In part two of our series on International Corporate Philanthropy Day (ICPD) led by Committee Encouraging Corporate Philanthropy we explore the opportunities, challenges and commitments that arise out of a top-level executive management conference that could benefit organizations around the globe. In Part I of the series, we discussed the event A Billion + Change: Mobilizing Billions in Skills-Based Volunteering sponsored by Morgan Stanley.
The 7th annual Board of Boards CEO conference held at McGraw Hill headquarters convened the top executives from diverse businesses including pharmaceuticals, consumer goods, electronics, public affairs and communications, asset management, manufacturing, business consulting, real estate among others. These thought leaders “are initiating partnerships across sectors to discover how the company’s products and expertise can complement and extend the important work of the nonprofit and government sectors. They are investing in a more nuanced understanding of the complexity and interconnectedness of factors that lead to staggering high school drop-out rates or domestic violence” said Margaret Coady, Director of CECP.
At the conference, the opening remarks were made by H.E. Fernando Henrique Cardoso, Former President of Brazil, and the interactive discussion panels had Angela Ahrendts, CEO, Burberry, Shelly Lazarus, Chairman, Ogilvy & Mather, Hikmet Ersek, President & CEO, The Western Union Company and Daniel L. Doctoroff, President & CEO, Bloomberg L. P.
President Cardozo spoke about some of the societal improvements that happened during his leadership – Brazil recorded a decline in infant mortality rates, a fall in the number of child laborers and attainment of near-universal primary education. He also spoke about the need for democratization of access and equity of outcomes in education. He remarked that it was time for transformation of social policies, where governments compete against each other to improve their systems and services. Governments should partner with corporations and nonprofits to create win-win situations for the social good.
President Cardozo was followed by panel discussions which focused on 1) CEO leadership in educating consumers on the societal impacts of the choices they make and 2) CEO leadership in educating investors about the long-term benefits of pursuing strategies that link positive societal impact and business benefit.
With the ‘Occupy Wall Street’ movement and other pushback from the general public, there are observations that business’ social license to operate is in crisis. A new definition of capitalism and triple bottom line needs to be developed that does not violate the trust of its public and government. The key takeaways from the polls and discussions were –
- The overwhelming response from an audience poll was that businesses are only somewhat successful in living up to their social contracts. While there are improvements, not much changed over the past few years.
- Agreement on businesses’ need to figure out a better way of living up to the social contract and to develop opportunities for CEOs to move the discourse in the right direction.
- A significant obstacle that businesses face in opting for socially-sustainable practices is ‘competitive pressure’ to drive down costs. This ranked high above ‘consumer pressure’ and ‘shareholder pressure’ for business leaders.
- It was surveyed that the most significant barrier in making more socially-sustainable buying decisions is that these choices are often not as affordable or convenient for the consumer.
- CEOs also felt that most consumers have not been educated on the full negative impact of their purchasing habits.
- Leadership has noticed a slight hike in demand for greater transparency regarding company’s community practices compared to five years ago and they believe that consumers do reward CSR efforts by a corporation.
For CEOs in companies engaged in environmental and societal sustainability, bringing investors along on their journey has not been simple.
- CEO’s lamented that the demand from investors to pursue business strategies that support social good has been limited. Angela Ahrendts, while speaking about the tremendous impact of Burberry’s philanthropic initiatives on employees and consumers, commented that not once was she asked about these initiatives by an investor.
- Many have moved towards integrated reporting, which combines financial and sustainability performance in a step forward to educate/share better information of their financial, social & environmental efforts. Daniel Doctoroff remarked that requests coming in from investors regarding a company’s sustainability and community engagement practices are ‘modest at best’.
- There was disagreement on the quality and transparency of integrated / CSR reporting due to apparent lack of standards. Klaus Kleinfeld, CEO of Alcoa Inc., challenged the group of elaborate reporting on philanthropic giving by a corporation when the company’s supply chain management and employee relations are completely wrong.
- Speakers and audience agreed that standardization of measurement and more comprehensive tools needs to be put in place before shareholders can be brought into closer alignment with stakeholder expectations.
The theme of the event resonated well with the audience for the ‘Next Generation Community Involvement: A Transformative Business Opportunity’. There was a call to action made to the CEOs to take greater responsibility for their company’s actions in the social and environmental sustainability. The leadership team agreed that businesses had a significant role in this transformation and it was up to leaders like themselves to build support of investors, consumers and other stakeholder groups along with them on this journey.
For social good advocates around the world, this is great news when CEOs are willing to put the pressure on themselves and their peers to deliver products and services in a socially-sustainable way. If they practice what they preach, there will be much progress made in accountability from businesses and for more strategic giving which will have positive impact on communities around the world.
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