Ethical 'Neutrality' Is Not An Option
Corporate businesses love to embrace popular trends and view it as good ‘branding’, as State Street Global Advisors, the asset management business, appeared to demonstrate when it commissioned a bronze sculpture to mark female empowerment and installed ‘Fearless Girl’ in New York, NY in 2017. But it’s often a different thing altogether when they come across a real, live ‘fearless girl’ (or boy/person) speaking her/his/their own mind on important issues in a way that questions the norm, the accepted rules, the state of play.
‘Fearless Girl’ New York, NY image credit Daniel Lloyd Blunk-Fernandez via @Unsplash
In the space between external corporate or organisational branding and an immediate response to fast-moving events sits a large, simmering vat of growing stakeholder concerns around many issues that have until now been considered to be the preserve of established and recognised decision-makers behind closed doors. These stakeholder concerns all fall into the environmental, social and governance (ESG) basket, and the challenge for businesses is to address them proactively, with better day to day engagement, before they lose all control of messaging on purpose and brand.
It would seem from recent statements that in the United Kingdom, the corporate governance watchdog and regulator, the Financial Reporting Council (FRC), agrees.
Businesses need only look at dramatic recent events on the global stage around the Annual General Meeting (AGM) to understand in a flash that their priorities on all aspects of stakeholder engagement should now be marked ‘urgent. ‘ But it is not only the perilous state of our natural and shared ecosystem that is bringing hearts and minds together globally to demand action for change.
Japanese tennis player and currently World No 2, Naomi Osaka’s sudden withdrawal from the French Open - and her clearly articulated reasons for it - has turned a spotlight on ethics and the need to define what we value in how we, as human beings , deal with other human beings in a variety of roles and within different contexts. The issues cover both the ‘S’ and the ‘G’ in ESG.
As a 23 year old woman who has been brave enough to bring up mental health on a global stage, Ms Osaka’s actions will continue to resonate with many individuals whose opinion, as stakeholders, should matter to the sporting bodies involved. As members of a workforce, the strength of their views should at least register too, with their corporate employers.
Savvy brands including Nike, Mastercard, Sweetgreen and Nissin Foods have already voiced support for Naomi Osaka after her withdrawal. Soon we could see a flood of corporate identification and support, because any wavering herd looks to a leader to be bold.
Almost exactly a year ago, Ms Osaka reportedly came out in strong support of the Black Lives Matter social movement. “I’m vocal because I believe in the movement and want to try to use my platform to facilitate change….George Floyd’s murder and the situation generally in America has had a big impact on me. Being silent is never the answer. Everyone should have a voice in the matter and use it” she is reported to have told Reuters by e-mail.
This is the sound of the voices that are getting louder, raising the stakes in the need for better stakeholder engagement. An essential part of such engagement includes the need to engage the workforce of every U.K. business around company purpose, to ensure buy in, commitment, productivity and retention. As mentioned in a recent post on Board Talk on the opportunity presented by remote working for better diversity and inclusion, both the economic and the human cost of the state of mental health in the U.K.’s workforce is staggering.
Last month the FRC made it clear that it believes workforce engagement lies at the heart of good corporate governance, with the launch of a report revealing the FTSE 350 response so far to its thinking, including an update on the state of company reporting on such engagement.
The report’s authors found that a ‘tick-box approach’ still constitutes the bulk of the response. Even allowing for an atypical 12 month perspective because of Covid-19, it expresses concern at the prevailing mindset around any need for better workforce engagement.
Noting that there are seeds of a change of attitude to workforce engagement at board level, the report states that on historic patterns of employee consultation “we haven’t seen the radical changes some hoped for, others feared.”
It finds that most firms do not talk about the outcomes of their initiatives on workforce engagement or explain why they chose their given approach in the first place. Where there were pre-existing company arrangements for such engagement, many businesses are doing a minimal amount to reconsider or add to them - the “company way” of doing things is often restated, it says.
At a time when social change surrounds us, this does not bode well for Britain’s businesses facing the future after Brexit. Stakeholder engagement is critical for resilient businesses and there have been many shifts in the U.K. corporate governance code to reflect such thinking.
Being complacent on the ‘S’ in ESG which revolves around human capital and its needs is sheer folly at a time when the empowerment of individuals - and their talent - is clear. This is the talent on which businesses rely for their survival and their success.
When a Chairman I interviewed in 2013 for the Financial Times , Lord Davies of Abersoch (who led the 2011 U.K. government drive for more women on boards) explained his philosophy to be “If you treat the doorman the same as the chairman you will be a great leader”, he was ahead of his time. Eight years later in June 2021 as we emerge in the U.K. from the ravages of the Covid-19 pandemic, it has never been more true as a good definition of leadership.
Naomi Osaka said it well in 2020 to all stakeholders facing important questions on what we value in the rapidly changing global society to which we belong.: “Being silent is never the answer. Everyone should have a voice in the matter and use it.”
The danger for all businesses, of course, is that a younger generation knows this to be true - while a generation sequestered in boardrooms still needs to be persuaded to venture out, seek different perspectives, and engage on the issues of the day to stay relevant and command respect.
There’s a good reason why we have spent much of the last decade in the U.K. talking about the critical importance of organisational culture for the creation of agile and resilient businesses.
Main image credit Kevin Mueller @Unsplash
