CAPE TOWN – Business leaders are under more scrutiny today than they perhaps have ever been. Governments and civil society are asking them hard questions about the role that their companies play in society.
In many respects, the corporate world has brought this on itself. An exclusive focus on profits and shareholder value has led to many of them chasing short term gains at the expense of long term sustainability.
However, CEOs of some of the world’s top companies speaking at the Consumer Goods Forum Global Summit in Cape Town last week were adamant that it doesn’t have to be this way. Doing good, and running a good business are not competing ideas.
No exclusive interest
The CEO of Nestlé, Paul Bulcke, argued that no business can be sustainable unless it looks beyond itself to the role it plays in the wider society.
“For a company to be successful over time you need to be successful in creating shareholder value,” he said. “But at the same time, in everything you do you have to create value for society too.”
He argued that this is fundamentally what economic activity has always been about and what many have lost sight of.
“We can do amazing good just by doing what we do in the right way,” Bulcke said. “But you can’t create shared value if you have a timeline that doesn’t go beyond tomorrow.”
He noted that businesses thrive when the society around them is thriving. He used the example of how Nestlé supports the local farmers who supply its factories around the world.
“We need good produce, good raw materials and stability in our supply chain,” said Bulcke. “If you do that working together with farmers you create better yields, better incomes and more stable incomes for them. There is no exclusive interest there.”
Nestlé is also the largest micro-fortifier of foods in the world. The company identifies areas where there are deficiencies of nutrients such as iron and vitamin A and builds these into its local products. This has obvious benefits for the health of the society, but Bulcke argues it has positives for the business as well.
“If I build nutritional products and am transparent about their nutritional benefits, I have a competitive advantage over time,” Bulcke argued. “That is why I am convinced it works. It is linked to the success of the company. It’s not one or the other.”
In a similar vein, the CEO of Tesco, Dave Lewis, spoke passionately about how retailers should address the issue of food waste, not just because it’s a good thing to do, but because it makes good business sense.
“In March of this year we made a straightforward commitment that by the end of 2017 no food that is fit for human consumption will be wasted inside the Tesco operation,” said Lewis. “And we absolutely believe that is possible.”
He said this is guided by a challenge facing the world at large.
“The issue is bigger than food waste,” said Lewis. “It’s about hunger, inequality, excess in one place and paucity in another. And it’s a growing problem. By 2050 we will not have enough food to feed the planet, yet today we waste one third of all food that we produce.”
Lewis argued that it doesn’t matter whether you look at this through the lens of commercial sensibility or making a contribution to mankind, because both are relevant.
“Waste ultimately has to be paid for, so if we can eradicate it we can lower costs and improve margins,” he said.
He also suggested that addressing this issue will have a positive brand impact.
“The thing that’s really interesting is that if our customers knew what goes on, they would want us to be different,” he said. “And we ought to run our businesses in a way that is consistent with their expectations.”
Speaking from a local perspective, CEO of Pick n Pay, Richard Brasher, noted that businesses need to make themselves relevant to the societies in which they operate. He said that much of what defines Pick n Pay stems from the values established by the company’s founder, Raymond Ackerman.
“They are good values, but hard to live by,” he said. “For instance, I am proud that we pay our staff as much as we can afford, not as little as we can get away with. We do have to be productive though.”
He argued that business should have a fundamentally positive impact on society.
“I think we are a force for good,” said Brasher. “We employ people, we create value for society, we provide good nutritious food at good economic prices. We have a moral obligation to keep prices down and our efficiencies up to give people the best quality at the lowest prices.”
He emphasised that when what is good for society is also good for the business, this leads to a virtuous cycle.
“Our impact on society is multiplied by success,” he said. “And it is a driving force of our business, that the more successful we are, the bigger the impact we can have.”