This OECD Forum 2019 background note will be used to prepare speakers on the panel CEO Activism & New forms of Leadership, taking place at the OECD headquarters from 16:45-18:15 on Monday, 20 May. Join the Forum Network to comment and help inform the upcoming debate and, whether you're with us in Paris or watching online, let us know what you think of the session!
Recent years have seen the emergence of a new class of “global superstars”, on par with Heads of State, Nobel Prize Winners and acclaimed civil society leaders: “the CEO activists”, speaking out on societal issues, often well beyond their core business nonetheless important for their personal or organisational values. Whether earning their social license to operate or leading on issues where governments are no longer capable or willing to do so, they act as game changers on a wide host of issues, seeking to contribute to improving people’s well-being globally and sustainably.
While Benetton might have been an early mover in this respect, with campaigns to raise awareness on HIV dating back to 1993 and an anti-racism campaign in 1996, examples are now countless and multifaceted: Howard Schultz from Starbucks, Nike, Arne Sorenson from Marriott addressing the issue of race; Ed Stack from Dick’s Sporting Goods, leading the effort to stop selling automatic weapons; Alan Joyce from Qantas, supporting same-sex marriage; CVS stopping the sale of tobacco products; Marc Benioff from Salesforce spending $6 million dollars of company money to close the gender pay gap in two years; and a coalition of major companies – including Walmart, Levis, Patagonia and Lyft – creating the #TimetoVote campaign, making a big push to increase voter turnout in the United States.
In an age of ‘radical uncertainty’, the need for strong leadership has never been more urgent as established organisations and people question their own ability to deliver in a challenging and fast-changing global environment. We are facing the potential unravelling of international norms and standards developed over decades, and in some cases by the very countries that were their biggest advocates and architects. As it seems increasingly evident that governments cannot achieve goals and craft solutions alone, there is a strong need for mutistakeholder partnerships. Policy shapers are as influential as traditional policy makers in delivering public policy and positive practices, and more importantly in ensuring that these are translated into impact.
In the words of Arne Sorenson of Marriott, a more political role for chief executives today is “unavoidable and essential: you can say it shouldn't exist, or try to hide from it, but neither approach works. There is enormous anxiety right now among our community all over the world. They want to hear a voice that is welcoming and affirming.”
The company’s “social value proposition” is increasingly becoming a key factor for recruitment, retention of talent and costumers loyalty. Whereas baby boomers sought out workplaces that offered stability and high pay, millennials have new priorities. According to a PwC report Millennials at Work – Reshaping the Workplace, “millennials want their work to have a purpose, to contribute something to the world and they want to be proud of their employer.”
A number of companies are adjusting to this new reality and seek ways to create an environment that takes account of mega trends such as shifting demographics, digital transformation and increasing globalisation, by supporting new social protection systems and creating models that improve people’s well-being throughout life. This may require re-designing social protection and rights in areas such as healthcare, skilling and pensions and portable benefits across different sectors and jobs.
This shift also holds true for institutional investors. A 2017 report by Edelman found that 76 per cent of investors expect companies to take a stand on societal issues, such as the environment, gender equality, diversity and globalisation. They have an expectation that CEOs take a stand on issues beyond making money and creating jobs. They are looking to the big societal actors in the business community to fill the void left by the implosion of trust in government. As new approaches to capitalism and value creation emerge, many actors are trying to reconcile the tension between addressing the shortcomings of the current system and paving the way for a more “inclusive form of capitalism”.
During the 2018 Paris Peace Forum convened by President Emmanuel Macron in November last year, the OECD announced a new Business for Inclusive Growth initiative. This call for action is now translated into a new G7 pledge by business leaders to help address global inequality.
At the same time, it is clear that such corporate activism will require alliances of a new kind, working hand in hand with civil society, trade unions, mayors and committed citizens more broadly. The emergence of people-power movements and numerous illustrations of citizen activism serve as a salutary reminder that everyone, whether at the helm of a large organisation or simply a citizen keen to take action, can be an agent of change, and take global responsibility.
Drawing on the FT’s US business editor Andrew Edgecliffe-Johnson, “if corporate purpose remains the preserve of a small group of western chief executives on the Davos circuit, it will fall short”. We must be mindful that in order for CEO activism to play a transformative role, it must be long-term, sustained and systemic. Also, a company needs to strike the balance between the risks and benefits of such boldness for its consumers while ensuring the authenticity of the causes it seeks to advance.
In an era of uncertainty, it seems there is a need to create a deeper connection with the people we ultimately serve – whether customers or citizens, reaching out beyond our comfort zone. This will require listening more, using language people understand, reaching beyond “people like us” and taking a broader view of the impact of globalisation and digital transformation on our societies and economies.
Some of the questions ahead of us include:
- As the very foundations upon which the global system is built are being challenged, how can CEOs, working hand in hand with governments, civil society, and international organisations, help ensure that the benefits of globalisation and digital transformation benefit the many, rather than the few?
- What are the opportunities for co-operation and complementarity between the actions taken by large organisations, including corporate leaders, and the various movements that have emerged in recent years, for instance on climate change, gender equality and poverty?
- Despite a modest rise in trust in corporate leaders in 2018, according to the latest Edelman Trust Barometer, what needs to happen across value chains and within local communities to instil a positive and long-lasting wave of change in the corporate world?
- How can the positive actions taken by business inspire action by other key stakeholders and create a wider sense of collective responsibility?
- What evolution do you see between a company being socially responsible, strong mantra in the 90th and “CEO activism”? What has changed from the mere CSR to CEO activism? Is the perceived lack of leadership and declining trust in governments the source of such new trends and behaviours?
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