Plotting a Path of Reason

2nd November, 2023

Rampant chasing after profit, regardless of its impact on employees, customers, suppliers and the planet has rightly been called out in recent years with a growing tide of consultancies advising companies on how to find their true ‘purpose’.  However, as recent articles suggest, a risk of swinging too dramatically to the other side has seen a company like Unilever tie itself up in knots in its attempt to find a social purpose for Hellman’s mayonnaise.  Spoiler alert: there isn’t one.  It just happens to make salads and sandwiches taste good. But while it may not have any other ‘purpose’ it does matter that the staff making it are well treated, quality ingredients are being used and that Unilever is paying tax on its profits. We would call this acting responsibly, surely something we do all care about?

So we would argue that there is absolutely nothing wrong with mayonnaise not having a social purpose (whatever that actually means).  What consumers and employees rage about is companies that do not pay their fair share of tax when we all do, or that pay workers a pittance whilst CEOs take home huge, disproportional pay packets.  Or that small businesses feel bullied into accepting long payment terms or see cashflow falter and end up in bankruptcy as they suffer late payment.

The voice of reason plots a clear path about treating all stakeholders and the planet with respect, acting responsibly and doing to others what you would expect them to do for you.  Articles like The Telegraph’s City turns its back on ethical investing amid upheaval’ (Friday 27th October, Matt Oliver, behind a paywall) sow seeds of despair – admission that a search for social purpose might not be appropriate for everything produced under the sun should not give us licence to throw the whole ESG agenda out of the window! Far from it….

Instead, we should be thankful that situations like the pandemic and the cost-of-living and climate crises have sharpened our focus on the crucial importance of behaving responsibly and treating people and planet well – and that’s all people by the way, not just shareholders and senior execs.  A focus on the S in ESG is long overdue.

For surely this is the way the private sector can play its part in correcting the excesses of the past, reduce inequality and ensure our planet remains habitable.  Clear commitment to basic principles that care for all people provides a path of reason within which further initiatives can be developed.  They provide corporate environmental and social responsibility alongside good governance that should be championed and favoured by investment, procurement and the general public.  The issue isn’t one of purpose, its one of behaving responsibly.

A change from ‘trendy ESG metrics’ to ‘old-fashioned profits’ misses the point.  Making a profit is fine – indeed essential to a business’s success – but don’t trample over people and planet in the process.  Indeed, treating them both well will improve those profits – it is NOT an either/or.   We outright reject the suggestion that ethical businesses don’t result in better run, more competitive companies delivering stronger returns for shareholders.  They do – and attract top talent who provide excellent customer service and are more productive because they feel valued in the workplace.

Admittedly, the benefit might not be felt immediately and there are many other factors which can also affect profits, but the long-term value of loyal customers and high staff retention will bring those higher returns when given time.  An organisation raising wage levels will see an initial hit to their P&L but when recruitment and training costs go down because you retain your staff, and productivity increases because your lowest paid staff are able to afford the basics for living in the UK, you will reap the rewards.

We cry out in despair that Shell and BP might scale back efforts for renewable energy due to lack of profit – surely there is no other viable path to ensure we treat our planet with care.  As Professor Guy Jubb is quoted in the article as saying ‘the stakes are too high’ to tolerate a lack of priority here.

The article describes Unilever as the ‘self-appointed torchbearer for ethics in the City’ and states it has ‘thrown in the towel’.  We sincerely hope it is not as dramatic as that.  Unilever has an excellent track record of treating people and planet well – it should be proud of its sustainability, ethical sourcing and real living wage records to name a few.

Behaving ethically matters, and let’s not forget an increasing number of employees and customers are demanding it.  Now is not the time to throw in the towel, but to take a stand for responsible business behaviour and continue to communicate that commitment clearly.