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Lately, a lot of chief executives

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have promised to shift
their business model.

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They pledge to serve all stakeholders,

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not just shareholders.

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Investment return, they say,

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will no longer take precedence

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over the health and welfare of employees,

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suppliers,

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even planet Earth.

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Not just in a crisis,

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but every day.

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This is a change that business
absolutely needs to make,

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but that does not mean
it is going to be easy.

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It's like going from being a young couple

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to having kids.

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When you're trying to make decisions

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with just one other person
in the relationship,

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it's pretty straightforward.

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Where should we have Sunday lunch?

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What should we watch for the movie?

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But when you add one child,

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a second child,

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new decision makers,

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life gets complicated.

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And each one has their own unique needs

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and individual perspective.

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We all know that you're not supposed
to have a favorite child,

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and that being fair
doesn't always mean being equal.

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It's one of the biggest
challenges in parenting,

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and in stakeholder capitalism.

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Employees need to earn a living wage.

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How else can they be confident
that they can feed their families?

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Pension fund investors
need to earn a positive return.

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Only then can they be sure

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that they are managing
the savings and retirement

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of their investors responsibly.

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Consumers want and deserve
products and services

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that are both affordable and safe.

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And we all want a society and planet

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that lets us breathe.

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I have spent my career
helping companies and their leaders

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improve their performance,

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particularly at times of transition.

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We've all gone digital.

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We've responded
to new health care regulations.

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We've improved their productivity,

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made them more diverse and inclusive.

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It took us a while to learn

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that you can't actually
make a company more digital

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by appointing a chief digital officer,

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or that a chief diversity officer

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could not single-handedly
make a company's culture more inclusive.

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So we already know that we cannot
just appoint a chief stakeholder officer

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if we really want to serve
all stakeholders.

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Instead, we need to reset.

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If we really want to serve
stakeholder needs,

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we need to get everyone involved.

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There are no quick fixes,

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but I do have a few ideas.

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Let's start at the top: the boardroom.

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This is where a company's strategy
is set and governed,

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and if all stakeholder needs
aren't accounted for here,

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really, nothing's changing.

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By definition,
a board can stand in the way

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of serving all stakeholders.

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Why?

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Because often, a board
is elected by shareholders.

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It represents their interests.

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It's there to act on their behalf.

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That's not just a dictionary definition.

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It's enshrined in law in the US,

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and this can really limit

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how much change a CEO or board can effect

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if they want to serve the needs
of more stakeholders.

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For years, if we're honest,

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we've been ticking boxes:

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ethnicity, age, gender.

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We've been looking for people
who look different,

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but boards still do the same thing.

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They look after the interests
of shareholders.

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We don't need tokens.

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We need people who truly
understand the experience

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and represent the diversity
of our stakeholders.

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Corporate boards can learn a thing or two
from the nonprofit world.

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I chair a charity, Teach First.

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It's an educational charity
that produces outstanding teachers

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and schools.

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Our board includes a wide range of skills:

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former civil servants,

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activists, teachers, ambassadors,

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technologists.

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Some of them on paper have very little

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that's an obvious fit
for an educational charity.

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But they each have real experience
with our stakeholders.

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Every board is different.

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Imagine a world where corporate governance
was very different than today:

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community leaders sitting
on the boards of their local bank;

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moral philosophers
advising social media companies;

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environmental activists
as directors of global energy companies.

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CEOs keep making pledges.

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They keep talking about social purpose,

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but real change won't happen

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until we change who governs

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and for what purpose.

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We have to change the laws
of incorporation that limit us,

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and remember who we really serve.

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Next, let's talk about the big E,

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the environment.

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Sustainability goals have been written
into annual reports all over the world.

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The goals are very lofty,

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and very, very long-term,

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and none of them will be accomplished

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if they don't have
real steps along the way.

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It's like saying,

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"I'm going to run a marathon,
or a 5k, sometime in the future."

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No one is going to believe you
until they see you get off the couch,

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start training,

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putting in the miles every single day.

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CEOs need the same thing.

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They need concrete,
achievable, measurable goals,

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and they need to share the data
and progress along the way.

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Being green is good
for the bottom line in the long run,

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but it requires investments,

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and those have to be shared.

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Brazil-based Natura is the world's
fourth largest cosmetics company.

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They've got the usual
profit and loss statements

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for the investors and the executive,

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but it's their other two P and Ls

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that make them a little bit special.

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One measures how well
they do for the environment.

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The other looks
at their impact on society.

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They measure everything:

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seeds planted,

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jobs created,

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rubbish thrown in the bin.

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Shell, the Anglo-Dutch energy company,

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is another example.

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They figured out
what many of us already knew;

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it's not good enough
just to look after your own emissions.

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In fact, their emissions
accounted for about 15 percent

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of their system emissions.

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So they changed.

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Working with activists and pension funds,

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they set three-year rolling goals

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with progress markers year by year.

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By 2050, they hope to reduce
their net carbon footprint

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by almost two thirds.

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That is a major reduction.

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Initially, these targets
are linked to the bonuses

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of their top 150 decision makers,

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and over time the pay
of nearly 17,000 employees

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could be linked in part
to how they treat Mother Earth.

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It's still early days for this industry

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and many of these initiatives.

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Success will depend
on how well we stay the course

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when the investments
become more significant,

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when stakeholders disagree,

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or when competitors start catching up.

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Let's spend a little bit of time
on a stakeholder

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who is sometimes hidden,

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and those are our suppliers.

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They are the connective tissue
underneath many companies:

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Uber drivers, widget makers,

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service employees.

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They're like an invisible life force
that power our economy,

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and one thing we know for sure

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is that the success
or failure of your business

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depends on your suppliers
and partnerships.

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It's a painful lesson that many hospitals,

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including in the US and UK,

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will take from COVID-19.

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In pandemics, robust, agile supply chains

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deliver the masks, ventilators,

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testing kits and vaccines

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that we all need.

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It saves lives,

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and it helps to reopen our economy.

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Suppliers don't just matter
when we're in a crisis.

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If you really want to scale
your positive impact,

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you have to look beyond
the walls of your company.

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BHP Billiton,

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the Australian mining company,

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did just that when it made a commitment

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to end gender imbalance
in its workforce by 2025.

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It decided to encourage, or kind of nudge,
its suppliers into also participating

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by providing training and technology.

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In Chile, Kal Tire

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helps to change the enormous tires

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on BHP's trucks.

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It is a very physical,
demanding, dangerous job,

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and to be honest with you,

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not that many women
were even interested in the job.

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The two companies change that.

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First, they developed a mechanical arm.

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And then they proactively encouraged
women to apply for the job.

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Now, Kal Tire is just one company.

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It's an example.

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BHP Billiton has thousands of suppliers,

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and if you really want to engage
your supplier network,

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you can use incentives
to get them engaged.

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Today, Kal Tire illustrates

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how well that can be done,

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and across BHP's supplier networks,

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women are now 15 percent
more likely to get the job

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than they were even a year ago today.

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Suppliers and partnerships

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will make or break your business.

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In good times, they're the key
to your success,

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scaling it worldwide,

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and in bad times,
they're the key to your survival.

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If suppliers are a hidden stakeholder,

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then customers are probably
the most visible.

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But when shareholders rule supreme,

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some companies may have an incentive

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to focus on customers' short-term desires

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rather than their long-term needs.

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Consumption of processed food
has taken off around the world,

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and with it,

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global obesity rates have increased.

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That's why the Access to Nutrition
Foundation now tracks the salt, fat, sugar

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that global food and drink companies
include in their products.

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They also track whether
they market them responsibly.

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I think it's like measuring
the calories consumed

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for every dollar these companies earn.

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Companies that have been
paying attention to this

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have begun to make changes,

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including ingredients and formulations.

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Nestle reduced the sugar
in its breakfast cereal.

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Unilever reduced the volume
and calories in its ice cream.

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Now, I'm not sure that's a good idea,

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but I can tell you it takes creativity
and a little bit of investment.

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We know that consumer needs
change over time,

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but companies that make
these investments proactively

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can be better positioned
in the long term, even for shareholders.

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As we all have tried
to improve our eating habits,

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tried to eat less ice cream,

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these companies were well-positioned
to capture that market.

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They were ahead, more competitive,

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and able to be more relevant.

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It also aligns with governments,

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many of whom have looked
at nutrition labeling,

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exercise programs, or even sugar taxes

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to encourage healthier eating.

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If customers are stakeholders,

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then they should not be harmed

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by the goods, services

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and products we produce.

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It's that simple.

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For stakeholder capitalism to really work,

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we all need to see ourselves
as chief executive officers.

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If we really want change,

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we have to be willing

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to bear the backlash.

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We're not always going to get it right,

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and that's OK.

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Real, substantive change takes time.

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The right answer keeps changing.

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But we have to try to do better.

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There's a quote that I love
that really captures

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the essence of this moment.

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It's by the American poet
Gwendolyn Brooks.

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"We are each other's harvest.

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We are each other's business.

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We are each other's magnitude and bond."

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Business is a set
of ever-changing human bonds

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through which we plant and grow and reap.

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Our harvest is our lives and livelihoods,

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our civil liberties,
our skills and communities.

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Business is what we make of it.

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Let's hit reset

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and serve all stakeholders.

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Thank you.