The role of business in promoting inclusive growth
‘There is strong evidence that the current level of inequality is unsustainable from a political, social and economic perspective. We have changed the inclusive growth narrative, but now action must follow.’
Gabriela Ramos, OECD Chief of Staff and Sherpa to the G20, speaking to the OECD Global Parliamentary Network, London, 5 April 2018
Governments cannot act alone if we are to achieve the aims of the Sustainable Development Goals (Global Goals) and support inclusive growth, businesses must play their part. As employers, investors and product or service providers it is critical for companies to recognise their role in meeting the needs of marginalised groups, reducing inequalities and shaping policy and regulation. In fact, it is in their interests to do so, because a more equal economy will benefit them. A recent report has estimated that achieving the Global Goals would open up more than $12 trillion in business savings and revenue and create 380 million new jobs by 2030. This would deliver financial returns, better-educated employees, and higher consumer purchasing power.
Looking forward how can businesses change their practices to achieve inclusive social outcomes? And what does the purpose-led business of the 21st century look like?
Business leaders associated with Blueprint, including Sir Mike Rake, Chair of Advisory Council; Sue Garrard, Blueprint Trustee and Executive Vice President, Sustainable Business & Communications, Unilever; and Sacha Romanovitch, Chief Executive, Grant Thornton joined the conversation with the OECD and representatives from 70 parliaments. Here we share their perspectives and experiences on what it means to be purpose-led and how businesses can support growth that delivers for society.
‘If you set out as a business to treat your employees, suppliers, customers and community fairly you will create better and stronger businesses’ Sir Mike Rake speaking to the OECD about how business can better understand their role in society and where business and policymakers can work together. He outlined that while growth has returned since the global financial crisis, it must still be made more inclusive and that it is in the interest of business, as part of society, to help achieve this.
- Statistics show us that there is a great disparity of wealth and opportunity, not only between countries but also within them. Because people are being left behind, there is a growing feeling that free trade is not for the many but the few. To dispel this myth politicians and business must work together to understand the causes.
- Business is part of the global society and not immune to the substantial systemic challenges such as climate change and the fourth industrial revolution that we all face. As part of society, business has a responsibility to engage and earn trust. For example, nearly 50% of jobs are likely to be lost to robotics in the next 20 years, and this statistic does not account for AI which is growing at an unparalleled rate.
- As employers and producers of products, what responsibilities do businesses have? Well, workers drive consumer spending and contribute to society through their taxes and personal networks. More inclusion means more people who participate in delivering growth and contribute to the economy. At a minimum, it is in the interest of companies who rely on consumers to address these employment challenges, but companies should also look at these burgeoning technologies as an opportunity to retrain their workforce to meet their changing needs.
Critical to delivering the continued innovation that will fuel employment and create inclusive growth is long-term investment Sir Mike Rake concluded. This is where government and business can work together to mitigate the risk and encourage investors to think more sustainably.
‘The Blueprint Principles offer a very simple and actionable guide to putting purpose at the centre of business’ Sue Garrard speaking to OECD about the role of purpose in business.
As a founder and Trustee of Blueprint for Better Business, Sue outlined why she believes businesses are moving from seeing profit as the purpose of business to seeing profit as an outcome of a purpose that benefits society. In part, this is driven by an understanding that it offers a business opportunity.
In her address, Garrard shared her experiences at Unilever, where she is responsible for embedding the company’s ambitious “Sustainable Living Plan” into the business and ensuring progress against its 70-plus time-bound targets. In 2017 Unilever’s sustainable living brands grew 46% faster than the rest of the business and delivered 70% of the company’s turnover growth. She drew on this to illustrate her view of how business can help drive a reduction in inequality, defining the four key areas as mindset, motivation, investor friendly framework and partners.
- Mindset – Businesses of all sizes are realising that as part of society they face equal risks from systemic challenges including environmental change and inequality. Given the scale of the shift that needs to be achieved, businesses cannot just be bystanders but also have to be part of the solution. A key role that early adopters can play is sharing great examples from businesses of all sizes to demonstrate that it is achievable.
- Motivation – There is a strong business case for a shift from old style CSR to the more holistic concept of purpose which puts social responsibility at the heart of all parts of the business rather than siloing it to a specific department. Unilever’s experience is that consumers believe everyone must play a part and see a close link between social and environmental policy. Consumers spending data shows a clear willingness to differentiate between products based on a company’s purpose – in particular paying more for brands that commit to making a social difference or are more environmentally friendly. This illustrates how business can be more competitive and drive growth by understanding consumer demand.
- Investor friendly framework – While this is changing, there is still a need to demonstrate and explain the benefit of a purpose-led approach to investors. This could be through some form of indexation, for example, mapping against the Global Goals to evaluate the social and financial impact to multiple stakeholders against business performance. For businesses who are just beginning this journey, the Blueprint Principles offer a straightforward and actionable guide to how you put purpose at the heart of a business.
- Partners – Beyond employees and consumers, businesses also have vital partner relationships such as suppliers and shareholders. As part of this businesses must act reasonably and influence others to bring in better practice, both these factors help to build long-lasting relationships which have a positive impact on business outcomes.
‘Business purpose calls on us to ask who we work with, how we act towards them and what impact we have’ Sacha Romanovitch speaking to the OECD about the concept of Vibrant Capital.
In her comments, Romanovitch outlined why she believes businesses prospering and thriving, can and should be good for society. She underlined that a critical part of this is collaborating with civil society to build an inclusive economy in which people and communities realise their potential. In fact, addressing society’s broader challenges can help businesses to remain relevant to customers, providing long-term value and mitigating future risks. To illustrate this, she outlined three critical ways in which her organisation thinks about what it means to be a purpose-led business and the steps they take to achieve this.
- Building trust – encouraging good practice and integrity in markets is vital in securing investment in the UK and for innovation to take hold.
- Sustainable practice – one way to unlock sustainable growth in through actively supporting dynamic organisations which are creating jobs and having a positive financial and social impact in the communities they serve. Data also shows that acting more sustainably helps business to withstand an economic crisis.
- Putting workers and suppliers at the heart of business – as a business that is based on people, creating an environment where people are inspired to come to work and to make a difference is crucial. This extends to supply chain organisations.
In her role as CEO of Grant Thornton, Romanovitch has spearheaded the development of the Vibrant Economy Index which sparks debate about what type of economy we want to build. It uses multiple datasets to provide a robust, independent framework to help understand the challenges and opportunities in a local area. And it drives collaboration between citizens, businesses and place-shapers to make their places thrive. Read more in her blog here.
Find out more about working with A Blueprint for Better Business here or download our paper on ‘How can purpose-led businesses contribute to inclusive growth and how can policymakers help them?’