0:00:01.208,0:00:03.601
Lately, a lot of chief executives

0:00:03.625,0:00:06.851
have promised to shift[br]their business model.

0:00:06.875,0:00:10.018
They pledge to serve all stakeholders,

0:00:10.042,0:00:12.184
not just shareholders.

0:00:12.208,0:00:14.601
Investment return, they say,

0:00:14.625,0:00:16.643
will no longer take precedence

0:00:16.667,0:00:19.268
over the health and welfare of employees,

0:00:19.292,0:00:20.601
suppliers,

0:00:20.625,0:00:22.351
even planet Earth.

0:00:22.375,0:00:24.268
Not just in a crisis,

0:00:24.292,0:00:26.434
but every day.

0:00:26.458,0:00:30.434
This is a change that business[br]absolutely needs to make,

0:00:30.458,0:00:32.833
but that does not mean[br]it is going to be easy.

0:00:34.000,0:00:36.101
It's like going from being a young couple

0:00:36.125,0:00:37.851
to having kids.

0:00:37.875,0:00:39.684
When you're trying to make decisions

0:00:39.708,0:00:42.268
with just one other person[br]in the relationship,

0:00:42.292,0:00:43.976
it's pretty straightforward.

0:00:44.000,0:00:46.059
Where should we have Sunday lunch?

0:00:46.083,0:00:47.792
What should we watch for the movie?

0:00:48.625,0:00:51.351
But when you add one child,

0:00:51.375,0:00:52.893
a second child,

0:00:52.917,0:00:54.726
new decision makers,

0:00:54.750,0:00:57.393
life gets complicated.

0:00:57.417,0:01:00.726
And each one has their own unique needs

0:01:00.750,0:01:03.018
and individual perspective.

0:01:03.042,0:01:07.684
We all know that you're not supposed[br]to have a favorite child,

0:01:07.708,0:01:11.500
and that being fair[br]doesn't always mean being equal.

0:01:12.750,0:01:15.559
It's one of the biggest[br]challenges in parenting,

0:01:15.583,0:01:17.375
and in stakeholder capitalism.

0:01:18.458,0:01:21.601
Employees need to earn a living wage.

0:01:21.625,0:01:25.809
How else can they be confident[br]that they can feed their families?

0:01:25.833,0:01:29.893
Pension fund investors[br]need to earn a positive return.

0:01:29.917,0:01:31.851
Only then can they be sure

0:01:31.875,0:01:34.976
that they are managing[br]the savings and retirement

0:01:35.000,0:01:37.018
of their investors responsibly.

0:01:37.042,0:01:40.684
Consumers want and deserve[br]products and services

0:01:40.708,0:01:43.750
that are both affordable and safe.

0:01:44.667,0:01:47.726
And we all want a society and planet

0:01:47.750,0:01:49.083
that lets us breathe.

0:01:50.333,0:01:54.684
I have spent my career[br]helping companies and their leaders

0:01:54.708,0:01:56.518
improve their performance,

0:01:56.542,0:01:58.875
particularly at times of transition.

0:02:00.208,0:02:02.476
We've all gone digital.

0:02:02.500,0:02:05.184
We've responded[br]to new health care regulations.

0:02:05.208,0:02:07.018
We've improved their productivity,

0:02:07.042,0:02:09.851
made them more diverse and inclusive.

0:02:09.875,0:02:11.393
It took us a while to learn

0:02:11.417,0:02:15.101
that you can't actually[br]make a company more digital

0:02:15.125,0:02:18.184
by appointing a chief digital officer,

0:02:18.208,0:02:20.601
or that a chief diversity officer

0:02:20.625,0:02:24.917
could not single-handedly[br]make a company's culture more inclusive.

0:02:25.792,0:02:31.309
So we already know that we cannot[br]just appoint a chief stakeholder officer

0:02:31.333,0:02:34.518
if we really want to serve[br]all stakeholders.

0:02:34.542,0:02:36.958
Instead, we need to reset.

0:02:37.958,0:02:41.226
If we really want to serve[br]stakeholder needs,

0:02:41.250,0:02:42.958
we need to get everyone involved.

0:02:43.917,0:02:45.809
There are no quick fixes,

0:02:45.833,0:02:48.351
but I do have a few ideas.

0:02:48.375,0:02:51.143
Let's start at the top: the boardroom.

0:02:51.167,0:02:54.976
This is where a company's strategy[br]is set and governed,

0:02:55.000,0:02:59.226
and if all stakeholder needs[br]aren't accounted for here,

0:02:59.250,0:03:01.250
really, nothing's changing.

0:03:02.592,0:03:06.268
By definition,[br]a board can stand in the way

0:03:06.292,0:03:08.750
of serving all stakeholders.

0:03:09.583,0:03:10.976
Why?

0:03:11.000,0:03:14.292
Because often, a board[br]is elected by shareholders.

0:03:15.125,0:03:17.268
It represents their interests.

0:03:17.292,0:03:19.833
It's there to act on their behalf.

0:03:21.208,0:03:23.292
That's not just a dictionary definition.

0:03:24.125,0:03:26.518
It's enshrined in law in the US,

0:03:26.542,0:03:28.226
and this can really limit

0:03:28.250,0:03:31.976
how much change a CEO or board can effect

0:03:32.000,0:03:35.934
if they want to serve the needs[br]of more stakeholders.

0:03:35.958,0:03:38.393
For years, if we're honest,

0:03:38.417,0:03:40.643
we've been ticking boxes:

0:03:40.667,0:03:43.583
ethnicity, age, gender.

0:03:44.417,0:03:47.518
We've been looking for people[br]who look different,

0:03:47.542,0:03:50.684
but boards still do the same thing.

0:03:50.708,0:03:53.893
They look after the interests[br]of shareholders.

0:03:53.917,0:03:55.768
We don't need tokens.

0:03:55.792,0:04:00.268
We need people who truly[br]understand the experience

0:04:00.292,0:04:04.143
and represent the diversity[br]of our stakeholders.

0:04:04.167,0:04:08.018
Corporate boards can learn a thing or two[br]from the nonprofit world.

0:04:08.042,0:04:11.018
I chair a charity, Teach First.

0:04:11.042,0:04:14.393
It's an educational charity[br]that produces outstanding teachers

0:04:14.417,0:04:15.893
and schools.

0:04:15.917,0:04:19.250
Our board includes a wide range of skills:

0:04:20.667,0:04:23.059
former civil servants,

0:04:23.083,0:04:26.643
activists, teachers, ambassadors,

0:04:26.667,0:04:28.101
technologists.

0:04:28.125,0:04:30.559
Some of them on paper have very little

0:04:30.583,0:04:34.143
that's an obvious fit[br]for an educational charity.

0:04:34.167,0:04:38.601
But they each have real experience[br]with our stakeholders.

0:04:38.625,0:04:39.917
Every board is different.

0:04:40.917,0:04:46.018
Imagine a world where corporate governance[br]was very different than today:

0:04:46.042,0:04:50.184
community leaders sitting[br]on the boards of their local bank;

0:04:50.208,0:04:54.393
moral philosophers[br]advising social media companies;

0:04:54.417,0:04:59.268
environmental activists[br]as directors of global energy companies.

0:04:59.292,0:05:01.851
CEOs keep making pledges.

0:05:01.875,0:05:04.476
They keep talking about social purpose,

0:05:04.500,0:05:06.726
but real change won't happen

0:05:06.750,0:05:09.268
until we change who governs

0:05:09.292,0:05:11.125
and for what purpose.

0:05:12.208,0:05:15.684
We have to change the laws[br]of incorporation that limit us,

0:05:15.708,0:05:18.125
and remember who we really serve.

0:05:18.750,0:05:22.268
Next, let's talk about the big E,

0:05:22.292,0:05:24.059
the environment.

0:05:24.083,0:05:28.643
Sustainability goals have been written[br]into annual reports all over the world.

0:05:28.667,0:05:30.351
The goals are very lofty,

0:05:30.375,0:05:32.250
and very, very long-term,

0:05:33.167,0:05:35.393
and none of them will be accomplished

0:05:35.417,0:05:38.268
if they don't have[br]real steps along the way.

0:05:38.292,0:05:39.684
It's like saying,

0:05:39.708,0:05:43.750
"I'm going to run a marathon,[br]or a 5k, sometime in the future."

0:05:44.558,0:05:48.559
No one is going to believe you[br]until they see you get off the couch,

0:05:48.583,0:05:49.934
start training,

0:05:49.958,0:05:52.792
putting in the miles every single day.

0:05:53.542,0:05:56.184
CEOs need the same thing.

0:05:56.208,0:06:00.393
They need concrete,[br]achievable, measurable goals,

0:06:00.417,0:06:03.583
and they need to share the data[br]and progress along the way.

0:06:04.958,0:06:08.809
Being green is good[br]for the bottom line in the long run,

0:06:08.833,0:06:10.601
but it requires investments,

0:06:10.625,0:06:12.417
and those have to be shared.

0:06:13.042,0:06:17.518
Brazil-based Natura is the world's[br]fourth largest cosmetics company.

0:06:17.542,0:06:20.018
They've got the usual[br]profit and loss statements

0:06:20.042,0:06:22.184
for the investors and the executive,

0:06:22.208,0:06:24.393
but it's their other two P and Ls

0:06:24.417,0:06:26.976
that make them a little bit special.

0:06:27.000,0:06:30.518
One measures how well[br]they do for the environment.

0:06:30.542,0:06:34.393
The other looks[br]at their impact on society.

0:06:34.417,0:06:36.059
They measure everything:

0:06:36.083,0:06:37.768
seeds planted,

0:06:37.792,0:06:39.643
jobs created,

0:06:39.667,0:06:41.976
rubbish thrown in the bin.

0:06:42.000,0:06:44.601
Shell, the Anglo-Dutch energy company,

0:06:44.625,0:06:46.143
is another example.

0:06:46.167,0:06:49.476
They figured out[br]what many of us already knew;

0:06:49.500,0:06:53.726
it's not good enough[br]just to look after your own emissions.

0:06:53.750,0:06:56.976
In fact, their emissions[br]accounted for about 15 percent

0:06:57.000,0:06:58.976
of their system emissions.

0:06:59.000,0:07:00.351
So they changed.

0:07:00.375,0:07:03.809
Working with activists and pension funds,

0:07:03.833,0:07:06.184
they set three-year rolling goals

0:07:06.208,0:07:09.042
with progress markers year by year.

0:07:09.750,0:07:14.184
By 2050, they hope to reduce[br]their net carbon footprint

0:07:14.208,0:07:15.726
by almost two thirds.

0:07:15.750,0:07:17.083
That is a major reduction.

0:07:17.917,0:07:21.351
Initially, these targets[br]are linked to the bonuses

0:07:21.375,0:07:23.833
of their top 150 decision makers,

0:07:25.250,0:07:30.851
and over time the pay[br]of nearly 17,000 employees

0:07:30.875,0:07:34.708
could be linked in part[br]to how they treat Mother Earth.

0:07:36.542,0:07:38.976
It's still early days for this industry

0:07:39.000,0:07:40.976
and many of these initiatives.

0:07:41.000,0:07:44.768
Success will depend[br]on how well we stay the course

0:07:44.792,0:07:47.226
when the investments[br]become more significant,

0:07:47.250,0:07:49.393
when stakeholders disagree,

0:07:49.417,0:07:52.083
or when competitors start catching up.

0:07:53.542,0:07:55.893
Let's spend a little bit of time[br]on a stakeholder

0:07:55.917,0:07:57.601
who is sometimes hidden,

0:07:57.625,0:07:59.893
and those are our suppliers.

0:07:59.917,0:08:04.018
They are the connective tissue[br]underneath many companies:

0:08:04.042,0:08:06.309
Uber drivers, widget makers,

0:08:06.333,0:08:07.667
service employees.

0:08:08.583,0:08:12.309
They're like an invisible life force[br]that power our economy,

0:08:12.333,0:08:14.643
and one thing we know for sure

0:08:14.667,0:08:17.268
is that the success[br]or failure of your business

0:08:17.292,0:08:19.851
depends on your suppliers[br]and partnerships.

0:08:19.875,0:08:22.268
It's a painful lesson that many hospitals,

0:08:22.292,0:08:24.101
including in the US and UK,

0:08:24.125,0:08:25.667
will take from COVID-19.

0:08:26.500,0:08:30.059
In pandemics, robust, agile supply chains

0:08:30.083,0:08:32.893
deliver the masks, ventilators,

0:08:32.917,0:08:35.476
testing kits and vaccines

0:08:35.500,0:08:37.059
that we all need.

0:08:37.083,0:08:38.851
It saves lives,

0:08:38.875,0:08:41.750
and it helps to reopen our economy.

0:08:42.333,0:08:45.851
Suppliers don't just matter[br]when we're in a crisis.

0:08:45.875,0:08:48.559
If you really want to scale[br]your positive impact,

0:08:48.583,0:08:51.476
you have to look beyond[br]the walls of your company.

0:08:51.500,0:08:52.809
BHP Billiton,

0:08:52.833,0:08:54.559
the Australian mining company,

0:08:54.583,0:08:56.768
did just that when it made a commitment

0:08:56.792,0:09:01.143
to end gender imbalance[br]in its workforce by 2025.

0:09:01.167,0:09:06.851
It decided to encourage, or kind of nudge,[br]its suppliers into also participating

0:09:06.875,0:09:09.125
by providing training and technology.

0:09:09.875,0:09:12.059
In Chile, Kal Tire

0:09:12.083,0:09:14.643
helps to change the enormous tires

0:09:14.667,0:09:17.083
on BHP's trucks.

0:09:17.125,0:09:20.559
It is a very physical,[br]demanding, dangerous job,

0:09:20.583,0:09:21.976
and to be honest with you,

0:09:22.000,0:09:24.750
not that many women[br]were even interested in the job.

0:09:25.583,0:09:27.726
The two companies change that.

0:09:27.750,0:09:30.059
First, they developed a mechanical arm.

0:09:30.083,0:09:34.208
And then they proactively encouraged[br]women to apply for the job.

0:09:35.375,0:09:38.833
Now, Kal Tire is just one company.

0:09:39.792,0:09:41.309
It's an example.

0:09:41.333,0:09:45.018
BHP Billiton has thousands of suppliers,

0:09:45.042,0:09:48.351
and if you really want to engage[br]your supplier network,

0:09:48.375,0:09:51.333
you can use incentives[br]to get them engaged.

0:09:52.125,0:09:55.601
Today, Kal Tire illustrates

0:09:55.625,0:09:58.018
how well that can be done,

0:09:58.042,0:10:00.851
and across BHP's supplier networks,

0:10:00.875,0:10:04.559
women are now 15 percent[br]more likely to get the job

0:10:04.583,0:10:06.792
than they were even a year ago today.

0:10:08.083,0:10:10.042
Suppliers and partnerships

0:10:11.000,0:10:13.393
will make or break your business.

0:10:13.417,0:10:16.476
In good times, they're the key[br]to your success,

0:10:16.500,0:10:18.518
scaling it worldwide,

0:10:18.542,0:10:21.833
and in bad times,[br]they're the key to your survival.

0:10:22.792,0:10:25.351
If suppliers are a hidden stakeholder,

0:10:25.375,0:10:27.792
then customers are probably[br]the most visible.

0:10:29.333,0:10:31.809
But when shareholders rule supreme,

0:10:31.833,0:10:34.018
some companies may have an incentive

0:10:34.042,0:10:37.518
to focus on customers' short-term desires

0:10:37.542,0:10:39.458
rather than their long-term needs.

0:10:40.500,0:10:44.476
Consumption of processed food[br]has taken off around the world,

0:10:44.500,0:10:45.768
and with it,

0:10:45.792,0:10:47.625
global obesity rates have increased.

0:10:49.292,0:10:56.143
That's why the Access to Nutrition[br]Foundation now tracks the salt, fat, sugar

0:10:56.167,0:10:59.643
that global food and drink companies[br]include in their products.

0:10:59.667,0:11:02.458
They also track whether[br]they market them responsibly.

0:11:03.458,0:11:06.059
I think it's like measuring[br]the calories consumed

0:11:06.083,0:11:08.208
for every dollar these companies earn.

0:11:09.250,0:11:11.601
Companies that have been[br]paying attention to this

0:11:11.625,0:11:13.351
have begun to make changes,

0:11:13.375,0:11:16.143
including ingredients and formulations.

0:11:16.167,0:11:19.809
Nestle reduced the sugar[br]in its breakfast cereal.

0:11:19.833,0:11:24.726
Unilever reduced the volume[br]and calories in its ice cream.

0:11:24.750,0:11:27.559
Now, I'm not sure that's a good idea,

0:11:27.583,0:11:30.917
but I can tell you it takes creativity[br]and a little bit of investment.

0:11:32.500,0:11:37.434
We know that consumer needs[br]change over time,

0:11:37.458,0:11:40.518
but companies that make[br]these investments proactively

0:11:40.542,0:11:45.018
can be better positioned[br]in the long term, even for shareholders.

0:11:45.042,0:11:48.268
As we all have tried[br]to improve our eating habits,

0:11:48.292,0:11:50.018
tried to eat less ice cream,

0:11:50.042,0:11:53.309
these companies were well-positioned[br]to capture that market.

0:11:53.333,0:11:55.726
They were ahead, more competitive,

0:11:55.750,0:11:58.601
and able to be more relevant.

0:11:58.625,0:12:00.518
It also aligns with governments,

0:12:00.542,0:12:03.101
many of whom have looked[br]at nutrition labeling,

0:12:03.125,0:12:06.143
exercise programs, or even sugar taxes

0:12:06.167,0:12:07.833
to encourage healthier eating.

0:12:08.917,0:12:11.708
If customers are stakeholders,

0:12:13.417,0:12:16.309
then they should not be harmed

0:12:16.333,0:12:18.768
by the goods, services

0:12:18.792,0:12:21.059
and products we produce.

0:12:21.083,0:12:22.500
It's that simple.

0:12:23.542,0:12:27.184
For stakeholder capitalism to really work,

0:12:27.208,0:12:30.667
we all need to see ourselves[br]as chief executive officers.

0:12:31.583,0:12:33.643
If we really want change,

0:12:33.667,0:12:35.167
we have to be willing

0:12:36.625,0:12:38.518
to bear the backlash.

0:12:38.542,0:12:40.458
We're not always going to get it right,

0:12:40.875,0:12:42.125
and that's OK.

0:12:42.750,0:12:46.417
Real, substantive change takes time.

0:12:47.292,0:12:49.625
The right answer keeps changing.

0:12:50.917,0:12:53.500
But we have to try to do better.

0:12:54.625,0:12:57.018
There's a quote that I love[br]that really captures

0:12:57.042,0:12:58.375
the essence of this moment.

0:12:59.208,0:13:02.083
It's by the American poet[br]Gwendolyn Brooks.

0:13:03.167,0:13:05.976
"We are each other's harvest.

0:13:06.000,0:13:08.351
We are each other's business.

0:13:08.375,0:13:11.792
We are each other's magnitude and bond."

0:13:13.417,0:13:18.018
Business is a set[br]of ever-changing human bonds

0:13:18.042,0:13:23.059
through which we plant and grow and reap.

0:13:23.083,0:13:26.184
Our harvest is our lives and livelihoods,

0:13:26.208,0:13:29.917
our civil liberties,[br]our skills and communities.

0:13:30.458,0:13:32.792
Business is what we make of it.

0:13:33.875,0:13:35.851
Let's hit reset

0:13:35.875,0:13:37.708
and serve all stakeholders.

0:13:38.542,0:13:40.417
Thank you.