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How businesses can serve everyone, not just shareholders

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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.
Títol:
How businesses can serve everyone, not just shareholders
Speaker:
Dame Vivian Hunt
Descripció:

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.

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Video Language:
English
Team:
TED
Projecte:
TEDTalks
Duration:
13:53

English subtitles

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