HERE IS THE INTERESTING FACT
A WHOLE HOST OF THINGS—INCLUDING MANY REGULATIONS—WHICH BUSINESS INITIALLY OPPOSED (MOSTLY JUST AS A REFLEXT) HAVE TURNED OUT TO BE GOOD FOR THE BOTTOM LINE
The following is an extract from a piece by Will Hutton in the Guardian of September 27 2015. I have read something similar many times.
The oft-mindless, automatic, anti-government reflex of those who conform to the American Business Model to endeavor to deny all social obligations, ignore the environment, and denounce any and all regulations, has never made any sense—particularly when it is shown up to be bad business.
Sustainability pays.
Make your god the share price, as so many British and US companies do, and you create one basket of problems – under-investment, excess deal-making and cutting corners. Abuse the stakeholder system, as did VW, and make your god production on any terms, damning the concerns of outsiders as irrelevant, and your end can be equally grisly. Capitalism, in short, may have boundless creative and innovative energy – but it also has boundless ways to go wrong.
Intriguingly, recent work by a group of researchers at Harvard and the London Business School compared 90 American companies that took sustainability seriously with 90 who did not. Over 18 years the 90 committed to sustainability delivered annual financial returns 4.8% higher than the other 90.
In order to deliver sustainability they had to organize themselves around a core purpose, and then embed checks and balances to keep themselves honest. They shaped the way they were governed to open up to outside stakeholders with whom they checked their strategy. Their reporting measures embraced many metrics beyond share price and they rewarded directors for meeting them. Sustainability was a route to more open governance and rounded strategy – and it delivered.
No comments:
Post a Comment