From day one in the job, Theresa May had the behaviour of corporate Britain in her sights. Worried about ‘an irresponsible minority’ of companies acting ‘carelessly’, she launched a consultation on corporate governance and promised to shake-up British boardrooms with the idea of giving workers a say on boards.
What do these proposals mean for companies, and particularly manufacturers and retailers, who must comply with local rules while running global businesses? And how far are the Conservatives really willing to go?
One thing is certain: the political wind is clearly blowing in the direction of change. Yet far from a threat, the smartest businesses will actually see these proposals as an opportunity. The link between corporate reputation and profitability will only get stronger as ever-more discerning shoppers (many of them tech-savvy millennials) begin to think hard before parting with their cash. That’s why many enlightened businesses are prioritising ethical practices and sustainable development not just to survive but to thrive.
Early sustainable development plans among retailers and manufacturers focussed on environmental and health aspects. Food retailers’ and manufacturers’ plans often included provisions for sustainable supplies of food sources such as fish, bananas and cocoa as well as addressing the problem of food waste. These plans also improved the nutrition content of their food by reducing the level of salt, sugar, and saturated and trans fat. But this was just the start – and the pressure now is to go much further, and faster.
Evidence clearly shows that employees prefer to work for a value-led, ethical company, and that customers like to feel ‘good’ about the products they are using. More recent sustainable development plans have responded with greater emphasis on ‘social sustainability’ and a recognition that more needs to be done to maintain committed and loyal customers and employees.
A focus on sustainability will help to prepare the consumer retail sector for the social challenges that lie ahead.
Businesses are also realising that the greatest impact comes not from working alone but from working in partnership with other firms and non-governmental organisations. Last year, for example, companies such as Unilever, Tesco, The Coca-Cola Company, Boots, and Marks & Spencer came together under the auspices of the Consumer Goods Forum to promote decent working conditions worldwide and eradicate forced labour from supply chains.
Yet the next challenge is to ensure all these efforts are effectively tied to corporate growth strategies and communicated to customers. As a first step, companies might start looking at how they are reporting on their efforts. This could mean better ‘integrated reporting’ of social and environmental impacts alongside financial performance.
The emphasis on sustainability will help to prepare businesses for the social challenges that lie ahead, not least with regards to employment. As technology advances, business models adapt. For retail, this could mean the downsizing of workforces through greater use of automation and artificial intelligence. The public and their political representatives will want to know that changes are implemented in a considerate way. Companies that demonstrate strong commitments to social sustainability are more likely to retain the trust of their customers and less likely to be branded ‘careless’ by the politicians.