Many businesses in India today are making positive changes to make sustainability a centrepiece of their strategy. By implementing an integrated ‘sustainable’ growth plan, businesses are helping to future-proof their brand relevance, business viability, and corporate culture too.
The Bravery Mandate key India insights threw up many important facts. The number of consumers and decision-makers expecting brands to create stability in uncertain times rose by 23% since 2019; more than 2/3 of respondents expect brands to make multi-year investments in causes but also reassess their corporate policies at least every 6 months, and 70% said that they are more likely to purchase or recommend products or services from brands that address societal issues that matter to them.
The pandemic has sharpened the focus on corporate governance and ESG ( Environment, Social and Governance). In August this year, McDonald’s leading sustainability officer stepped down and was replaced by Jon Banner, EVP and global chief impact officer, of McDonald's Corporation. There had been considerable pressure from activist ESG stakeholder Carl Icahn … who wanted changes in how McDonald's sources pork; though the company denied the change had anything to do with Icahn's campaign.
The McDonald's experience shows how real and immediate the ESG issue is for companies.
To map the growing importance of ESG and focus on increased reporting of ESG compliance, the Arthur W Page Society has penned an important guide on Stakeholder Capitalism and ESG for communicators.
On his ongoing visit to India, the organisation's president, Roger Bolton, spoke to PRmoment India's editor Paarul Chand about how firms should set about making their ESG journey, regardless of their corporate structure, the role of CCO in ESG implementation and the evolution of the public affairs professional in the time of Web 3.0.
Accelerated stakeholder capitalism
Bolton believes that the pandemic has sped up the stakeholder capitalism movement. This has brought great opportunities and focus on the role of CCOs.
He explains, "The pressure on companies to transform workplace culture, corporate culture issues is even more profound (post the pandemic). So what's happened with the role of the chief communication officer, certainly not every company, but many, many of our members around the world are saying that, in fact, they have stepped up. And they become a senior partner with the CEO and work across the C suite in all these areas. That's the good news.
The bad news is they're stressed, they're stretched, they don't have the financial resources, nor do those that they have in their teams have the skills they need to really do it well. And they're under pressure from their CFOs to prove return on investment. And they're struggling. They're thriving and struggling at the same time if that makes sense, right? They're thriving in the sense that they have these really exciting, challenging new opportunities. And they're doing well many of them, but their biggest concern is where do we get the resources and how do we make this work?"
So how do CCOs face this challenge?
Bolton advocated, " Being really effective senior strategic advisors across the enterprise, which requires socio political economic intelligence, strategic thinking, and the EQ to be a good advisor."
Bolton also stated that, "Through our thought leadership work and the research that we're doing now at Page, we hope to provide better answers. I don't have the answers for the future right now. We're working on those. But it's clear that the biggest challenge that our members face is having the skills and capabilities and resources to step up and do this role that we all envision. And they're under significant challenge. You know, especially with recession potentially looming. They're under cost pressures. They're seen as cost centres in their organisation, and they're under cost pressures. So demonstrating value, I guess is the bottom line."
Leadership buy in needed to build stakeholder capitalism
Working with an enlightened CEO helps better implement and communicate the ESG value.
Roger Bolton shared his experience at health insurance major Aetna, " We had a new CEO came in, John 'Jack' Rowe. And he was determined to change the company in deep and meaningful ways. And I was asked to stay on as part of his team. And what I witnessed there was leadership. Jack was a doctor, but not just any doctor, he was the CEO of Mount Sinai Health Centre in New York City, one of the great academic medical centres in the world, but he'd never run a health insurance company, he had a strategic idea of how health insurance should work with doctors, that was very different from current practice, and wanted to change the company.
So he hired and brought in from a competitor, the best operating executive in the industry. And so Jack was responsible for strategy, Ron Williams was the other guy's name was responsible for operations. And they asked me to lead the culture change. So I became a part of that senior team. Those two guys believed to the depth of their soul in all of the values and behaviours and policy changes that we were making. And they embodied it in everything that they did. And every action that they took, and they also started every meeting with every stakeholder, both internal and external, with the discussion of values and ethics and our new mission and purpose."
Impact of the Aetna Way : 700% jump in stock price
Explaining the journey to impact, Bolton explained, "Our investors had serious doubts about whether Jack's ideas were going to work. And he had to simultaneously say, look, in the short term, we're going to lose money, we're going to exit some markets, we're losing money, we're going to lay people off, and it's going to be a challenge. And, he had to convince not only the investors, but also our people and our customers to believe in us, as we made the investment to become the company that we eventually became, in our case, it did pay off. And we went from being unprofitable to being a profitable business, we went from being hated by doctors to being the most popular insurance company with doctors, and our stock price went up 700% in six years."
This experience is a clear example of the real world value of stakeholder capitalism. One learning from this is that short term measurements of results can be a barrier to building a socially useful business.
Don't focus on quarterly numbers as incentives
Roger Bolton stated that many of the corporate incentives around the world are based on quarterly results and making quarterly numbers.
Bolton explained that, "Many of the things that need to be done to build a longer-term sustainable world will have a short-term negative impact on your company's financials. And in that case, what you have to be able to do is, number one, help your investors understand that you're gonna make some short-term investments that may cost money. And some investors may leave you over that.
But there are also increasingly long-term investors and investors with a focus on ESG, who may understand and who may be willing to accept some short-term trade-offs, as long as you can convince them that this over the longer term, we'll build a more sustainable enterprise that will last and create value for generations to come."
Bolton pointed out, "That's a hard argument to make if all your incentives inside your company are based on meeting your numbers. And so you've got to be willing to not only convince investors but also restructure your internal incentive structure so that the short-term investments can be made in longer-term growth."
Roger Bolton is the president of Page, the premier global professional association for senior corporate communication executives.
Previously, Bolton served as senior VP of communications at Aetna with responsibility to lead culture change in a strategic business transformation. Prior to his business career, Bolton was assistant secretary of the Treasury for public affairs under President George H.W. Bush; and special assistant to President Reagan in the White House, with responsibility for the president’s relations with business and labor.