Lately, a lot of chief executives

have promised to shift
their business model.

They pledge to serve all stakeholders,

not just shareholders.

Investment return, they say,

will no longer take precedence

over the health and welfare of employees,

suppliers,

even planet Earth.

Not just in a crisis,

but every day.

This is a change that business
absolutely needs to make,

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

It's like going from being a young couple

to having kids.

When you're trying to make decisions

with just one other person
in the relationship,

it's pretty straightforward.

Where should we have Sunday lunch?

What should we watch for the movie?

But when you add one child,

a second child,

new decision makers,

life gets complicated.

And each one has their own unique needs

and individual perspective.

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

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

It's one of the biggest
challenges in parenting,

and in stakeholder capitalism.

Employees need to earn a living wage.

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

Pension fund investors
need to earn a positive return.

Only then can they be sure

that they are managing
the savings and retirement

of their investors responsibly.

Consumers want and deserve
products and services

that are both affordable and safe.

And we all want a society and planet

that lets us breathe.

I have spent my career
helping companies and their leaders

improve their performance,

particularly at times of transition.

We've all gone digital.

We've responded
to new health care regulations.

We've improved their productivity,

made them more diverse and inclusive.

It took us a while to learn

that you can't actually
make a company more digital

by appointing a chief digital officer,

or that a chief diversity officer

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

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

if we really want to serve
all stakeholders.

Instead, we need to reset.

If we really want to serve
stakeholder needs,

we need to get everyone involved.

There are no quick fixes,

but I do have a few ideas.

Let's start at the top: the boardroom.

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

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

really, nothing's changing.

By definition,
a board can stand in the way

of serving all stakeholders.

Why?

Because often, a board
is elected by shareholders.

It represents their interests.

It's there to act on their behalf.

That's not just a dictionary definition.

It's enshrined in law in the US,

and this can really limit

how much change a CEO or board can effect

if they want to serve the needs
of more stakeholders.

For years, if we're honest,

we've been ticking boxes:

ethnicity, age, gender.

We've been looking for people
who look different,

but boards still do the same thing.

They look after the interests
of shareholders.

We don't need tokens.

We need people who truly
understand the experience

and represent the diversity
of our stakeholders.

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

I chair a charity, Teach First.

It's an educational charity
that produces outstanding teachers

and schools.

Our board includes a wide range of skills:

former civil servants,

activists, teachers, ambassadors,

technologists.

Some of them on paper have very little

that's an obvious fit
for an educational charity.

But they each have real experience
with our stakeholders.

Every board is different.

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

community leaders sitting
on the boards of their local bank;

moral philosophers
advising social media companies;

environmental activists
as directors of global energy companies.

CEOs keep making pledges.

They keep talking about social purpose,

but real change won't happen

until we change who governs

and for what purpose.

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

and remember who we really serve.

Next, let's talk about the big E,

the environment.

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

The goals are very lofty,

and very, very long-term,

and none of them will be accomplished

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

It's like saying,

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

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

start training,

putting in the miles every single day.

CEOs need the same thing.

They need concrete,
achievable, measurable goals,

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

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

but it requires investments,

and those have to be shared.

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

They've got the usual
profit and loss statements

for the investors and the executive,

but it's their other two P&Ls

that make them a little bit special.

One measures how well
they do for the environment.

The other looks
at their impact on society.

They measure everything:

seeds planted,

jobs created,

rubbish thrown in the bin.

Shell, the Anglo-Dutch energy company,

is another example.

They figured out
what many of us already knew;

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

In fact, their emissions
accounted for about 15 percent

of their system emissions.

So they changed.

Working with activists and pension funds,

they set three-year rolling goals

with progress markers year by year.

By 2050, they hope to reduce
their net carbon footprint

by almost two thirds.

That is a major reduction.

Initially, these targets
are linked to the bonuses

of their top 150 decision makers,

and over time the pay
of nearly 17,000 employees

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

It's still early days for this industry

and many of these initiatives.

Success will depend
on how well we stay the course

when the investments
become more significant,

when stakeholders disagree,

or when competitors start catching up.

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

who is sometimes hidden,

and those are our suppliers.

They are the connective tissue
underneath many companies:

Uber drivers, widget makers,

service employees.

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

and one thing we know for sure

is that the success
or failure of your business

depends on your suppliers
and partnerships.

It's a painful lesson that many hospitals,

including in the US and UK,

will take from COVID-19.

In pandemics, robust, agile supply chains

deliver the masks, ventilators,

testing kits and vaccines

that we all need.

It saves lives,

and it helps to reopen our economy.

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

If you really want to scale
your positive impact,

you have to look beyond
the walls of your company.

BHP Billiton,

the Australian mining company,

did just that when it made a commitment

to end gender imbalance
in its workforce by 2025.

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

by providing training and technology.

In Chile, Kal Tire

helps to change the enormous tires

on BHP's trucks.

It is a very physical,
demanding, dangerous job,

and to be honest with you,

not that many women
were even interested in the job.

The two companies change that.

First, they developed a mechanical arm.

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

Now, Kal Tire is just one company.

It's an example.

BHP Billiton has thousands of suppliers,

and if you really want to engage
your supplier network,

you can use incentives
to get them engaged.

Today, Kal Tire illustrates

how well that can be done,

and across BHP's supplier networks,

women are now 15 percent
more likely to get the job

than they were even a year ago today.

Suppliers and partnerships

will make or break your business.

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

scaling it worldwide,

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

If suppliers are a hidden stakeholder,

then customers are probably
the most visible.

But when shareholders rule supreme,

some companies may have an incentive

to focus on customers' short-term desires

rather than their long-term needs.

Consumption of processed food
has taken off around the world,

and with it,

global obesity rates have increased.

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

that global food and drink companies
include in their products.

They also track whether
they market them responsibly.

I think it's like measuring
the calories consumed

for every dollar these companies earn.

Companies that have been
paying attention to this

have begun to make changes,

including ingredients and formulations.

Nestle reduced the sugar
in its breakfast cereal.

Unilever reduced the volume
and calories in its ice cream.

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

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

We know that consumer needs
change over time,

but companies that make
these investments proactively

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

As we all have tried
to improve our eating habits,

tried to eat less ice cream,

these companies were well-positioned
to capture that market.

They were ahead, more competitive,

and able to be more relevant.

It also aligns with governments,

many of whom have looked
at nutrition labeling,

exercise programs, or even sugar taxes

to encourage healthier eating.

If customers are stakeholders,

then they should not be harmed

by the goods, services

and products we produce.

It's that simple.

For stakeholder capitalism to really work,

we all need to see ourselves
as chief executive officers.

If we really want change,

we have to be willing

to bear the backlash.

We're not always going to get it right,

and that's OK.

Real, substantive change takes time.

The right answer keeps changing.

But we have to try to do better.

There's a quote that I love
that really captures

the essence of this moment.

It's by the American poet
Gwendolyn Brooks.

"We are each other's harvest.

We are each other's business.

We are each other's magnitude and bond."

Business is a set
of ever-changing human bonds

through which we plant and grow and reap.

Our harvest is our lives and livelihoods,

our civil liberties,
our skills and communities.

Business is what we make of it.

Let's hit reset

and serve all stakeholders.

Thank you.