Is 2019 the year companies became more caring? | FT


[MUSIC PLAYING] ANDREW HILL: Trust is
still low 10 or more years after the financial crisis, and
that seems a good enough reason to say we need to rethink
the various fixes that were put in place after
the 2008-2009 crisis and see what more profound
change can be brought through into business and finance. A movement to reset capitalism
is already underway. One opportunity in 2020 is
that lots of business people are now talking about
purpose and the need to instil new ways beyond
pure shareholder value. GILLIAN TETT: What
you’re seeing happening today is a very necessary return
to stakeholder capitalism, if you like, i.e., the idea
that business and markets should be set within a
wider social context and a legal and
political framework. We’re not just moving from a
world of narrow shareholder focus to stakeholder focus. We’re also moving towards
a world where investors increasingly recognise they
need to look at the long term. You need to have a wider
sense of what context you’re operating in. KATIE MARTIN: Investors and
business executives are people just like you and me. They have children. Those children are
skiving schools on Friday to go on strike against
the environment. And this really sharpens
the issue for people. Suddenly, investors are
looking much more seriously at, how do we become good stewards
of the global environment? How do we look ourselves
in the eye in 20 years time and think that we
did the right thing? ANDREW HILL: Each year that we
advance into the 21st century, a younger generation is
worried about the purpose of the corporation, the
purpose of capitalism. And that’s an optimistic
sign, I think, that people will be able to
lead this change in 2020 in ways that they weren’t necessarily
in previous years. KATIE MARTIN: So
where is this change going to come from
over the next year? Well, there’s lots of
statistics out there that show that the
younger people are, the more they care
about these issues. These young people are
going to become customers of banks, of pension providers,
of the entire financial services industry. The competitive
pressure that’s going to come from firms looking to
snag business from these people as they develop wealth,
as they become older, is getting increasingly intense. ANDREW HILL: There will be an
increasing clamour of people asking for business leaders to
deliver on promises that they made in 2019, notably,
the Business Roundtable. People will start asking
those 180 or so signatories of that statement, what have
they actually done in 2020? KATIE MARTIN: For the
finance and market sectors that I’m primarily
focused on, the real thing is figuring out how to get
money to green projects. How do we issue green bonds? How do we help companies that
are trying to transition away from being dirty, oily
companies into green technology? Where does the money come
from for that process? That’s what bankers and
investors are definitely grappling with now. And they know that if
they don’t get this right, that next generation, the
Greta Thunberg generation, is not going to be interested
in using their services. ANDREW HILL: On the
downside, of course, although we might hope in 2020
for there to be more regulatory and policy change to try
and reset and curb the worst excesses of
capitalism, there are going to be distractions,
notably the US presidential election and
impeachment, and also, in the European
scenario, Brexit, and in Asia, China
and Hong Kong. GILLIAN TETT: So any investor
who’s looking at a company or the corporate landscape needs
to recognise that if you ignore those risks, you’re in danger
of essentially seeing the value of your assets being impaired. So if you want to
understand the reset that’s going on right now, it pays
to think about fear and greed. The fear element is
pretty clear cut. Essentially, what you have are
many C-suites who are waking up and realising that if they
don’t start paying attention to stakeholders, they
face regulatory pressure. They face consumer backlash. They sometimes face
their own protest from their own employees. And they also face
potential investor pressure. But the greed element
is important too. Some companies also recognise
that if they start looking at stakeholders more broadly,
they can build for the long term. If they can get ahead
of the really important social and environmental
changes right now, be that renewable energy, be
that non-meat alternatives, be that other ways that you can
tap into the growing concerns amongst consumers for
sustainable products, if you can do that,
then often you can make more money in
the long term anyway.

6 thoughts on “Is 2019 the year companies became more caring? | FT

  1. Capitalism is about consensual values and implicit consensus obviously shifts from time to time. Therefore, there’s no point in saying there’s an opposition between profits and social responsibility when the former anyhow depends on the latter. It should be noted, though, that ESG is largely driven by a politically correct agenda that owes its prominence to the fact that it’s rooted in a mindset restricted to certain layers of consumption classes capable of affording the difference in cost in order to become activists in spite of the “state inertia”. As it’s by no means shared by the less affluent and much more numerous classes, this agenda is starting to lose ground in democratic states as the needs of the vast majority, focused on social inequality, is bluntly incompatible in terms of priorities. So far it has produced some poor and ridiculous far right populism here and there, with picturesque politicians promising all the impossible ways there are to implicitly reverse globalization to the golden age when blue collar workers and small farmers thrived. As yet the far left socialist populism, idealistic and incapable of calculating costs, isn’t taken seriously by the poorer segments of western society, as it’s identified either with the politically correct rhetoric or with the antidemocratic and corrupt regimes that still bear the socialist trademark. It’s the perfect environment for the rise of Real Politik technocracies which will consolidate only some minor features of ESG into policy, as it becomes a vogue among upper middle classes, as philanthropy is for rich people…

  2. The hell with cuddly capitalism: I shiver at the thought of activist CEOs.

    The purpose of business is to make a profit while obeying the law.

    As a customer of any business, my values are purely utilitarian and transactional. Maybe I prefer free-range chicken and bread with bits in it, and I may signal thus to butcher and the baker.

    As a citizen in a democracy, my values, in common with my fellow citizens, are rightly expressed through our elected representatives, and not on our behalf by unelected egotistical capitalists.

  3. A disproportionately high proportion of CEOs are nacisists/functioning psychopaths. They lack empathy and so the social good is only considered as a means to an end, if at all.

Leave a Reply

Your email address will not be published. Required fields are marked *