How businesses can serve everyone, not just shareholders
-
0:01 - 0:04Lately, a lot of chief executives
-
0:04 - 0:07have promised to shift
their business model. -
0:07 - 0:10They pledge to serve all stakeholders,
-
0:10 - 0:12not just shareholders.
-
0:12 - 0:15Investment return, they say,
-
0:15 - 0:17will no longer take precedence
-
0:17 - 0:19over the health and welfare of employees,
-
0:19 - 0:21suppliers,
-
0:21 - 0:22even planet Earth.
-
0:22 - 0:24Not just in a crisis,
-
0:24 - 0:26but every day.
-
0:26 - 0:30This is a change that business
absolutely needs to make, -
0:30 - 0:33but that does not mean
it is going to be easy. -
0:34 - 0:36It's like going from being a young couple
-
0:36 - 0:38to having kids.
-
0:38 - 0:40When you're trying to make decisions
-
0:40 - 0:42with just one other person
in the relationship, -
0:42 - 0:44it's pretty straightforward.
-
0:44 - 0:46Where should we have Sunday lunch?
-
0:46 - 0:48What should we watch for the movie?
-
0:49 - 0:51But when you add one child,
-
0:51 - 0:53a second child,
-
0:53 - 0:55new decision makers,
-
0:55 - 0:57life gets complicated.
-
0:57 - 1:01And each one has their own unique needs
-
1:01 - 1:03and individual perspective.
-
1:03 - 1:08We all know that you're not supposed
to have a favorite child, -
1:08 - 1:12and that being fair
doesn't always mean being equal. -
1:13 - 1:16It's one of the biggest
challenges in parenting, -
1:16 - 1:17and in stakeholder capitalism.
-
1:18 - 1:22Employees need to earn a living wage.
-
1:22 - 1:26How else can they be confident
that they can feed their families? -
1:26 - 1:30Pension fund investors
need to earn a positive return. -
1:30 - 1:32Only then can they be sure
-
1:32 - 1:35that they are managing
the savings and retirement -
1:35 - 1:37of their investors responsibly.
-
1:37 - 1:41Consumers want and deserve
products and services -
1:41 - 1:44that are both affordable and safe.
-
1:45 - 1:48And we all want a society and planet
-
1:48 - 1:49that lets us breathe.
-
1:50 - 1:55I have spent my career
helping companies and their leaders -
1:55 - 1:57improve their performance,
-
1:57 - 1:59particularly at times of transition.
-
2:00 - 2:02We've all gone digital.
-
2:02 - 2:05We've responded
to new health care regulations. -
2:05 - 2:07We've improved their productivity,
-
2:07 - 2:10made them more diverse and inclusive.
-
2:10 - 2:11It took us a while to learn
-
2:11 - 2:15that you can't actually
make a company more digital -
2:15 - 2:18by appointing a chief digital officer,
-
2:18 - 2:21or that a chief diversity officer
-
2:21 - 2:25could not single-handedly
make a company's culture more inclusive. -
2:26 - 2:31So we already know that we cannot
just appoint a chief stakeholder officer -
2:31 - 2:35if we really want to serve
all stakeholders. -
2:35 - 2:37Instead, we need to reset.
-
2:38 - 2:41If we really want to serve
stakeholder needs, -
2:41 - 2:43we need to get everyone involved.
-
2:44 - 2:46There are no quick fixes,
-
2:46 - 2:48but I do have a few ideas.
-
2:48 - 2:51Let's start at the top: the boardroom.
-
2:51 - 2:55This is where a company's strategy
is set and governed, -
2:55 - 2:59and if all stakeholder needs
aren't accounted for here, -
2:59 - 3:01really, nothing's changing.
-
3:03 - 3:06By definition,
a board can stand in the way -
3:06 - 3:09of serving all stakeholders.
-
3:10 - 3:11Why?
-
3:11 - 3:14Because often, a board
is elected by shareholders. -
3:15 - 3:17It represents their interests.
-
3:17 - 3:20It's there to act on their behalf.
-
3:21 - 3:23That's not just a dictionary definition.
-
3:24 - 3:27It's enshrined in law in the US,
-
3:27 - 3:28and this can really limit
-
3:28 - 3:32how much change a CEO or board can effect
-
3:32 - 3:36if they want to serve the needs
of more stakeholders. -
3:36 - 3:38For years, if we're honest,
-
3:38 - 3:41we've been ticking boxes:
-
3:41 - 3:44ethnicity, age, gender.
-
3:44 - 3:48We've been looking for people
who look different, -
3:48 - 3:51but boards still do the same thing.
-
3:51 - 3:54They look after the interests
of shareholders. -
3:54 - 3:56We don't need tokens.
-
3:56 - 4:00We need people who truly
understand the experience -
4:00 - 4:04and represent the diversity
of our stakeholders. -
4:04 - 4:08Corporate boards can learn a thing or two
from the nonprofit world. -
4:08 - 4:11I chair a charity, Teach First.
-
4:11 - 4:14It's an educational charity
that produces outstanding teachers -
4:14 - 4:16and schools.
-
4:16 - 4:19Our board includes a wide range of skills:
-
4:21 - 4:23former civil servants,
-
4:23 - 4:27activists, teachers, ambassadors,
-
4:27 - 4:28technologists.
-
4:28 - 4:31Some of them on paper have very little
-
4:31 - 4:34that's an obvious fit
for an educational charity. -
4:34 - 4:39But they each have real experience
with our stakeholders. -
4:39 - 4:40Every board is different.
-
4:41 - 4:46Imagine a world where corporate governance
was very different than today: -
4:46 - 4:50community leaders sitting
on the boards of their local bank; -
4:50 - 4:54moral philosophers
advising social media companies; -
4:54 - 4:59environmental activists
as directors of global energy companies. -
4:59 - 5:02CEOs keep making pledges.
-
5:02 - 5:04They keep talking about social purpose,
-
5:04 - 5:07but real change won't happen
-
5:07 - 5:09until we change who governs
-
5:09 - 5:11and for what purpose.
-
5:12 - 5:16We have to change the laws
of incorporation that limit us, -
5:16 - 5:18and remember who we really serve.
-
5:19 - 5:22Next, let's talk about the big E,
-
5:22 - 5:24the environment.
-
5:24 - 5:29Sustainability goals have been written
into annual reports all over the world. -
5:29 - 5:30The goals are very lofty,
-
5:30 - 5:32and very, very long-term,
-
5:33 - 5:35and none of them will be accomplished
-
5:35 - 5:38if they don't have
real steps along the way. -
5:38 - 5:40It's like saying,
-
5:40 - 5:44"I'm going to run a marathon,
or a 5k, sometime in the future." -
5:45 - 5:49No one is going to believe you
until they see you get off the couch, -
5:49 - 5:50start training,
-
5:50 - 5:53putting in the miles every single day.
-
5:54 - 5:56CEOs need the same thing.
-
5:56 - 6:00They need concrete,
achievable, measurable goals, -
6:00 - 6:04and they need to share the data
and progress along the way. -
6:05 - 6:09Being green is good
for the bottom line in the long run, -
6:09 - 6:11but it requires investments,
-
6:11 - 6:12and those have to be shared.
-
6:13 - 6:18Brazil-based Natura is the world's
fourth largest cosmetics company. -
6:18 - 6:20They've got the usual
profit and loss statements -
6:20 - 6:22for the investors and the executive,
-
6:22 - 6:24but it's their other two P and Ls
-
6:24 - 6:27that make them a little bit special.
-
6:27 - 6:31One measures how well
they do for the environment. -
6:31 - 6:34The other looks
at their impact on society. -
6:34 - 6:36They measure everything:
-
6:36 - 6:38seeds planted,
-
6:38 - 6:40jobs created,
-
6:40 - 6:42rubbish thrown in the bin.
-
6:42 - 6:45Shell, the Anglo-Dutch energy company,
-
6:45 - 6:46is another example.
-
6:46 - 6:49They figured out
what many of us already knew; -
6:50 - 6:54it's not good enough
just to look after your own emissions. -
6:54 - 6:57In fact, their emissions
accounted for about 15 percent -
6:57 - 6:59of their system emissions.
-
6:59 - 7:00So they changed.
-
7:00 - 7:04Working with activists and pension funds,
-
7:04 - 7:06they set three-year rolling goals
-
7:06 - 7:09with progress markers year by year.
-
7:10 - 7:14By 2050, they hope to reduce
their net carbon footprint -
7:14 - 7:16by almost two thirds.
-
7:16 - 7:17That is a major reduction.
-
7:18 - 7:21Initially, these targets
are linked to the bonuses -
7:21 - 7:24of their top 150 decision makers,
-
7:25 - 7:31and over time the pay
of nearly 17,000 employees -
7:31 - 7:35could be linked in part
to how they treat Mother Earth. -
7:37 - 7:39It's still early days for this industry
-
7:39 - 7:41and many of these initiatives.
-
7:41 - 7:45Success will depend
on how well we stay the course -
7:45 - 7:47when the investments
become more significant, -
7:47 - 7:49when stakeholders disagree,
-
7:49 - 7:52or when competitors start catching up.
-
7:54 - 7:56Let's spend a little bit of time
on a stakeholder -
7:56 - 7:58who is sometimes hidden,
-
7:58 - 8:00and those are our suppliers.
-
8:00 - 8:04They are the connective tissue
underneath many companies: -
8:04 - 8:06Uber drivers, widget makers,
-
8:06 - 8:08service employees.
-
8:09 - 8:12They're like an invisible life force
that power our economy, -
8:12 - 8:15and one thing we know for sure
-
8:15 - 8:17is that the success
or failure of your business -
8:17 - 8:20depends on your suppliers
and partnerships. -
8:20 - 8:22It's a painful lesson that many hospitals,
-
8:22 - 8:24including in the US and UK,
-
8:24 - 8:26will take from COVID-19.
-
8:26 - 8:30In pandemics, robust, agile supply chains
-
8:30 - 8:33deliver the masks, ventilators,
-
8:33 - 8:35testing kits and vaccines
-
8:36 - 8:37that we all need.
-
8:37 - 8:39It saves lives,
-
8:39 - 8:42and it helps to reopen our economy.
-
8:42 - 8:46Suppliers don't just matter
when we're in a crisis. -
8:46 - 8:49If you really want to scale
your positive impact, -
8:49 - 8:51you have to look beyond
the walls of your company. -
8:52 - 8:53BHP Billiton,
-
8:53 - 8:55the Australian mining company,
-
8:55 - 8:57did just that when it made a commitment
-
8:57 - 9:01to end gender imbalance
in its workforce by 2025. -
9:01 - 9:07It decided to encourage, or kind of nudge,
its suppliers into also participating -
9:07 - 9:09by providing training and technology.
-
9:10 - 9:12In Chile, Kal Tire
-
9:12 - 9:15helps to change the enormous tires
-
9:15 - 9:17on BHP's trucks.
-
9:17 - 9:21It is a very physical,
demanding, dangerous job, -
9:21 - 9:22and to be honest with you,
-
9:22 - 9:25not that many women
were even interested in the job. -
9:26 - 9:28The two companies change that.
-
9:28 - 9:30First, they developed a mechanical arm.
-
9:30 - 9:34And then they proactively encouraged
women to apply for the job. -
9:35 - 9:39Now, Kal Tire is just one company.
-
9:40 - 9:41It's an example.
-
9:41 - 9:45BHP Billiton has thousands of suppliers,
-
9:45 - 9:48and if you really want to engage
your supplier network, -
9:48 - 9:51you can use incentives
to get them engaged. -
9:52 - 9:56Today, Kal Tire illustrates
-
9:56 - 9:58how well that can be done,
-
9:58 - 10:01and across BHP's supplier networks,
-
10:01 - 10:05women are now 15 percent
more likely to get the job -
10:05 - 10:07than they were even a year ago today.
-
10:08 - 10:10Suppliers and partnerships
-
10:11 - 10:13will make or break your business.
-
10:13 - 10:16In good times, they're the key
to your success, -
10:16 - 10:19scaling it worldwide,
-
10:19 - 10:22and in bad times,
they're the key to your survival. -
10:23 - 10:25If suppliers are a hidden stakeholder,
-
10:25 - 10:28then customers are probably
the most visible. -
10:29 - 10:32But when shareholders rule supreme,
-
10:32 - 10:34some companies may have an incentive
-
10:34 - 10:38to focus on customers' short-term desires
-
10:38 - 10:39rather than their long-term needs.
-
10:40 - 10:44Consumption of processed food
has taken off around the world, -
10:44 - 10:46and with it,
-
10:46 - 10:48global obesity rates have increased.
-
10:49 - 10:56That's why the Access to Nutrition
Foundation now tracks the salt, fat, sugar -
10:56 - 11:00that global food and drink companies
include in their products. -
11:00 - 11:02They also track whether
they market them responsibly. -
11:03 - 11:06I think it's like measuring
the calories consumed -
11:06 - 11:08for every dollar these companies earn.
-
11:09 - 11:12Companies that have been
paying attention to this -
11:12 - 11:13have begun to make changes,
-
11:13 - 11:16including ingredients and formulations.
-
11:16 - 11:20Nestle reduced the sugar
in its breakfast cereal. -
11:20 - 11:25Unilever reduced the volume
and calories in its ice cream. -
11:25 - 11:28Now, I'm not sure that's a good idea,
-
11:28 - 11:31but I can tell you it takes creativity
and a little bit of investment. -
11:32 - 11:37We know that consumer needs
change over time, -
11:37 - 11:41but companies that make
these investments proactively -
11:41 - 11:45can be better positioned
in the long term, even for shareholders. -
11:45 - 11:48As we all have tried
to improve our eating habits, -
11:48 - 11:50tried to eat less ice cream,
-
11:50 - 11:53these companies were well-positioned
to capture that market. -
11:53 - 11:56They were ahead, more competitive,
-
11:56 - 11:59and able to be more relevant.
-
11:59 - 12:01It also aligns with governments,
-
12:01 - 12:03many of whom have looked
at nutrition labeling, -
12:03 - 12:06exercise programs, or even sugar taxes
-
12:06 - 12:08to encourage healthier eating.
-
12:09 - 12:12If customers are stakeholders,
-
12:13 - 12:16then they should not be harmed
-
12:16 - 12:19by the goods, services
-
12:19 - 12:21and products we produce.
-
12:21 - 12:22It's that simple.
-
12:24 - 12:27For stakeholder capitalism to really work,
-
12:27 - 12:31we all need to see ourselves
as chief executive officers. -
12:32 - 12:34If we really want change,
-
12:34 - 12:35we have to be willing
-
12:37 - 12:39to bear the backlash.
-
12:39 - 12:40We're not always going to get it right,
-
12:41 - 12:42and that's OK.
-
12:43 - 12:46Real, substantive change takes time.
-
12:47 - 12:50The right answer keeps changing.
-
12:51 - 12:54But we have to try to do better.
-
12:55 - 12:57There's a quote that I love
that really captures -
12:57 - 12:58the essence of this moment.
-
12:59 - 13:02It's by the American poet
Gwendolyn Brooks. -
13:03 - 13:06"We are each other's harvest.
-
13:06 - 13:08We are each other's business.
-
13:08 - 13:12We are each other's magnitude and bond."
-
13:13 - 13:18Business is a set
of ever-changing human bonds -
13:18 - 13:23through which we plant and grow and reap.
-
13:23 - 13:26Our harvest is our lives and livelihoods,
-
13:26 - 13:30our civil liberties,
our skills and communities. -
13:30 - 13:33Business is what we make of it.
-
13:34 - 13:36Let's hit reset
-
13:36 - 13:38and serve all stakeholders.
-
13:39 - 13:40Thank you.
- Title:
- How businesses can serve everyone, not just shareholders
- Speaker:
- Dame Vivian Hunt
- Description:
-
Companies worldwide are pledging to play a more meaningful role in the well-being of their employees, customers and the environment. How can they turn their promises into action? From creating a representative boardroom to committing to measurable sustainability goals, business leader Dame Vivian Hunt discusses the necessary changes companies can make to embrace stakeholder capitalism -- and shares how it could change business for good.
- Video Language:
- English
- Team:
- closed TED
- Project:
- TEDTalks
- Duration:
- 13:53
Erin Gregory edited English subtitles for How businesses can serve everyone, not just shareholders | ||
Erin Gregory edited English subtitles for How businesses can serve everyone, not just shareholders | ||
Erin Gregory approved English subtitles for How businesses can serve everyone, not just shareholders | ||
Erin Gregory edited English subtitles for How businesses can serve everyone, not just shareholders | ||
Joanna Pietrulewicz accepted English subtitles for How businesses can serve everyone, not just shareholders | ||
Joanna Pietrulewicz edited English subtitles for How businesses can serve everyone, not just shareholders | ||
Joanna Pietrulewicz edited English subtitles for How businesses can serve everyone, not just shareholders | ||
Joseph Geni edited English subtitles for How businesses can serve everyone, not just shareholders |