This week we received news that really shouldn’t be news. Around 180 business leaders convened to align on a philosophical shift when it comes to corporate purpose. The leaders aligned on a different perspective that emphasizes shareholders less and embraces stockholders, including employees, customers, society and investors, more.
The shift in perspective is one that has always been discussed in the business world. Business leaders and academics are often weighing the pros and cons of emphasizing a shareholder perspective that focuses on delivering value to investors or a stakeholder perspective that states that a business should focus on being a societal good as well as a shareholder good.
Today, the regulatory shackles holding businesses back are being lifted. However, social media has given people a platform to critique businesses when it comes to climate change, working conditions, political affiliations and income inequality. Just last week SoulCycle found itself in hot water when it was revealed its owner was holding a fundraiser for Donald Trump.
Consumers may be more vocal than ever when it comes to calling companies out, but it’s unclear how much that increase in volume translates to sales. That lack in clarity, however, may change as emerging demographics grow in buying power.
More than Marketing. More than Lip Service.
All too often, brands’ philanthropic efforts are nothing more than marketing and tax ride offs. They’re used to earn a little PR, but in today’s political environment consumers are demanding more. Beyond that, they’re not taking brands at their word when it comes to doing good. They’re calling out greenwashing. They’re pointing out woke washing. They’re demanding brand actions match the beliefs they espouse.
This is only growing truer. Get Z is the most skeptical generation we’ve seen. They not only want companies to operate in a way that benefits society as a large, they’re demanding proof of it. The shift to a stakeholder perspective is more than just good PR, it’s a growing business imperative. It’s an imperative that says when you benefit all stakeholders, shareholders will benefit as well from increased consumer good will, customer loyalty and sales.
Doing Good Doesn’t Have to Mean Speaking Out
This announcement by business leaders is a hopeful one for me. There are brands that have the permission and strategic need to be political, but that’s not the case for all brands. This announcement says that all brands have the opportunity to do good in the world in facets that are both political and not. That means doing more than just paying lip service and doing an annual philanthropic effort. It means looking at every aspect of the company’s value chain and identifying where it can do more to benefit stakeholders, not just shareholders.