{"id":9913,"date":"2023-03-21T19:34:45","date_gmt":"2023-03-21T17:34:45","guid":{"rendered":"https:\/\/escp.eu\/thechoice\/?p=9913"},"modified":"2023-03-21T19:34:48","modified_gmt":"2023-03-21T17:34:48","slug":"how-business-can-deliver-where-government-is-failing","status":"publish","type":"post","link":"https:\/\/escp.eu\/thechoice\/choose-to-lead\/how-business-can-deliver-where-government-is-failing\/","title":{"rendered":"How business can deliver where government is failing"},"content":{"rendered":"\n

BlackRock chief executive Larry Fink wrote in his 2020\u00a0letter<\/a>\u00a0to CEOs:\u00a0\u201cA company cannot achieve long-term profits without embracing purpose and considering the needs of a broad range of stakeholders.\u201d<\/em><\/p>\n\n\n\n

Those words have come to embody the current era of stakeholder capitalism, in which companies are not only viewed as part of the broader social and environmental fabric, but are called upon to do their bit to tackle the thorniest, hairiest challenges of our time.<\/p>\n\n\n\n

That companies are now seen as social actors is a function of another trend: the erosion of trust in government, triggered by rising levels of inequality, disinformation and economic dislocation.\u00a0As trust in government institutions has weakened, the expectations of business leaders have soared<\/strong>. In fact, business is now the only institution viewed as competent and ethical, according to the 2023\u00a0Edelman Trust Barometer<\/a>, a survey.\u00a0<\/p>\n\n\n\n

But this is turning out to be both a blessing and a curse for leaders of companies, who are having to balance\u00a0their own goals with making profits and meeting responsibilities to society and the environment. To find out how they can navigate this balancing act, we spoke with ESCP Professor Jean-Philippe Bouilloud<\/a>.<\/p>\n\n\n\n

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Ultimately, companies are part of a system of trust and, in modern, civilised societies, businesses simply cannot operate in a vacuum.<\/p>\nProfessor Jean-Philippe Bouilloud<\/cite><\/blockquote>\n<\/div>\n\n\n\n

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\"Jean-Philippe<\/figure><\/div><\/div>\n<\/div>\n\n\n\n

Uphold clear and honest communication to rebuild trust\u00a0<\/h2>\n\n\n\n

He tells us the loss of trust in government comes down to the feeble rate of progress on sorting out key issues such as the climate crisis: \u201cI think the key reason is disappointment, given the ecological problems we\u2019re facing now, which is partly a consequence of the industrial progress we had in the 20th century.\u201d<\/em><\/p>\n\n\n\n

Companies contributed to that and other problems, but they must be part of the solution. That responsibility comes with downsides. Some politicians and investors have launched a backlash against \u201cwoke capitalism\u201d, or the idea that a business should look beyond its profits. However, Bouilloud does not expect the pendulum to swing back. He says the role of business in society is only going to grow:<\/p>\n\n\n\n

\u201cBig companies are already part of society; they have no choice not to be. Of course, shareholders are an important stakeholder for companies, but businesses are accountable to a wider universe of stakeholders, including their employees, customers, suppliers, politicians and regulators. <\/em>Ultimately, companies are part of a system of trust and, in modern, civilised societies, businesses simply cannot operate in a vacuum<\/em><\/strong>.\u201d<\/em><\/p>\n\n\n\n

In navigating the pitfalls of being held in higher esteem and being given greater responsibility for societal, political and moral issues, Bouilloud tells us that companies must embody certain virtues:<\/p>\n\n\n\n

\u201cThe first thing to do is uphold clear and honest communication<\/strong>. So many companies are being called out for \u2018greenwashing\u2019, or making dubious claims about their sustainability. Companies need to walk the talk. They also need to be <\/em>honest<\/em><\/a>, and admit when they haven\u2019t got it right. That can go against a leader\u2019s natural instinct, which is to preserve the brand. Of course, there are consequences to telling the truth; your share price could drop. But the consequences of dishonesty are far greater, in terms of losing your social license to operate.\u201d<\/em><\/p>\n\n\n\n

The\u00a0professor also reminds us that plenty of people still distrust\u00a0businesses because of their past wrongdoing:\u00a0\u201cPeople, especially the young, are still suspicious of big corporations. Let\u2019s not forget that the private sector has been a core part of a capitalist system that is linked to rising inequality, damage to the environment and other exploitative practices.\u201d<\/em><\/p>\n\n\n\n

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Companies need to walk the talk. They also need to be honest and admit when they haven\u2019t got it right.<\/p>\n<\/blockquote>\n\n\n\n

Develop agility to cope with ever-shifting kaleidoscope of problems<\/h2>\n\n\n\n

The issues that corporate leaders are being asked to address may seem like an ever-shifting kaleidoscope of problems. From global poverty to gender equity, from climate action to clean energy, the challenge for companies is finding ways to balance all the different sustainability goals in the least bad way possible.<\/p>\n\n\n\n

As leaders are pulled in multiple\u00a0directions, Bouilloud reminds us that these goals are monumental, so they cannot be achieved overnight. Patience is required, in addition to a more targeted approach that focuses on the problems that are most relevant to the business<\/strong>.\u00a0The added benefit is that these challenges are usually the ones that the company has the expertise, resources and mandate to tackle.\u00a0\u00a0<\/p>\n\n\n\n

\u201cCompanies are feeling the pressure to act, but it can be challenging if they are going to completely rethink their business practices and processes. If you\u2019re an industrial company, for instance, you\u2019re not going to be able to reduce emissions in your own processes, those in the supply chain, and in some cases completely re-engineer your products overnight,\u201d <\/em>says Bouilloud.<\/p>\n\n\n\n

Part of the answer to that problem is agility, or methods to help businesses quickly adapt to changes in the internal or external environment<\/strong>. Bouilloud\u00a0points out that companies should already have the elements in place that can make an organisation truly agile: culture, people and governance.<\/p>\n\n\n\n

Shocks like Covid and the Ukraine war will have pushed many companies to develop frameworks for business agility. So it\u2019s more a question of adapting these existing playbooks to new challenges, as and when they emerge.<\/p>\n\n\n\n

Ultimately, a huge amount of work lies ahead to tackle those problems and reach sustainability goals. While not discounting the role of government in nudging companies away from bad practices and pushing them towards positive action, Bouilloud is optimistic that business can help deliver where others are failing.<\/p>\n\n\n\n

\u201c<\/em>Big companies have the capacity to be catalysts for change. <\/em><\/strong>For example, the private sector already provides the vast majority of employment in many countries, which demonstrates the positive effect business can have on the economy and on reducing poverty.\u201d<\/em><\/p>\n\n\n\n

Beyond being an engine of job growth, companies need to tackle a wide array of society\u2019s worst ills. In doing so, everyone should benefit.<\/h5>\n","protected":false},"excerpt":{"rendered":"

As trust in government institutions has weakened, the expectations of business leaders have soared. How can businesses can use this trust for good?<\/p>\n","protected":false},"author":1,"featured_media":9912,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[13],"tags":[42,280],"class_list":["post-9913","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-choose-to-lead","tag-leadership","tag-responsiblebusiness","category-13","description-off"],"acf":[],"yoast_head":"\nHow business can deliver where government is failing - The Choice by ESCP<\/title>\n<meta name=\"description\" content=\"As trust in government institutions has weakened, the expectations of business leaders have soared. 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