The Malta Independent on Sunday
Social Progress Needs Business Leadership
Environmental sustainability and managing for resource scarcity now inform many corporate strategies, according to a new Deloitte global survey.
In response to concerns expressed by employees, customers, and shareholders, more companies are taking a broader view of strategy to include social responsibility, according to Punit Renjen, CEO of Deloitte Global. As one of nearly 200 signatories of last year’s statement on corporate purpose issued by the Business Roundtable, Renjen sees a new model of success emerging. In this Q&A, he discusses the importance of putting business leaders at the forefront of addressing pressing societal needs as they continue to grow and generate profits.
What impact are you seeing since the Business Roundtable issued its Purpose of a Corporation statement?
Renjen: I already see a significant shift in the conversation regarding the role of business in society. Business leaders are increasingly embracing a new form of capitalism, moving from one focused primarily on shareholder value to one focused on benefitting the broader world. Shifting societal attitudes have made it an imperative for companies to place societal responsibility at the heart of their strategies. Leaders are beginning to realise that business cannot succeed if society fails.
Importantly, over the past few years we have seen more evidence of climate change around the world—from huge wildfires, most recently in Australia, to record high temperatures and melting glaciers. These events likely influenced the results of Deloitte’s Industry 4.0 Global Readiness Report survey this year, in which nine of 10 business leaders say they expect climate change to have a negative impact on their organisations. It’s clear that these global events are striking a chord, and that businesses understand that making money and having a positive impact on society are not mutually exclusive. To that end, 62% of CXOs surveyed indicate that making a profit while positively contributing to society is an Industry 4.0 investment priority for their organisations.
How are companies stepping up to the challenge of contributing to the good of society?
More business leaders are getting serious about solving huge, intractable problems, with more concrete initiatives, greater transparency in reporting nonfinancial measures of performance, more promises of engagement, and a greater willingness to collaborate, cooperate, and connect across sectors to deliver meaningful results. According to our Readiness Report findings, six in 10 business leaders say they are focused on and/or have programs to address resource scarcity, with climate change and environmental sustainability close behind at 54%.
Focusing specifically on environmental sustainability, more than 90% of CXOs say they have sustainability initiatives—such as reducing travel and eliminating plastic—in place or on the drawing board. Two years ago, only 10% of executives believed their companies could influence environmental sustainability to a significant degree.
Are there best-practice trends that show organisations putting these ideas into action, especially when it comes to investing in their workers and communities?
As part of the Readiness Report research, Deloitte interviewed business leaders about their commitments to societal impact. Adobe, for example, is invested in lifelong learning via its Learning Fund. This benefit offers employees a yearly stipend of up to $1,000 to attend a conference, take an online coding class, or otherwise explore an area of interest or develop a new skill. Adobe also covers up to $10,000 per year in tuition and continuing education for employees through the Learning Fund.
Meanwhile, SAP offers internal courses in machine learning, AI, the internet of things, and blockchain, among other technologies, in acknowledgement of the difficulty in attracting new talent with critical Industry 4.0 skills.
From an environmental sustainability perspective, Toshiba has installed 35,000 sensors in its offices to control lighting, air conditioning, and elevator operations based on the movement of its people—reducing CO2 emissions by 50% in the process. The list goes on and on. What’s key is that all these companies are taking actions that benefit their own businesses and society at large.
How do you see corporate purpose supporting value creation, and how can organisations balance the needs of multiple stakeholders, including investors?
Whether in relation to financial performance, employee engagement, or the customer experience, research continues to affirm that purpose-led businesses do better. From a revenue perspective, when asked why their companies choose to focus on societal issues, 42% of CXOs surveyed for the Readiness Report cited the opportunity to generate revenue, indicating that business can do well by doing good. Moreover, eight in 10 CXOs claim to have developed products or services in the past year that make a positive impact on society or the environment, and 88% say those efforts are generating revenue.
From an employee and customer perspective, young people in particular are highly motivated to do good in the world, and they don’t want to work for an organisation or support brands that put profits ahead of purpose. They strive to be part of something bigger.
That’s the point we need to make clear to all stakeholders. Businesses cannot succeed if society fails, but society has far less chance of succeeding if businesses fail to lead. Those of us in business need to marshal our capabilities in areas such as responsiveness, innovation, and scalability to help address society’s most difficult challenges.
Those of us in business need to marshal our capabilities in areas such as responsiveness, innovation, and scalability to help address society’s most difficult challenges.