What are companies for?
Last month The Economist newspaper published a special Briefing on corporate purpose – What Are Companies For? This explained the increased interest among business corporations in pursuing a social purpose, in addition to increasing shareholder returns and providing value to customers. This trend, according to The Economist, is a reaction to the global financial crash, and represents companies either seeing the light or caving in to external pressure, ‘depending on who you ask’.
The article gave several examples, such as BlackRock, a giant investment fund, which expects all major companies to articulate their social purpose. It notes that at a recent Business Roundtable, major CEOs agreed that their firms should serve stakeholders as well as shareholders; offer good value to customers and training to staff; promote inclusivity; treat suppliers fairly and ethically; support the communities in which they work; and protect the environment. This list doesn’t, in truth, seem particularly radical, but the article also presented the other side of the argument, citing activists who have used the courts to force the giant CalPERS pension fund to revert to picking investments for their financial performance alone, rather than their ‘social performance’; and a major hedge fund which claims that generating competitive shareholder returns is social value enough. Overall, while presenting a more or less balanced account of the debate, The Economist seemed to come down more or less on the latter point of view.
As a long-term reader of the newspaper, I found this surprising: I read the article fully expecting it to end with an endorsement of the need for businesses to contribute purposefully to three kinds of value: to their customers, to their investors, and to society more broadly. This is not a new or radical idea, and especially in an age when we are learning to expect less and less of our communities and governments, and therefore need to be able to rely on businesses acting responsibly of their own accord, against a background of social inequality, institutional decay, environmental degradation and political instability.
Among many things the article did not clearly say, I’d make three points.
1. Corporate citizenship and the social contract
Citizenship is one of the great public goods, where it exists. A healthy polity is one whose people are citizens, rather than subjects. They have a voice in the directions in which they are led, and in who does the leading; they hold their leaders accountable; and they accept a duty towards their fellow citizens, and to the nation state, which guides and sets limits on how they behave, including how they contribute to society. Good citizens behave accordingly not only because they are held accountable for doing so, but because they feel a sense of responsibility to do so. They not only pay their taxes as required, they also engage in community activities which enhance the common good. This is part of the social contract.
Businesses are in many ways corporate citizens. Not just because so many of them use the language of ‘good corporate citizenship’ in their public relations, but because, like individual citizens, they have a voice in the politics which determine where they are led, and who does the leading – and in holding leaders accountable (even if some may disingenuously deny having this influence). Therefore, in addition to paying taxes and otherwise complying with the law, they should also display a sense of responsibility towards others, and aim to behave in ways that enhance the common good.
Thus, as good corporate citizens, it’s essential corporations act in a socially responsible way, and recognise how they are contributing, and will in future contribute, to society: through their goods and services, their returns to investors, and in how they comport themselves and treat the environment and those around them. They should aim to enhance society and its prospects for the future, rather than simply avoid undermining them.
2. Stakeholders in a common future
Companies increasingly talk about ‘their stakeholders’, and The Economist article adopts the same language. It’s true, of course, that corporations have their stakeholders – i.e. others with a stake in their success and how they achieve it: the communities in which they operate, local and national governments, employees, their suppliers and customers, and so on.
But the concept of a ‘stake’ is far more powerful than that. The truth is, companies and others have a shared stake in a sustainable future, characterised by an open, well-regulated economy, greater equality of opportunity, a restored and sustained natural environment, democratic governance, and some version of ‘the pursuit of happiness’. My family and friends, the farmer in Harissa and the farmer just down the road here in Kent, BP, Huawei, Microsoft and the local corner ship: we are all stakeholders in that future. None of us can meet our goals in the medium term, unless we recognise our common stake.
Therefore companies which seek to define their social purpose are not stepping outside the appropriate parameters of business decision making. They are simply recognising the truth that it is in their interests – in common with others in society with whom they share a stake – to contribute social value.
3. Long-term interests
Of course, there will always be businesses willing to take a short-term view, seeking to maximise financial profits above all. And some business sectors are controversial simply because of the products and services they produce, even before considering a wider social purpose (arms, tobacco, etc.). But this should not alter the recognition that businesses should aim do ‘do well by doing good’. Indeed, there are many sectors for whom taking a ‘common weal’ approach is particularly well aligned with their evident economic interests. These include companies operating in sectors which perforce take a long term view because of the nature of their business: pension funds, miners, forestry, water supply, insurance companies, and the like. They all need to generate income in the short term, but they do so on the basis of long-term assets, much of whose value and benefits will ultimately accrue to people in future generations. Therefore they have no choice but to consider how they can help ensure those future customers will be in a position to purchase and benefit from their products, and thus how they might contribute to societal well-being.
For these three reasons, among others, The Economist got the balance of its briefing wrong. As good corporate citizens, with a stake in a sustainable future, and a future in which customers will be in a position to purchase their wares, corporations have an interest in behaving responsibly, and understanding and aiming to increase their net benefit to society. In any case, since it would be weird to suggest that businesses should not contribute to the good of society, it seems intuitively right that they should.
Journey
He rides a train
through slow flat land:
nothing to see
but horizon,
wanders clumps of yellowed grass
and sand,
and sets a wounded beetle
on a stone.
With awkward clattering
a lone jackdaw
alights
and takes its unexpected prey.
Sometimes he waits all week
for a metaphor,
then two – or more –
turn up in a day.
Published Sept 2019 by Ink, Sweat & Tears
Letter to the future
When you read history books, they may not show
the many ways that people lived today:
it’s critical you know the things we know.
To tame a girl, her aunties pin her so
she’s still, and then reduce her with a blade.
When you read history books, it may not show.
To keep them safe, we welcome those who hoe
a different furrow – to farms far away.
It’s critical you know the things we know.
The ragged pick among the scraps we throw
aside: the iron will never cleave to clay.
When you read history books, it may not show
up clearly, but when someone from below
makes claims beyond her due – we make her pay.
It’s critical you know the things we know
so you avoid reaping the weeds you sow
among the corn. Although it’s clear today,
when you read history books, it may not show:
it’s critical you know the things we know.
Published in Poetry Salzburg Review no 34
If I was a billionaire wanting to do good…
If one had to choose a single development sector, which would it be?
Several times in the past few years, I’ve quoted what I’ve come to regard as Natsios‘s Law: that the most easily measurable interventions are often the least transformational, while the most transformational are often the least measurable. In writing this, Andrew Natsios was making the point that, given the obsession with predicting and measuring the impact of public investments and actions, some of the most important actions lose out, because although they seek to achieve the things that matter most, they are hard to measure.
Some of the things he had in mind were improvements in governance, politics and accountability, and the adoption of tolerance, justice, respect for human rights and other values. Meanwhile, easily measurable interventions like infrastructure and the delivery of reproductive health services were far easier to fund. By this he wasn’t undervaluing the more measurable changes (the ‘hardware’, if you like); he was simply pointing out that because of the role of ‘bean counters’ in judging what was good or not good enough, international aid was skewed towards the hardware and away from the ‘software’. This remains the case today.
I wrote about this in a blog post back in 2013, and also proposed what I suggested was ‘Natsios’s Second Law’: our ability to understand and describe societal problems in sophisticated detail is in inverse proportion to our ability to address them. The ability of people in the development sector to understand the characteristics of a peaceful, developmental or resilient society had hugely improved, compared with 15 years earlier, but their ability to help people embed those characteristics in their own societies had not kept pace. It’s one thing to recognise resilience or the lack thereof, it’s quite another to become resilient, especially in the face of the structural factors make societies fragile instead, and the softer, societal factors that contribute so much towards resilience.
I also said, just because one can’t ordain a better future, doesn’t mean one should stop trying to help make it happen, and I proposed four rules for programming, to take account of this disconnect between ambition and the capacity to achieve it. (And as it happens, I still agree with what I wrote then).
- Don’t promise too much.
- Given how hard it is to chart progress in the big picture, it makes sense to work at a smaller scale: with individuals, households, communities – and support their efforts to make a difference to the bigger picture they are part of.
- Rather than basing strategy on ‘solving problems’, it may be more realistic to focus on a vision of a better future, keep it in view, and aim to make progress towards it. The means to get there will no doubt be different from what we might have envisaged, but if we keep the end in sight, we can adjust and readjust as we go.
- Perhaps it was also time to come up with institutions and organisations more fit for the purpose at hand.
I went back to reread this blogpost recently, after a friend who is not involved in overseas aid asked me how I would invest my charitable donations, if I were a billionaire. My initial, ready response was to describe the charity I once dreamed of setting up. This would use minimal budgets to seek out and support leaders in developing countries with the combination of drive, values and courage to make a difference on the ‘software’ side. I shared the blogpost I had written about this (also in 2013) with my friend. But after she’d read it, she pointed out that my proposal was relatively cheap, costing only $3 million per year or an endowment of $60 million. Not enough for a billionaire to spend, surely?
So she asked the question again, in a slightly different way: in which single international development sector would I invest a significant sum of money annually, if I were a billionaire?
Given my own long-term commitment to softer aspects of development – dialogue, local accountability projects, and the like – I was surprised at the conclusion I came to – assuming the funding was my own – i.e. that I had skin in the game.
The answer was education – the very same answer I’d have given more than thirty years ago, before I started work in the aid sector; though the reasons are perhaps a little more thought-through today.
Formation: knowledge, empathy, critical thinking and ambition for change
If I had the means to do so, I’d invest heavily in the kinds of education that develop young people’s knowledge, empathy, critical thinking skills and ambition for change. In French, one of the words for education is ‘formation’, and I’ve always thought that appropriate in English, too. By forming young people’s capability to think critically and act accordingly, on the basis of knowledge and empathy, the investment would help build the software needed to overcome, dissolve or at least sidestep some of the structural constraints to resilience and progress.
This would require a massive investment, not least because the education systems and teaching methods in so many places seem almost designed to undermine critical thinking. It would need a continued and committed subsidy for at least a generation, and a major injection of external technical assistance. It would also be able to piggy back on technological innovation. But while it would draw on international knowledge and skills, it would also have to be homegrown, based on cultures and knowledge systems in the countries concerned.
There is no guarantee that enhancing the critical thinking skills, confidence and ambition of a generation of young women and men would be enough to turn the corner in making their societies resilient. But it would at least endow them with the language and knowledge they’d need, to decide what good progress looked like in their own context, and decide whether what was being achieved was transformational enough. And in so doing, it would relieve Andrew Natsios’s bean counters of the need to measure progress themselves. And thus clear the way for more initiatives designed to be truly transformational, whether or not they were easily measurable in reports to Washington, Brussels and New York.
The girl in the swimming pool
It's magical to watch a girl begin to drown,
suspended with her face towards the rain,
then lift and place her gently on the ground
and coax her lungs to believe and breathe again.
Your dad had raced the tide, and fought his way
through surf, on jagged granite, years before,
to reach and rescue you from panicked spray
and the pull of the sea, and swim you back to shore.
You fancy higher powers had bid him save
you, so you'd later rescue in her turn
this girl half-floating on her enchanting wave
who sank, and rose, and sank; a stricken bird –
but when you lean out from the parapet
above the shadowed gorge, where far below
those blue and sightless swollen dolls forget,
forget, forget, in time with the river, you know
one life saved means no more nor less – beside
whole families who cowered in stands of cane
and, hopeless, queued in quiet lines to die –
than one life saved: unlinked in any chain.
Published in the Kent & Sussex Folio, 2019
Poetry after Auschwitz
'Poetry is pointless – like kicking a stone’
- overheard at a poetry reading
At the start and the end of this long, straight road:
a silent child, a house in flames,
a leafless tree, an empty town
He kicks a stone to watch it leap
and skitter on the flattened clay,
then slow and stall and go to ground
Along the forest edge stand those
he's failed to save: he sings his song;
his unknown patrons hear no sound
and yet he feels their silence deep
beneath his feet, and sees beyond
the tree, the child, the house, the town
Published in the Kent & Sussex Folio, 2019
Sunday
I.
In shade is cold. I face the railway bank.
Each fresh wet blade of lawn is trimmed.
Birdsong, a distant plane and muffled train
augment the silence. Topmost limbs
of the tallest oaks and sycamores are lit.
Coffee drifts from the dew-damp table.
A robin hops and pokes the shadowed soil
beneath the feather-leaf maple.
I name my flowers: foxglove, poppy, rose…
Dew pools like mercury, on watertight
nasturtium leaves. In measureless time, I find
the perfect rhyme, and summer light
begins to peel the coverlet of day,
slips effortlessly down the bank towards me
brightening, and creeps across the grass
to touch my feet; abruptly warms me…
II.
… From Sunday’s topical TV,
vox populi intrudes in drifts
of sound, insisting lazily
on infiltrating all the gifts
of silence, time and space I’ve nursed.
Its current casually blows
the floating phrases into verse –
though scarcely quickening their prose.
‘… So why should I work hard to pay
for them to sit around all day?’
‘The vulnerable need our care –
I’m more than proud to pay my share.’
‘They take us for a bunch of fools:
‘if they live here, they follow our rules.’
‘Well I, for one, just don’t subscribe
to the kind of Britain you describe.’
While claiming depth, each voice defines
itself in shallow tones as pro
or con – as though to part from lines
already drawn would be to throw
away the comfort of deceit
and live in panicked fear – and swells
with self-reflection to repeat
ideas which paraphrase themselves…
III.
… afraid of synthesis, we stand around
the tree which grew within the forest while
we looked away, and each in different style
describes the contours of its bole and crown,
the spiny fruits in which its seeds are found,
its leaves and inch-long thorns… And thus profile
the traits we see, but make no common trial
of whether it will heal or harm our ground.
Though God, alarmed by Nimrod’s tower, to tame
us gave each tribe a language only He
and they could speak, His trick was not to name
a multiplicity of tongues, but the
illusion that within a single tongue,
by sharing words, we share a lexicon.
First published by Ink Sweat & Tears, December 2018
