The CBI’s finding that barely 50% of British citizens believe that business makes a positive contribution to society (despite employing 25 million people in the UK and paying £172bn in tax last year) is sobering. In itself it is enough for companies to think seriously about changing how they do business.
On the surface most business leaders would nod sagely and say ‘quite so, something must be done’ but you suspect that a number inside are also probably thinking – what problem? We survived the banking crisis, energy costs are plummeting, and we comply with the law and donate to charity. Individual scandals will always come and go, such as ‘Horsegate’ and Rana Plaza, but no business has gone bust because of them.
And it’s true that in the 15 years I’ve been doing this job at M&S I’ve seen significant change in how business conducts itself. But I also believe business is in that most dangerous position, lulled by having taken some action into believing that further more drastic action on social and environmental issues is unnecessary.
Why then, if we’re better than we were, do I believe we have to be fundamentally different in how we conduct business in the future? Put simply, the social and environmental issues we will have to deal with in the future are more substantial and complex than the ones we’ve faced to date and are likely to have a greater impact on business success.
For example, climate change is becoming a growing, disruptive and costly reality as extreme weather events take hold. Supply chains, predictable growing and selling seasons, insurance costs are all being jeopardized. Similarly, the lack of a coherent, long-term global policy framework for carbon may please some companies today but as the ‘heat’ is turned up over the next decade the chance of sudden Government intervention increases.
The closely related issue of water availability (both too little and too much at any one point in time) are also preying on business leaders’ minds. From California to Sao Paulo, Adelaide to Uttar Pradesh we are reminded of the fragility of modern life and its dependence on the ready availability of abundant, clean, cheap water. Other resources (soil, forests, fisheries etc.) are under pressure too as the global population and consumption grows.
And it’s not just environmental issues — social issues are on the rise too. Supply chain standards, tax, privacy, wages, youth unemployment, zero hour contracts, wellbeing, sustainable communities all contribute to the low levels of trust highlighted by the CBI. It’s a long, fragmented list of issues that has lacked a ‘lightening rod’ to galvanise change.
But 2015 will see the social debate for business simplified, and thus given more prominence, centred on the word ‘inequality’. A business that cannot show it puts more back into society than it takes out will struggle to remain relevant and successful in this new environment.
So let’s not be seduced into thinking that a general improvement in corporate behaviour over the last decade is enough to maintain, let alone improve, the compact of business with the society it serves. Individual businesses like Unilever, Jaguar Land Rover, Johnson Matthey, National Grid and Marks and Spencer are working hard to redefine responsible business. But we need a bigger conversation too, one that asks what type of economy we want in the future and which businesses are best placed to deliver that change.
Capitalism has and continues to deliver huge benefits to society, but to continue to prosper in the future, business must also accept the challenge of responding dynamically to growing social and environmental pressures.
Mike is Director of Sustainable Business at Marks & Spencer. He was part of the small team that in 2007 developed and delivered the company’s groundbreaking Plan A, a 100 point, 5 year plan to address a wide range of environmental and social issues.
In May 2011 Mike was named the Guardian’s inaugural Sustainable Business Innovator of the Year. He is Co-Chair of the Consumer Goods Forum (CGF) Sustainability Steering Group, Chair of the World Environment Center, a Visiting Fellow at the Smith Centre for Enterprise and the Environment at Oxford University, a Senior Associate at the Cambridge Programme for Sustainable Leadership and sits on BiTC’s Environment Leadership Team. Prior to joining Marks & Spencer in 2000, he worked as an environment manager in the engineering sector and as an environmental consultant. He is a chemistry graduate from Sheffield University. You can follow Mike @planamikebarry.