In an open
letter
signed by 181
CEOs,
from Apple to Walmart, the group expressed its commitment to managing
companies for the benefit of all stakeholders — with customers, employees,
suppliers, communities and shareholders named explicitly as top priorities; and
a healthy environment described as going hand-in-hand with supporting all
communities in which businesses operate. The last two sentences of the letter
were unequivocal:
“Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”
Milton Friedman must be rolling over in his grave, seeing as this statement
is in sharp contrast with the shareholder-supremacy model which has dominated
the global economy for the last several decades. We at Sustainable Brands®
(SB) strongly agree that such a
pivot serves people around the
world better and promotes an economy that is stronger, healthier, more resilient
and more equitable. This kind of thinking has been at the core of our mission
since our founding in 2006, and it is consistent with our first principles and
theory of change. That is why the global SB community welcomes this change with
an encouraging and can-do attitude.
The link between purpose and profit still remains vital for this next stage of
the evolution of capitalism. Blackrock CEO Larry Fink articulated it
well in one of his recent annual letters when he wrote, “Purpose is not the sole
pursuit of profits but the animating force for achieving them. Profits are in no
way inconsistent with purpose. In fact, profits and purpose are inextricably
linked.”
Leading
research
shows that companies with a strong commitment to environmental and social
purpose consistently outperform the market — they tend to grow faster and
generally have higher profitability. A recent Harvard-Columbia study
found this
purpose
premium
to be 5–7 percent per year, on par with companies with top-notch governance and
innovation capacities. SB’s own corporate membership network of over 80
companies generated $2.9 trillion in revenue in 2018, with a total annual
growth rate of 17 percent — far beyond the US GDP growth rate. These data points
support our belief that businesses are in the unique position to succeed by
solving global societal and environmental challenges. With all this in mind, we
warmly welcome the Business Roundtable to the party — after all, it is far
better to join the party late than to miss it altogether.
What the Business Roundtable leadership hasn’t discussed publicly yet is how to
do it — how it plans to accomplish the ambition shared in its letter. The Why
and the What are of course important, as those frame the overall mission.
However, the ability for a business to deliver on its mission is predicated on
its ability to adapt, learn and build capacity — in essence, the How. A shift of
this magnitude, from a narrow focus on quarterly earnings for shareholders to
long-term strategies for all stakeholders, requires a holistic systemic reset.
These 180+ companies — and many more that we are confident will follow — need to
adjust their core strategies, supply chain relationships, operational tactics,
innovation pipelines, stakeholder engagement priorities and, in many cases,
governance practices in order to be consistent with the new paradigm. This means
reinventing goal-setting, planning, measuring and reporting, as well. It’s a
tall order.
So, how do we do it? We must evolve from redefining the purpose of business to redesigning everything mentioned above in order to deliver on this new, more balanced vision.
The SB community has been working on the How, in parallel with
the What and Why, for over a decade and we have many (but by no means all) of
the answers. We have worked to distill the key steps on the journey from
business-as-usual to a sustainable brand through our SB Brand Transformation
Roadmap™
— an orientation and navigation tool that not only fully meets the needs of the
Business Roundtable’s new purpose of a corporation, but also breaks down the
journey into practical levels of maturity and achievement, helping set
appropriate goals and priorities in all departments and find the right
collaborations (both internal and external) to speed up progress.
Furthermore, the SB community has been studying, synthesizing and applying the
best available thought leadership around measuring both business risk and
positive impact with respect to all essential stakeholder groups: customers,
employees, suppliers, communities and shareholders. This is the basis of SB’s
New Metrics series of
conferences, currently running in its 9th year.
Between our theory of change, the SB Brand Transformation Roadmap™ and New
Metrics, the SB community not only welcomes Business Roundtable’s recent
redefinition of the Purpose of a Corporation, it also stands ready to share
best-in-class know-how with respect to goal-setting, implementing, measuring and
reporting on success. We have been seeding this work for many years, and the
moment to take it to the next level is now. Our sleeves are rolled up and we are
tackling precisely the journey that the Business Roundtable is committing to.
Let’s all get to work together and solve these challenges through social and
environmental innovation at scale.
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Advisor and Co-Lead, Global Content Strategy & Thought Leadership, Sustainable Brands
Dimitar is a senior sustainability and regeneration strategist, educator, executive advisor and mentor. He currently holds the following active roles: Advisor and Co-Lead, Global Content Strategy & Thought Leadership at Sustainable Brands; Senior Strategist, Content Development & Product Innovation at Sustainability Hub Norway; Executive Advisor at rePurpose Global; and Senior Content Advisor at Integrate2033. He co-led the creation of the SB Brand Transformation Roadmap, a comprehensive navigation tool mapping the whole journey from business-as-usual to a sustainable brand, and co-designed an accompanying assessment process that measures progress in five dimensions: purpose, brand influence, operations and supply chain, products and services, and governance.
I’m an executive with considerable general management, CEO, CFO and CMO experience. I have 25+ years in B2B software, as the CEO of a public software company and as a SaaS business growing from $15M to $90M, taking that company public as CFO, GM and CMO.
Published Sep 23, 2019 11am EDT / 8am PDT / 4pm BST / 5pm CEST