor relations
- Adaptability and innovation
Andrew Winston offers an optimistic view, grounded in experience, on how to create value by making the world a better place. The best-selling author and sought-after speaker is a globally-recognised expert on megatrends and how to build companies that thrive by serving the many stakeholders with a focus on the long-term, not just shareholders and shorter-term focus.
The last few years have been punctuated by significant change – Covid-19, supply chain security, inflation, artificial intelligence, workplace design, sustainability, stakeholder capitalism and more. The pandemic spawned new thinking in the boardroom. Boards had to consider their role in the lives of their employees, communities and society – how to keep people safe, how to keep people alive, how to best serve their communities. It was a game-changer in terms of its human and business impacts. According to Andrew, the fresh thinking that it prompted accelerated boardroom discussions about the role of business beyond profits, and quite possibly drove positive developments for the long-term.
Expectations on businesses are also changing. In the 2023 Edelman Trust Barometer the majority of respondents agreed that CEOs should take a public stand on the treatment of employees (89%), climate change (82%), discrimination (80%), wealth gap (77%) and immigration (72%).
In his 2022 annual letter, BlackRock's Larry Fink wrote that what distinguishes truly great companies is they all “have a clear sense of purpose; consistent values; and, crucially, they recognise the importance of engaging with and delivering for their key stakeholders. This is the foundation of stakeholder capitalism.”
“A company must create value for and be valued by its full range of stakeholders in order to deliver long-term value for its shareholders. It is through effective stakeholder capitalism that capital is efficiently allocated, companies achieve durable profitability, and value is created and sustained over the long-term.”
“It’s exactly what businesses do; they solve problems and create shareholder value in doing so,” Andrew says. “Sustainability pays.”
Sustainability means staying in business for the medium- to long-term.
Andrew’s 2021 book, Net positive: How courageous companies thrive by giving more than they take, co-authored with former Unilever CEO Paul Polman, is a call to arms, setting out the role and imperative of businesses to deliver “the scale of change and transformation the world so desperately needs” alongside real-world examples.
When considering “stakeholder capitalism” as Andrew describes it in his book, boards and directors should take into account several factors:
Ultimately, stakeholder and shareholder interests do align in the long-term however this involves balancing the interests of various stakeholders and short-term expectations while fulfilling legal and fiduciary duties. By taking a holistic view, businesses can contribute to a sustainable future while delivering profit and purpose.