CECP’s 2020 Look Ahead: Corporate Purpose Defining Stakeholder Capitalism
Date: December 17, 2020
Anyone with the idea that CEOs and companies can now stand down with a new Administration has sorely underestimated corporations. They will still fill the role of CEO statespeople Yet, the role of a company will change when a little less rests on their shoulders alone. There is still plenty to do to meet the needs of people and planet, and we may have to make up for lost time. The UN’s Sustainable Development Goals (SDGs) are ever more relevant, perhaps with a deeper sense of purpose to ensure equity for all. The issues abound on which companies can lead and lend a hand: systemic inequity, climate, infrastructure, jobs/future of work, education, economic recovery, technology, food security, and much more. Here are the bright spots we see in corporate purpose leadership for 2021: communicating with a divided nation, adaptability and innovation, employee well-being, focus, and tracking ESG=resilience.
Communicating with a Divided Nation, Government, and Workforce: companies can call for unity and progress with groups that might never see eye to eye. They can bring people to a “healing middle ground”, helping to propagate empathy and listening so that we may understand (if we can) the other half. ”At a time when CEOs are increasingly involved with their employees’ well-being, that political division is stark. ‘For CEOs right now,’ says BCG CEO Rich Lesser, ‘the challenge is how do you convey a sense of community and humanity and support for the democratic process at a time when there is so much distrust and division.’” CEOs are listening and speaking out, and companies are creating space to learn and move us forward together.
Adaptability and Innovation: we saw GM building respirators and whole companies working from home. The great pivot, still in response mode but with an eye towards recovery, looks to companies to help build back better, not return to a broken normal. Companies are exploring how they can expand Covid-19 adaptations and collaborations that work better. The call is to find a future sustainable new normal with the freedom to experiment, making what was perceived impossible possible, cutting innovation time from years to months. Markets of tomorrow will drive inclusive economic growth. We don’t have to look any further for examples than Pfizer, Moderna, UPS, FedEx, CVS, Walgreens, and myriad others speeding vaccines to communities.
Employee Well-Being: CEOs are involved with ensuring the well-being of their employees, their most important stakeholder. A continuum will guide companies along this journey: transparency, empathy, diversity, equity, inclusion (DEI), motivation, innovation, and growth. Start with the ~60% of essential workers who are on the front line, including the supply chain. Ensure worker safety. Companies will identify their unique role in the vaccine roll out as they can create the systems for widespread adoption to keep their workforce, supply chain, and communities safe. They will use equity as a growth opportunity and seek innovation in every corner of the company. They will set current and future workers up for success, with the skills to compete. Guardian Life Insurance’s Deanna Mulligan wrote the book, Hire Purpose, outlining how companies can lead workplace evolution with a values-based response. Target will contribute $1 billion towards employee pay–including a minimum wage increase, childcare, and bonuses to 350,000 frontline workers.
Equity is the Standard: the new year provides the opportunity for companies to further focus on social issues that align with their corporate purpose, mission, values, and areas of expertise. We saw companies support voting, make statements condemning racism, and care for communities struggling with Covid-19. We see Allstate announcing a bond deal focusing on diversity; JP Morgan refocusing its assets to address racial equity; Merck CEO Ken Frazier and IBM Executive Chair Ginni Rometty, along with 35 other CEOs, committing to train, hire, and promote one million Black Americans over the next decade; and Accenture, Hilton, IBM, GSK, Medtronic, SAP, and TD Bank signing on to a business mentorship program for LGBTQ refugees.
Sustainability is the New Digital: Bain reports the trend is irreversible and reaching a reflection point. According to the Edelman Trust Barometer, “social” is the most important ESG priority for investors, including a healthy corporate culture. Our collective goal is to extend the capital time frame, or as Rebecca Henderson says, “re-wire the capital markets”. We see growing evidence that corporate responsibility and investor relations (IR) are working together. Thirty companies including Aptiv and BD shared Long-Term Plans, proving the power of business units banding together to share material data—from purpose to human capital to financial. The World Economic Forum’s International Business Council and the Big 4 accounting firms, led by Brian Moynihan of Bank of America, released a report synthesizing the 21 most important ESG metrics, including CECP’s Total Social Investment. The Biden Administration is set to amplify the importance of ESG. Organizations are racing to develop DEI metrics. Are you ready?
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