Strong leadership has the potential to transform the way a company engages with social, environmental and development challenges. But when development-minded leaders leave their corporations, the challenge lies in ensuring those cross-sectoral partnerships and sustainable business practices live on after their departure.
It’s a challenge that deserves attention, especially as leaders emerge like Unilever CEO Paul Polman, who participated with other private sector chiefs to recommend Sustainable Development Goals framework. But perhaps it begs attention even more so thanks to the examples of companies that have backslid following the departure of a leader — when suddenly a bad quarter means a change in policy.
Devex spoke with Sir Mark Moody-Stuart, former chairman of Shell, who has been engaged on these issues for many years, including through his role as chairman of the foundation for the United Nations Global Compact.
Moody-Stuart shares his advice on encouraging accountability and the importance of both individual and coalition leadership in this excerpt from the conversation:
How have you seen private sector engagement evolve? Do you think we’ve reached a pivotal moment yet?
The evolution has taken place. If we go back to the 90s … In those days we started looking at working with multiple stakeholders, looking at stakeholder requirements viewing companies in relation to stakeholders and looking at what we used to call nonfinancial elements. There was very little interest from the investor community.
So I think it’s really changing. I went to a meeting at the New York Stock Exchange [in September] where you had stock exchanges from all around the world talking about the need for listing standards on transparency etc., so it is spreading.
The Sustainable Development Goals took a step forward in that area I think. They were widely consulted, but I still worry in the implementation locally we don’t necessarily have this combination ... if we’re to deliver the goals we have to do it in each country and that means building coalitions in the country. You can’t have real political influence as a single business, even as a coalition of businesses. We don’t want [just] business coalitions [or just] single businesses having influence, but if you can combine them with civil society they can keep each other honest and both sides need keeping honest. And then they can genuinely influence governments.
Who can go about building those local coalitions?
I think the U.N. Global Compact local networks are one potential avenue because they do bring together the affiliates of international business, national business, small and medium-sized enterprises, national NGOs, civil society and labor unions where they exist. That is in an ideal world. We’ve got 85 networks and they’re not all ideal — some of them are quite weak. So we have a lot of work to do, but I’m sure it’s a very good framework on which to work in the coming period in the Global Compact.
It’s going to take hard work and it’s going to take leadership. You only put together these groups if you have quite strong leadership and that could come from every sector; it’s very much an individual thing. But one of my drives is to encourage affiliates of major companies to participate — because sometimes they don’t — and they have a lot to gain from it and vice versa. So I’m not saying we’ve solved it and not trying to over talk the strength of it, but I think it’s a potential solution.
You brought up the issue of individual leadership and we certainly see some examples of corporate executives who are rethinking the way their companies do business. How much of that change is because of leadership at the top and what happens when that leader leaves?
Of course it depends on leadership, but leadership should be distributed and institutionalized so the executive team from whom the likely next leader comes should really believe in it. That again is a question of to what extent, it’s a question of the penetration of values, which is a complicated issue … It depends how you built the values and what process you went through; but having arrived at them, if you allow exceptions to the values, [it is a problem]. So if you have a member of the leadership team who delivers fantastic results and is a very able person but doesn’t actually reflect the values, I think you are in trouble.
The classic thing is every company says, “Respect for people is one of our major values,” but there are behaviors at top companies, which basically is nonsense. If you don’t address that then people think, “Well, actually respect for people is OK, but making money is more important.” So I think the institutionalization of values and embedding values and checking that they are embedded is a major element to leadership.
Corporate engagement on social and environmental issues has often come in response to a crisis. Do companies need to become more proactive rather than reactive?
Crisis is important. But yes, in a perfect world, yes. If you look at the formation of many things that started 20 years ago — traded markets, forest stewardship council, sustainable fisheries and so on. The formation of these things has a kind of common path you can track.
Somebody raises a problem and that somebody is normally not in a corporation, it’s [someone] outside the corporation that says, “Oh, we have a problem.” Corporate reaction might be that, “It’s not a very big threat,” or, “There’s nothing much we can do about it,” “We don’t do that,” or, “It’s a government problem and the government should do something about it” — and you don’t get much happening. And then at a certain point a responsible company says, “I’m not sure this has anything to do with us, but let’s at least talk about it.” Then you begin to talk and then out of that comes experimental solutions … and if they work then that kind of bandwagon builds and I think that’s proactive.
So the answer is to listen very carefully to your critics. I always say business schools should teach people to listen, not just to listen selectively but listen to people who disagree with you. There’s probably a reason and you better find out what the reason is and you better find out if there’s any fire behind the smoke and you may be surprised. I think the answer to being proactive is radar scanning.
As a Devex Impact associate editor, Adva leads coverage of the intersection of business and international development. From partnerships to trade and social entrepreneurship to impact investing, she enjoys exploring the role the private sector and private capital play in development. Previously, she has worked as a reporter at newspapers in both the U.S. and South Africa. Most recently, she has been ghostwriting a memoir for a former child slave and NGO founder in Ghana.
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