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  • Lately, a lot of chief executives

  • have promised to shift their business model.

  • They pledge to serve all stakeholders,

  • not just shareholders.

  • Investment return, they say,

  • will no longer take precedence

  • over the health and welfare of employees,

  • suppliers,

  • even planet Earth.

  • Not just in a crisis,

  • but every day.

  • This is a change that business absolutely needs to make,

  • but that does not mean it is going to be easy.

  • It's like going from being a young couple

  • to having kids.

  • When you're trying to make decisions

  • with just one other person in the relationship,

  • it's pretty straightforward.

  • Where should we have Sunday lunch?

  • What should we watch for the movie?

  • But when you add one child,

  • a second child,

  • new decision makers,

  • life gets complicated.

  • And each one has their own unique needs

  • and individual perspective.

  • We all know that you're not supposed to have a favorite child,

  • and that being fair doesn't always mean being equal.

  • It's one of the biggest challenges in parenting,

  • and in stakeholder capitalism.

  • Employees need to earn a living wage.

  • How else can they be confident that they can feed their families?

  • Pension fund investors need to earn a positive return.

  • Only then can they be sure

  • that they are managing the savings and retirement

  • of their investors responsibly.

  • Consumers want and deserve products and services

  • that are both affordable and safe.

  • And we all want a society and planet

  • that lets us breathe.

  • I have spent my career helping companies and their leaders

  • improve their performance,

  • particularly at times of transition.

  • We've all gone digital.

  • We've responded to new health care regulations.

  • We've improved their productivity,

  • made them more diverse and inclusive.

  • It took us a while to learn

  • that you can't actually make a company more digital

  • by appointing a chief digital officer,

  • or that a chief diversity officer

  • could not single-handedly make a company's culture more inclusive.

  • So we already know that we cannot just appoint a chief stakeholder officer

  • if we really want to serve all stakeholders.

  • Instead, we need to reset.

  • If we really want to serve stakeholder needs,

  • we need to get everyone involved.

  • There are no quick fixes,

  • but I do have a few ideas.

  • Let's start at the top: the boardroom.

  • This is where a company's strategy is set and governed,

  • and if all stakeholder needs aren't accounted for here,

  • really, nothing's changing.

  • By definition, a board can stand in the way

  • of serving all stakeholders.

  • Why?

  • Because often, a board is elected by shareholders.

  • It represents their interests.

  • It's there to act on their behalf.

  • That's not just a dictionary definition.

  • It's enshrined in law in the US,

  • and this can really limit

  • how much change a CEO or board can effect

  • if they want to serve the needs of more stakeholders.

  • For years, if we're honest,

  • we've been ticking boxes:

  • ethnicity, age, gender.

  • We've been looking for people who look different,

  • but boards still do the same thing.

  • They look after the interests of shareholders.

  • We don't need tokens.

  • We need people who truly understand the experience

  • and represent the diversity of our stakeholders.

  • Corporate boards can learn a thing or two from the nonprofit world.

  • I chair a charity, Teach First.

  • It's an educational charity that produces outstanding teachers

  • and schools.

  • Our board includes a wide range of skills:

  • former civil servants,

  • activists, teachers, ambassadors,

  • technologists.

  • Some of them on paper have very little

  • that's an obvious fit for an educational charity.

  • But they each have real experience with our stakeholders.

  • Every board is different.

  • Imagine a world where corporate governance was very different than today:

  • community leaders sitting on the boards of their local bank;

  • moral philosophers advising social media companies;

  • environmental activists as directors of global energy companies.

  • CEOs keep making pledges.

  • They keep talking about social purpose,

  • but real change won't happen

  • until we change who governs

  • and for what purpose.

  • We have to change the laws of incorporation that limit us,

  • and remember who we really serve.

  • Next, let's talk about the big E,

  • the environment.

  • Sustainability goals have been written into annual reports all over the world.

  • The goals are very lofty,

  • and very, very long-term,

  • and none of them will be accomplished

  • if they don't have real steps along the way.

  • It's like saying,

  • "I'm going to run a marathon, or a 5k, sometime in the future."

  • No one is going to believe you until they see you get off the couch,

  • start training,

  • putting in the miles every single day.

  • CEOs need the same thing.

  • They need concrete, achievable, measurable goals,

  • and they need to share the data and progress along the way.

  • Being green is good for the bottom line in the long run,

  • but it requires investments,

  • and those have to be shared.

  • Brazil-based Natura is the world's fourth largest cosmetics company.

  • They've got the usual profit and loss statements

  • for the investors and the executive,

  • but it's their other two P and Ls

  • that make them a little bit special.

  • One measures how well they do for the environment.

  • The other looks at their impact on society.

  • They measure everything:

  • seeds planted,

  • jobs created,

  • rubbish thrown in the bin.

  • Shell, the Anglo-Dutch energy company,

  • is another example.

  • They figured out what many of us already knew;

  • it's not good enough just to look after your own emissions.

  • In fact, their emissions accounted for about 15 percent

  • of their system emissions.

  • So they changed.

  • Working with activists and pension funds,

  • they set three-year rolling goals

  • with progress markers year by year.

  • By 2050, they hope to reduce their net carbon footprint

  • by almost two thirds.

  • That is a major reduction.

  • Initially, these targets are linked to the bonuses

  • of their top 150 decision makers,

  • and over time the pay of nearly 17,000 employees

  • could be linked in part to how they treat Mother Earth.

  • It's still early days for this industry

  • and many of these initiatives.

  • Success will depend on how well we stay the course

  • when the investments become more significant,

  • when stakeholders disagree,

  • or when competitors start catching up.

  • Let's spend a little bit of time on a stakeholder

  • who is sometimes hidden,

  • and those are our suppliers.

  • They are the connective tissue underneath many companies:

  • Uber drivers, widget makers,

  • service employees.

  • They're like an invisible life force that power our economy,

  • and one thing we know for sure

  • is that the success or failure of your business

  • depends on your suppliers and partnerships.

  • It's a painful lesson that many hospitals,

  • including in the US and UK,

  • will take from COVID-19.

  • In pandemics, robust, agile supply chains

  • deliver the masks, ventilators,

  • testing kits and vaccines

  • that we all need.

  • It saves lives,

  • and it helps to reopen our economy.

  • Suppliers don't just matter when we're in a crisis.

  • If you really want to scale your positive impact,

  • you have to look beyond the walls of your company.

  • BHP Billiton,

  • the Australian mining company,

  • did just that when it made a commitment

  • to end gender imbalance in its workforce by 2025.

  • It decided to encourage, or kind of nudge, its suppliers into also participating

  • by providing training and technology.

  • In Chile, Kal Tire

  • helps to change the enormous tires

  • on BHP's trucks.

  • It is a very physical, demanding, dangerous job,

  • and to be honest with you,

  • not that many women were even interested in the job.

  • The two companies change that.

  • First, they developed a mechanical arm.

  • And then they proactively encouraged women to apply for the job.

  • Now, Kal Tire is just one company.

  • It's an example.

  • BHP Billiton has thousands of suppliers,

  • and if you really want to engage your supplier network,

  • you can use incentives to get them engaged.

  • Today, Kal Tire illustrates

  • how well that can be done,

  • and across BHP's supplier networks,

  • women are now 15 percent more likely to get the job

  • than they were even a year ago today.

  • Suppliers and partnerships

  • will make or break your business.

  • In good times, they're the key to your success,

  • scaling it worldwide,

  • and in bad times, they're the key to your survival.

  • If suppliers are a hidden stakeholder,

  • then customers are probably the most visible.

  • But when shareholders rule supreme,

  • some companies may have an incentive

  • to focus on customers' short-term desires

  • rather than their long-term needs.

  • Consumption of processed food has taken off around the world,

  • and with it,

  • global obesity rates have increased.

  • That's why the Access to Nutrition Foundation now tracks the salt, fat, sugar

  • that global food and drink companies include in their products.

  • They also track whether they market them responsibly.

  • I think it's like measuring the calories consumed

  • for every dollar these companies earn.

  • Companies that have been paying attention to this

  • have begun to make changes,

  • including ingredients and formulations.

  • Nestle reduced the sugar in its breakfast cereal.

  • Unilever reduced the volume and calories in its ice cream.

  • Now, I'm not sure that's a good idea,

  • but I can tell you it takes creativity and a little bit of investment.

  • We know that consumer needs change over time,

  • but companies that make these investments proactively

  • can be better positioned in the long term, even for shareholders.

  • As we all have tried to improve our eating habits,

  • tried to eat less ice cream,

  • these companies were well-positioned to capture that market.

  • They were ahead, more competitive,

  • and able to be more relevant.

  • It also aligns with governments,

  • many of whom have looked at nutrition labeling,

  • exercise programs, or even sugar taxes

  • to encourage healthier eating.

  • If customers are stakeholders,

  • then they should not be harmed

  • by the goods, services

  • and products we produce.

  • It's that simple.

  • For stakeholder capitalism to really work,

  • we all need to see ourselves as chief executive officers.

  • If we really want change,

  • we have to be willing

  • to bear the backlash.

  • We're not always going to get it right,

  • and that's OK.

  • Real, substantive change takes time.

  • The right answer keeps changing.

  • But we have to try to do better.

  • There's a quote that I love that really captures

  • the essence of this moment.

  • It's by the American poet Gwendolyn Brooks.