Around a month ago, 181 of the US’s top CEOs showed a remarkable moment of unity.
The Business Roundtable is a powerful lobbying group led by JPMorgan Chase’s Jamie Dimon. It’s a group of people not generally known for social activism, but they signed onto a new mission that reordered the priorities of their businesses in a way we haven’t seen since World War II.
The Business Roundtable agreed to an updated definition of the purpose of a company and pledged “a fundamental commitment to all our stakeholders.” They agreed that companies are for creating value for customers and meeting their expectations, investing in employees, fostering diversity and inclusion, dealing fairly and ethically with suppliers, supporting communities, and protecting the environment. All of these aims appear in the new mission before any mention of shareholders. In fact, shareholders don’t show up until you reach the last 50 words of the statement.
Even the Financial Times thinks it’s time for a reset. This month its editor published a letter to mark the start of the paper’s campaign for a “better form of capitalism”.
Lionel Barber said: “The long-term health of free enterprise capitalism will depend on delivering profit with purpose. Companies will come to understand that this combination serves their self-interest as well as their customers and employees. Without change, the prescription risks being far more painful.”
It’s clear the old ways of doing business are unfit for today’s times. From the 2008 financial crisis which undermined faith in unfettered free markets to increasing public anger against the corporate elite and the growing realisation that environmental risks impact company operations, there is an increasing desire from the public that companies ‘do the right thing.’ This was shown by FleishmanHillard’s new Authenticity Gap (AG) study which explores consumer views on today’s most discussed topics and trends. In the UK, this research showed that care for the environment is now the highest expectation for consumers across all industries studied.
The research study also revealed that Chinese citizens expect companies to be ‘more committed to doing the right thing’. This means different things in different industries; in healthcare, it means providing access to affordable, innovative medicines and treatments, while in technology, it means guarding data security and privacy. But a commitment to doing right is one thing. Implementing it, particularly in these polarized times, gets tricky very quickly.
In Asia, there have been some early shots at accountable capitalism but no widespread adoption. Yet, there is some evidence that a new generation leading family businesses is taking a more proactive stance.
One example is Adrian Cheng, the Executive Vice Chairman of New World Development. He’s best known for his art foundation as well as both the K11 and K11 Musea malls, which blend art, design, and retail, but he is, in fact, doing much more in the sustainability space. New World also recently announced they would donate three million square feet of land to help with Hong Kong’s housing crisis.
In the times to come, I believe it will be imperative for more Asian headquartered organisations to take a stand, but in a way that balances the interests of all their stakeholders. In today’s environment, expectations of companies and brands are higher than ever. It has never been more important for industries to get comfortable with the uncomfortable and to authentically engage with those who look to them for leadership.
Blog first published on October 3, 2019 on Marketing-Interactive.com.
Rachel Catanach is FleishmanHillard’s senior partner and president for Greater China and honorary secretary of PRHK, Hong Kong’s association for PR and communications professionals. You can contact Rachel here.