Thursday 13 November, 19.30 until 21.00, Yellow Room, Volkshaus, Stauffacherstrasse 60, 8004 Zürich International Satellite Events 2014
These are said to be unprecedentedly uncertain times for business, but one area where there seems to be much certainty is that businesses need to do more than be profitable providers of good and services: they must also do the ‘responsible’ thing, do the ‘right’ thing, for the rest of society. Even businesses themselves feel they need to do more than simply make money. Today, the presumption is that businesses cannot be trusted – one element of the broader decline in levels of trust in society – and that this is bad for business and for society.
In 2013, almost 68 percent of Swiss voters backed a nationwide ballot to curb “fat-bonuses” and to give shareholders of listed companies a veto over top manager salaries and bonuses. Voters also approved imposing massive fines and prison sentences of up to three years for those who breach the new rules. A few months later, one-third of Swiss voters backed an unsuccessful ballot to reduce the wage gap between top executives and the lowest paid workers in the same companies to a 1:12 ratio.
According to the 2014 Edelman Trust Barometer, only one in two people in the UK have trust in business. A continuing stream of media stories about corporates behaving badly - over a range of issues including excessive boardroom pay and poor working conditions in developing countries - maintains distrust about business motives and actions. It has become received wisdom that in order to restore trust, business needs to re-orientate its culture and values.
Yet even the widespread adoption of corporate social responsibility (CSR) policies seems to do little to assuage concerns. To some people, promoting your ‘ethical’ CSR credentials can reek of hypocrisy. Sincere CSR projects can be dismissed as ‘greenwash’. When there is so little trust, can big companies ever satisfy their critics that they are doing enough? As the well-publicised travails of the Co-operative in Britain seem to confirm, there may be pitfalls of being a business that has always had ‘doing good’ high in its values at the expense of the bottom line.
But perhaps we should not expect businesses to ‘do good’. The urge to be socially responsible through initiatives beyond the central, profit-making purpose of a company may be missing the point about what really constitutes ‘doing the right thing’. As Adam Smith wrote in The Wealth of Nations almost 250 years ago: ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.’ In turn, the drive to create new wealth provides the resources for many other social goods, from healthcare and education to funding the arts and museums.
Is maximising profit really at odds with social good? Could the CSR agenda conflict with the social benefits of profit-making business? How important is trust for profitability? When government is trusted even less than business, who should decide what ‘the right thing’ means?
managing director, FTI Consulting; Sky News regular; BBC Dateline London panellist; author Big Brother Watch: The state of civil liberties in modern Britain
Dr Norman Lewis
director (innovation), PwC; co-author, Big Potatoes: the London manifesto for innovation
CEO, Olsen Ltd.
associate fellow, Institute of Ideas; culture writer
It's not enough just to abide by the rules - companies are embedded in society and cannot ignore the moral dimensionJoseph Zammit-Lucia, Guardian, 24 September 2013
It was Winston Churchill who famously said thatPaul Polman, Huffington Post, 10 August 2013
Since the financial crisis of 2007 and 2008 there has been much pointed discussion about the need for business to rediscover its moral purpose.Kamal Ahmed, Telegraph, 3 February 2013
The return of bank bonuses has angered bishops and spread to the venerable churches of the Square Mile itselfJulia Finch and Nick Mathiason, Guardian, 25 October 2009