Let the top companies stick their necks out in sensitive, societal debates. It is a question of principles, think professors Egbert Eeftink, Muel Kaptein and Sander Klous.
Now that companies are more and more serious about their social role, their leaders cannot be left behind. CEOs will also have to speak out more often on politically sensitive issues without being a mouthful. It is also part of the purpose, principle or mission of making a positive difference in the world.
Purpose is one of the most hyped words of recent years, but it also indicates an important development that is taking more and more concrete forms. More and more organizations are focusing on their social responsibility and are moving towards a sustainable economy.
It’s a lot less hip than it looks. It is even very old fashioned. Consider the history of Unilever. The founder Sir William Lever had already regarded the purpose as of the utmost importance. He just didn’t call it that. In a time of great poverty, he built not only a successful business, but also houses for employees, many of whom lived in slums at the time. Many other companies did the same. Consider Philips, which built complete housing areas for employees in Eindhoven.
Corporations lost that role in the 1980s, the decade when shareholder value began to dominate the boardroom. In a way, there is now a renaissance of old values. However, it focuses on a wide range of social themes, from climate protection to diversity, inclusiveness and fair work.
Much has changed in the last hundred years. Lord Lever did not deal with gassy social media. Workers had no idea about the state of Brazil’s rainforests, and discussions of major social issues were mostly reserved for the elite.
How different it is now, in a world where everything is transparent, imagery dominates, and leaders become a mass at the push of a button. As a result, it is not at all attractive for motorists to stick their heads above ground level. They are no doubt wondering what they can get out of this.
Nevertheless, it is important that drivers actively show their colors. Reticence damages credibility. If directors give an impassioned speech about their purpose, visibility is part of it. Having influence in society also means entering into a dialogue with the same society. Even when it comes to complicated subjects.
The outbreak of war in Ukraine resulted in difficult decisions in the boardrooms. In some cases it seemed very simple: stop operating in Russia and take the loss. Such a decision ensures widespread respect in the outside world. But in other cases, stopping activities can actually be counterproductive. It’s a more complicated story, with drivers quickly pilloried for bad behavior.
Explanation about fossil investment
That shouldn’t stop them from explaining unpopular moves, as CEO David Knibbe of Nationale Nederlanden recently did. He admitted that he didn’t necessarily want to go on the talk show Op1 to explain about fossil investments. He did. It is part of the job when you say you have principles.
Precisely because of their growing social importance, administrators are increasingly becoming part of democracy. This includes interfering in the public debate. If it goes well, it can even be a good antidote in a political arena where image often trumps content. Anyone who does can afford to slip away, research shows. People are more understanding than we often think. As long as the honest story comes first.
Professors Egbert Eeftink (VU), Muel Kaptein (Rotterdam School of Management) and Sander Klous (UvA) are partners at KPMG
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