A company’s role in society - the management challenge of our times
A company’s role in society - the management challenge of our times
Today’s business landscape demands that organisations and companies take a position on the big issues of the day, being able to clearly define their role and purpose in society. Taking for instance the growing "anti-ESG movement”, companies do best in addressing this issue head-on and acting ethically responsible, instead of retreating to the sidelines. Taking a public stance and being able to clearly define the value you add, has become a top leadership priority closely linked to the long-term value creation of the company. The right leadership is key to help companies withstand these challenges.
The anti-ESG movement
In recent times a growing number of companies have come under attack by right-leaning politicians and pundits for their decisions on issues like DEI, LGBTQ+ rights, abortion and ESG investing. The movement questions the efficacy of ESG metrics, expresses concerns about the subjectivity and potential for greenwashing. Whilst the movement have varying reasons for their scepticism towards ESG principles they often argue that either market forces alone are sufficient to drive responsible business practices, or they question the feasibility of accurately measuring and implementing ESG considerations. Claims are made that companies basing decisions on ESG principles are part of a “woke” or “ESG” progressive agenda.
One of the great management challenges of our time
Having prepared and figured out a response to accusations of woke-ness has become a top leadership priority. Navigating a company’s role and purpose in society is one of the great management challenges of our time.
As the world around us is in turmoil, we look to our leaders for help to make sense of it. We want for them to ensure more clarity around direction, and for a stronger sense of purpose that translates into one’s professional occupation giving meaning to our work. These uncertain times calls for leaders with the ability to engage, bring people together and help make them move in one direction, together. In the face of threats such as from the anti-ESG movement these leaders will be better positioned to help build collective courage within their organisations, to address and speak up for their company’s profits, business model and stakeholders.
“It is not a far-fetched notion to imagine that every large corporation today would do well in appointing a Head of Foreign Affairs to help navigate the best interests of their company in our geopolitical world. Most companies today need to develop more of a strategy around corporate political responsibility to leave themselves less vulnerable to attack. ”
The growing concern with the anti-ESG movement is that it will potentially come to undermine sustainable practices, cause the neglect of social and ethical considerations and result in an overemphasis on short-term financial gains rather than long-term value. There is also a risk of it leading to ignoring stakeholder expectations, actually increasing greenwashing practices and reducing the drive for innovation, for instance in sustainable technologies.
It's easy to see why companies now carefully consider what battles to choose and understandably many would rather move towards a muddled middle-ground and retreat to the sidelines, choosing to stay quiet about their ESG efforts. However, by being silenced, companies miss the opportunity to gather allies and build collective courage. Present-day circumstances serve as a stark reminder that some battles and some rights are worth fighting for.
Wouldn’t you rather work for, or lead, a brave company?
By taking a public stance you tell your stakeholders what you value, making it easier for them to understand your position. You gain valuable buy-in and can more easily build on collective courage to further your case. Companies gain nothing from retreating to the sidelines. Instead, it can be strategically beneficial to face the threat head-on as it can enhance reputation, attract responsible investors, mitigate risks, differentiate the brand positively, and contribute to long-term value creation. To navigate these challenges organisations can consider some of the below strategies:
Engage stakeholders through transparency
By implementing clear reporting on ESG practices and disclosing the metrics and KPIs of your work, you demonstrate commitment and provide context for your ESG performance. Besides mitigating any accusations of greenwashing, an honest dialogue with your investors, customers, employees and society around you fosters trust.Integrating ESG into your business strategy
Ensure authenticity in your ESG considerations, by making ESG part of your long-term strategy and aligning ESG goals with overall business objectives. Make your case as a socially responsible business, by for instance securing sustainable supply chain management, adopting environmentally friendly technologies and promoting sustainable work initiatives.Educate and demonstrate positive social impact
Raise awareness about the importance of ESG practices and train your employees in compliance to help foster a culture of responsibility and ethical conduct. Align your social initiatives and philanthropy with ESG values, contributing to your community’s development and welfare. Showcasing corporate citizenship will help enhance your reputation.Collaborate with industry peers
Contribute to best practices for ESG Integration and participate in industry alliances and initiatives.Innovate for positive impact
Explore opportunities to invest in research and development of sustainable and innovative solutions. Identify the opportunities your organisation can have for positive social and environmental impact.
Keep making good business and build on good leadership practices
“ESG investing is about risk management and satisfying customers, not guaranteeing results. ”
Investors no longer look only to profit maximization, instead recognizing the growing demand for Environmental, Social, and Governance (ESG) considerations. With EU’s introduction of the Corporate Sustainability Reporting Directive (CSRD), investors and other stakeholders will have more information to assess the broader impact of companies on both society and the environment. ESG investing is about risk management and satisfying customers, not guaranteeing results.
When it comes to the anti-ESG movement, backing away from the fight and retreating to the middle ground, risks alienating a generation of talent. Your business decisions may very well anger some of your stakeholders, but a most-likely larger group, especially younger customers, and employees, will demand that you to stand up for your ESG commitments – even if it’s uncomfortable. Customers today expect company CEOs to take a public stance on issues such as climate change, discrimination, and the wealth gap.
Building good business today, requires that your dare to stand up and show your employees and other stakeholders what is unacceptable for your business, for your values, and for the society you wish to see.
We face complex challenges ahead and we will only be able to address these issues through coordinated efforts and diverse perspectives that collective courage can bring. We need social cohesion and collective courage to help foster solidarity, shared responsibility and mutual support, contributing to the rebuilding of trust and the strengthening of our communities.
To build businesses that can withstand these challenges and thrive, we need leaders with a unique set of traits and a forward-thinking mindset – at Alumni we call these leaders sustainable leaders.
About Alumni
Alumni is a global consultancy firm providing leadership services. We work as trusted advisors with a range of progressive and established companies in finding and developing the highly skilled competence they need to navigate the intricacies of a rapidly evolving world. The pressing issues of today, such as climate change, global health crises, geopolitical instability and technological disruptions, necessitate leaders who can transcend short-term gains and envision solutions that resonate across generations. Based on insights from decades of interactions with business leaders and knowledge from leadership theories and research, we claim that building durable businesses require leaders that on top of their experience and expertise, have certain traits. We have developed processes to help you identify these leaders and tools to assess and develop them. Read more about our model for sustainable leadership.
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