It used to be so simple. Companies existed for their shareholders, pure and simple. The job of a CEO was to maximise the company’s profits and keep their shareholders happy, whilst doing their best to keep out of trouble - or if not finding an excellent lawyer.
In 2020 it is clear to everyone involved in corporate life that the world has changed. Companies are still expected to churn out profits, cash and dividends. But to do so, they have to earn and return their so-called ‘Licence to Operate’. Otherwise the fires of hell rain down on them from NGOs, politicians and increasingly their own shareholders and they are chased from the corporate stage like the villain in a Greek tragedy.
Wouldn’t it be easy if this Licence was something you could get from the Post Office after filling in a few forms? But the world, and particularly the modern corporate world, is not that easy. The rules are complex and ever-shifting and some Boards only know they have transgressed after it has happened and they are paying the price.
This new world has three, rather than four, corners and increasingly all businesses need to navigate them. They are neatly summed up by the acronym ESG – Environmental, Social and Governance. In a different order businesses (large and small) need to demonstrate they are run with proper oversight, they need to show they are minimising their impact on the environment, and they need to deliver some element of wider social purpose, other than the ‘simple’ business of employing people and providing goods or services.
In the past few years, more and more of my time has spent discussing this ominous three letter acronym with Chairmen and CEOs and I don’t see any slackening of pressure on the corporate sector to adopt these new principles. If anything, we have moved from a world of aspiration to one of delivery. It is no longer enough for grand CEOs to turn up at Davos once a year, preach from the mountains about purpose and reckon job done.
The demands on businesses are getting increasingly granular and specific – and the main pressure is no longer coming from NGOs or woolly do-good quangos. It is coming from company owners themselves, the same shareholders who used to be happy with a rising share price and a bit of a dividend each year.
Within this world, like all others, communications is crucial. It is not enough for businesses to do, they need to be seen to do – and articulate both their actions and their aspirations clearly. They also need to communicate powerfully when they fall short and the actions they are taking to address those shortcomings.
More importantly they need to engage with their inquisitors effectively in a way that builds a community of common interest rather than creates a wall of confrontation and suspicion. That is why (today) Maitland/AMO is launching Maitland/AMO Sustain, a new sustainability practice that specialises in supporting clients to address and communicate their purpose and their ESG goals more effectively to their critical audience. This fits very much in our tradition of considered strategic communications, and will provide clients with expert advice on the most pressing issues they are facing today.
Ultimately we are all striving towards the same goals – a fairer society, a cleaner environment and a reduction in greenhouse gases – and we all have a part to play as individuals, governments and businesses. The rampant anarcho-capitalism of my youth might have been fun (and vastly rewarding) for a very few. But it was littered with too many cases of malpractice, left too many behind and laid waste to too much of our planet. This new world is certainly more demanding, and more dangerous for those that fail to comprehend. But it is ultimately a better world, or at least we hope will lead to one.
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