Commentary

Business and Community Alignment

February, 2022

By: Frank Olsson

President NZ Europe Business Council

It is interesting how Harvard Business Review (HBR) and The Financial Times take a very pro-societal view in their articles. Being a keen reader of HBR, I find the most common theme in their publication is to put business in perspective and underline the value and importance of creating a better life for the many. This is linked to the need for purpose in everything we do, and how a purposeful organization can generate new energy among employees and gain respect and appreciation from society, i.e., both customers and non-customers. And when you think about it, there are many more in the latter category than the former, underscoring the benefit and success that comes from not only doing things right, but equally as important, by doing the right thing.

In a Financial Times article by Martin Wolf, published in January 2022, he points to the two crises we are facing across so many countries – the lack of trust in the functioning of the democratic political system on the one hand, and the planetary environmental threat on the other. As most of us are aware, several companies now have market values in the hundreds of billions. That economic power position must be geared towards promoting a fair and good society.

Democracy cannot work if huge amounts of money are concentrated to a small group of individuals, with a vast majority of people being viewed as a means of production to be engaged at the lowest possible cost. Given how the mega companies operate on a global scale, they also need to understand, and strive to alleviate global problems, especially problems that the giants themselves create. Smart companies look to pay a fair share of taxes; because if you start to ‘cheat’ on a multibillion-dollar scale, the entire world order for trade, exchange and peaceful human interaction come under threat.

In the field of environmental health, we have been used to generating profit now and defer any consideration for externalities, such as negative environmental impact. It is not only wise, but also imperative for all business to be proactive in reducing negative impacts before they are compelled to do so by regulation. 

In his article Martin Wolf says: “Competitive profit-seeking entities are essentially amoral, even if they are law-abiding. They will not readily do things that are unprofitable, however socially desirable, or refuse to do things that are profitable, however socially undesirable.”

If this is what current laws allow, then it is obvious the laws are unfit for purpose and those breaching rules of common decency should be brought back to order. Wise companies will be proactive in this respect. Trust in politicians wane when people see them supporting narrow self-interest of big business acting contrarily to building a sustainable society. When vast rewards accrue to a wealthy few and the system makes the poor poorer, democracy is not working.

In the ongoing negotiations of a Free Trade Agreement between EU and New Zealand, there is a significant emphasis on ‘trade for all’, in the same vein as this article. Trickle down doesn’t work. There needs to be a plan ensuring benefits reach out as widely as possible among the citizenry and a robust follow-up scheme to ensure it really happens. Both parties are equally committed to these provisions.

These issues are not limited to mega corporations. All businesses need to ask the question of how they are contributing to a fairer society, rather than lobbying for rules that one-sidedly support business over public interest. I have in my book – ‘Learning to Dance, Corporate Style’ suggested for banks – after a long career in banking – that all decisions should be tested for “how does this benefit society?” or as an absolute minimum, “is this in any way contrary to the reasonable interests of society?” and if you get the wrong answer to these questions, the proposal or project must go back to the drawing board and be altered so these questions can be answered in a way that benefits the many.

Martin Wolf suggests at the end of his article that business leaders need to ask themselves: “What am I, as an influential individual business leader and member of business organizations, doing to increase the capacity of my country and the world to make sensible decisions in the interests of all?” In appointing or recruiting people to senior management, the process needs to include an assessment of their commitment to serving not only shareholders, but also the public.

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