Bath Business and Society

Research, analysis and comment on the role of business in society from Bath's School of Management

Topic: Business and society

Remembering Malcolm McIntosh

  , ,

📥  Business and society, Sustainability

 

On Saturday 18th November, friends and family gathered to remember and give thanks for the life and work of Malcolm McIntosh. Malcolm was a leading writer and thinker in the business and society field, and a Senior Visiting Fellow at the University of Bath. Here, Andrew Crane pays tribute to a much missed friend and colleague. 

 

Friends and family gather to remember Malcolm at the Tate Modern

When I first met Malcolm, he rather alarmed me. Now, when I say I met him, what I really mean is that I bought his book on corporate citizenship – this one – way back in the late 1990s when I was a newly minted PhD student and Malcolm was – well, I will come to that in a minute; Malcolm has never been easy to pigeonhole.

So it would be several years later that I actually got to meet Malcolm in person and later again that we became friends. But, in that first intellectual meeting between me the reader and Malcolm the author I was not sure I actually liked him all that much. I was at the time one of those academics who was – as Malcolm would always disparagingly describe us – rather too preoccupied with obscure scholarly journals that no one ever actually read.

But here was a book that ignored all that academic baggage and captured for the first time the messy and exciting new world of corporate responsibility that was emerging at the time. Like much of Malcolm’s work, it was an exploration of real life practice – of the problems and solutions that were being experimented with by companies at the time – and it was filled with practical, good advice on how to be a more responsible company.

So of course, upstart wannabe intellectual that I was – I hated it. I found it too hopeful and not nearly academic enough for my liking. Where was the criticism? The theory? The intellectual posturing?!

But here it is, fresh off my bookshelf. I still have it some 20 years later. And for many years I actually used it exactly as it was intended – with MBA students and executives who were looking for answers and examples rather than the abstract theory that I had to offer from my own work. Malcolm, along with his co-authors, provided a rich source of inspiration and good ideas.

It is something that his work has continued to provide, right up to his latest book, In Search of the Good Society. In it, you can find some of the best health advice you can get, along with insights on art, prosperity and political economy among other things.

Malcolm's last book, In Search of the Good Society, published by Routledge

It is quite a mix. But as I mentioned, Malcolm has always been rather hard to pin down. Of course, that is probably exactly how he always wanted it to be, too.

When this earlier book came out, he was listed on the jacket as “an independent teacher, writer and consultant”. Now that probably isn’t a bad description for his whole career. Even when he had a formal position – as a Professor, as a Centre Director, as a Special Advisor to the UN – he was just as independent as when he was officially “independent”.

Malcolm, as anyone who knew him soon realized, always had his very own way of doing things. And it never looked too much like everyone else’s way of doing things.  He always crossed-boundaries between academia and practice and he had little time for academic disciplines or departments. His latest book, for example, is so wonderfully ambitious in its scope – part travelogue, part art appreciation, part health memoir – that it is almost impossible to categorize.

So University Vice Chancellors would typically either love or hate him, or very often both at the same time. Other academics also didn’t always fully appreciate him, but those that did, turned to him again and again for inspiration and a healthy dose of straight talking. Students naturally gravitated to him because he was so full of new ideas. And practitioners were often drawn to him because he understood them but also challenged them in ways that no one else did.

And I personally found him constantly invigorating. I asked Malcolm many times over the years to give classes to my students, to speak at conferences or examine the theses of my PhD students – and most recently, to join us as a Senior Visiting Fellow at the University of Bath. But I never really knew what I was going to get. That, of course, was a great part of the appeal with Malcolm. He was always so alive with learning and new insights wherever and however he would find them. You could never predict which direction he would head in next.

So, my own relationship with Malcom – our friendship over the 15 years that have passed once we did eventually bump into one another – has always been a source of fun and intellectual stimulation. If I ran into him at a conference whether in London or New York or KL or Cape Town I would naturally seek him out. He would of course have just flown in from somewhere else and have tales to tell aplenty of his travels. He never, ever, seemed to get bored or tired of visiting and learning from other places. And of course, he would have that twinkle in his eye, and that great hearty laugh, as he unwrapped another little nugget of worldly knowledge – or he unravelled another of life’s ironies – or he castigated (but always with such humour) the continued failings of us all to get to grips with the problems of the world.

Because, at the heart of it all, Malcolm always, always, always had an unending drive to make the world a better place. His work, really, was a means to an end. He was an unstoppable optimist, ever believing that things could one day be better, and that knowledge, love and understanding were the keys to getting us there. He was constantly planning something new, building institutions, writing books, launching new initiatives, and hacking his own path through the status quo. And it was such a pleasure and an honour to be swept up in all that with him.

Memories of Malcolm

So what can I say except that, like many people, I will – I am – missing him terribly and the planet will be a poorer place without him. Right up to the last he was planning the next thing, ready to fire off another book to complete his trilogy. Sadly, it was not to be this time. But he has left us a wonderful repository of knowledge and insight. And in his time here – whether through his work or simply the way he chose to lead his life to the absolute fullest – he helped move us all a little bit closer to the better world, to the good society, that he wanted for all of us.

 

 

Six tips for making interdisciplinary research work

  , , ,

📥  Business and society, Research, Sustainability

 

Interdisciplinary work holds lots of promise for business and society research, but it is also highly challenging. Sarah Glozer, Deputy Director of the Centre of Business, Organisations and Society, summarises the advice from our recent event about how to make it work in practice.

 

As universities, journals and funding bodies call for greater interdisciplinarity in our research, we brought an international group of academics together last night to debate one key question: how do we make interdisciplinary research work in the context of business and society research? Over food, drinks and a good dose of speed networking, we debated the challenges and opportunities of interdisciplinarity. Here are our top six tips for success.

 

1. Keep it practical. The best way to galvanise interdisciplinary interest around an issue is to get your hands dirty. See the issues first hand and focus on a specific problem or challenge with real-world impact. Trying to artificially force researchers together from different disciplines and expecting to see ‘something new’, risks getting stuck in the weeds. Get out there, find your common problem, and take it from there. This is about making it matter and developing problem-based teams.

 

2. Look for the easy wins. It is arguably easier to make novel contributions and have more meaningful impact in interdisciplinary teams. Knowing your respective subjects so well, it is easy to identify gaps when you start comparing across disciplines. We are trained to have deep areas of specialism, so let’s exploit these. Issues of business and society cannot be dealt with by each of us on our own, and so think about what skills you can bring to the table and don’t be afraid to make broad assertions early on to establish common ground.

 

3. Speak the same language. In interdisciplinary research, it is important to really integrate the scope of the work across the team, not just pay lip service to ‘collaboration’. Make sure that all parties are involved from the get go to avoid being perceived as convenient ‘add-ons’ and make sure to generate a shared package of work. This is about identifying capabilities (and points of disconnect) from the outset, and being transparent. This might even involve going back to basics… What’s the point? Why do we need an interdisciplinary perspective here? What’s the added value?

 

4. Set a goal. Interdisciplinarity requires a change in mindset. We need to be open minded and define a shared goal. In business, the goal of collaborative efforts is making money. In academia, what is the goal? More importantly, in business and society research who are our key stakeholders? Yes, we want to solve problems, yes, we want to generate good scholarship, but is there more to the project than this? An aligned goal and a joint framing of questions sets the core focus and breaks down silos.

 

5. Build relationships. We need to learn from each other and so we should base teams not just on skills, but also attitude. Interdisciplinarity teaches us to be tolerant, but most importantly, we learned last night that the best projects are those where we establish healthy ways of working. Let’s enjoy this. Interdisciplinary research can be exciting and stimulating. If it’s a pleasure, we are learning. And if we are learning, we are likely breaking new ground. The successful teams are those that embrace ignorance and aren’t afraid to get out of their comfort zone. It is easier to do this with researchers you can call friends, or where there is mutual respect for one another’s work.

 

6. Break the mould. Let’s be clear about the challenges. This isn’t easy, particularly for early career academics. We need to create the right environment and recognise that we have different measures of output in different disciplines. Are we talking impact, funding or journal rankings, or all three as measures of success? Whilst we have the intention to be interdisciplinary, the system can sometimes stifle creativity. How do we get the gatekeepers to really buy into this? How can we work to break the mould for early academic leaders of tomorrow?

 

Prof Andy Crane, panellists and guests at CBOS Interdisciplinary event, held at No15 Great Pulteney. Photo by Sarah Glozer.

 

To round off the event, the panellists were asked for their final comments on the question, ‘What advice would you give to inspire interdisciplinarity in business and society research?’

  •  “It’s about solving problems and changing the world. We have to be open to new perspectives.Adam Joinson, Professor of Information Systems, University of Bath

 

  • Listen, talk and form a gang. You can make a new field. Just look at the business ethics area which was formed from the interaction of moral philosophers and social scientists.Laura Spence, Professor of Business Ethics, Royal Holloway, University of London

 

  • Form educational systems across disciplines and learn from one another.Mette Morsing, Mistra Chair of Sustainable Markets and Scientific Director at Misum, Stockholm School of Economics

 

  • There are differences and diversity even within disciplines. Let’s recognise this and identify synergies. Don’t just focus on the lowest common denominator.Julie Barnett, Professor of Health Psychology, University of Bath

 

  •  “Impact, stimulation and let’s recognise power. What structures enable and constrain our activities?David Cooper, Professor in Accountancy, Alberta School of Business

 

Feature image by cactusbeetroot under CC BY-NC-2.0

 

Business schools still have work to do to prepare future managers for a "Better World"

  , , ,

📥  Business and society, Education, Research

 

 

The latest rankings exercise from Corporate Knights aims to show how far business schools are incorporating sustainability into their research and teaching. While the results show that progress is being made, there are also questions around how business schools engage with such exercises, and whether we're getting a truly global view of business school practice. In this piece, Annie Snelson-Powell questions what such rankings exercises really tell us about how future managers are being educated in sustainable business practice. 

October 16th saw the publication of the 2017 Corporate Knights Better World MBA ranking. This exercise provides an annual assessment of sustainability at all full-time MBA programmes that choose to opt into the Corporate Knights process of evaluation, and also includes the top Financial Times (FT) Global MBA programmes.

These global business schools are evaluated via a methodology which involves three key criteria: the presence of core courses on sustainability in the MBA curriculum; school affiliation with related institutes and centres; and the faculty’s research as gauged by the volume of related publications and citations.

The Corporate Knights report reminds us that the role of business schools in educating future leaders is particularly crucial as it’s these new managers who will shape how all types of organisations address sustainability through their decisions and actions.  The report suggests that both society and the business school sector may often fail to sufficiently recognise their responsibilities and opportunities offered by the United Nations Sustainable Development Goals.

As scholars, we also question the actions and motivations of organisations in their approach to sustainability, including a critical concern for how business schools are addressing their responsibilities.  We look to activities at the most prestigious business schools in particular, since their actions serve to define and redefine what an ideal business school should do and hence eventually influence behaviour in the sector overall.  Our earlier research on UK business schools found that while some business schools were failing to implement sustainability, there were also examples of meaningful activity from many schools including the most prestigious.

These findings are echoed in this world-wide evaluation which shows that the six most highly ranked MBA programmes in the world all feature in the Better World MBA ranking this year.  In fact, of the 40 MBA programmes included in the Corporate Knights' list, 18 are also rated as top FT MBAs.  This link between prestige and sustainability is heartening and serves to indicate that we might expect an upward curve in the uptake of sustainability in the MBA as other business schools across the sector follow suit.

However, before we become too complacent about this important progress, questions remain.  Is this uptake of sustainability also reflecting the expertise of the prestigious business schools in becoming ever-more savvy at performing well in the whole suite of games relating to accreditations, rankings and evaluation?  Now that AMBA and other accreditation bodies stipulate that attention must be paid to sustainability, are these business schools merely delivering the minimum required to maintain their status and memberships?  Is signalling an interest in sustainability another means to sway stakeholders without fulsomely addressing some of the profound and inherent tensions faced by business theories and practice, such as the pursuit of maximum short-term profit versus a longer term sustainable means of doing business that respects the environment and society?

Looking more carefully at the MBA curriculum itself, arguably the most direct of the Corporate Knights' measures of the education a future leader will receive, eight of the top 40 Better World MBAs had only one or no core dedicated course on sustainability.  A previous post by our Sustainability & Management MSc students eloquently argues that this kind of education is a fundamental for all business students.  Even at these exemplar “greenest” schools, which should provide the best sustainability education for future managers, there is clearly still more that can be achieved.

Furthermore, this list of the greenest schools is a stark reminder of the over-emphasis on Western perspectives when it comes to thinking about sustainability and management education in general.  These rankings reveal that large geographic blind-spots remain in our assessment of sustainability in MBA programmes.  Of the 40 featured in the Better World MBA list, 39 are from North America, Australia or Europe.  That these regions alone can determine what an MBA for a better world should look like is doubtful.  We should explore how business schools in Africa, Asia and elsewhere in the world are viewing sustainability and seek to understand whether non-Western schools see any benefit in participating in this kind of assessment.  While progress has been made, there is still work to do in establishing a truly global understanding of what constitutes an MBA for a better world.

 

Image by H.Koppdelaney

 

Overseas anti-slavery initiatives flourish, but domestic governance gaps persist

  , ,

📥  Business and society, Modern slavery, Policy, Research, Supply chains

 

UK-based companies are ramping up efforts to combat slavery in their overseas supply chains. But according to Andrew Crane and Genevieve LeBaron, companies also need to be working harder to address the severe labour exploitation taking place at home.

 

The passage of the UK 2015 Modern Slavery Act has prompted companies to be more open about their efforts to combat forced labour in global supply chains. To date, hundreds of companies have published modern slavery statements as required by the Act. These statements depict the problem of forced labour as a hidden and illegal practice that is seeping into complex overseas supply chains, in spite of companies’ extensive efforts to protect human rights. Companies describe their efforts to prevent and address forced labour and human trafficking through the use of ethical auditing, certification schemes, supplier codes of conduct, awareness-raising and the installation of responsible sourcing managers. This is centred on vulnerable and faraway workers, such as in the Thai fishing industry or the Bangladeshi garments sector.

There is without doubt value in company efforts to combat forced labour in supply chains operating in countries where national regulatory enforcement of labour standards is weak. Seldom acknowledged, however, is the fact that the problem is not exclusive to developing countries in the global south, but is also prevalent in developed countries in the north, including the UK.

As we document in our research published in the journal Regulation & Governance, regulatory and enforcement gaps surround the use of forced labour in global supply chains as well as supply chains located within UK borders. Problems such as the weak enforcement of labour law, poor oversight over labour providers and limited transparency in labour supply chains – combined with immigration laws that render migrant workers vulnerable to forced labour – mean that forced labour continues to thrive in UK-based industries.

Many companies source from domestic supply chains in which forced labour is known to be a problem. These include the food, construction, garment and household goods industries, as well as those linked to services such as car washes and cleaning. Yet, companies reporting on their anti-slavery efforts rarely mention these UK-based supply chains or their vulnerable workforces, choosing instead to focus on workers in their sourcing networks overseas – instead of the presumably easier option of fighting forced labour at home.

This blind spot may stem from the assumption that the UK government is already handling the problem of forced labour within its borders, so companies do not need to. However, as highlighted in our research, design flaws in public regulatory initiatives and poor enforcement mean that regulatory gaps frequently referred to as ‘decent work deficits’ in the developing world could also occur in the UK.

The risk of forced labour in UK supply chains was acknowledged by department store chain John Lewis in its 2016-2017 Human Rights and Modern Slavery Report, following the high-profile 2016 conviction of one of its UK bed suppliers Kozee Sleep for exploiting a ‘slave workforce’ to make beds sold in John Lewis stores. The company report notes that UK workers are at risk of slavery, due to “informal recruitment in seasonal supply chains” and the “lack of scrutiny of labour providers”. However, it is not clear how exactly the company plans to address these risks.

The Kozee Sleep case also underscores the shortcomings of company initiatives to monitor labour and social standards. According to several newspaper reports, Kozee Sleep passed an ‘ethical’ audit just weeks before it got busted for forced labour. As The Independent reported, “ethical audits by a series of firms including John Lewis, Next, and Dunelm Mill failed to spot their supplier was employing foreign workers for less than £2 a day”. If ethical audits cannot detect forced labour in the UK, how effective are these tools abroad, where audit cheating and corruption are documented to be widespread?

Although the reports provide some detail about the initiatives that companies are taking to prevent and address forced labour, they very seldom report on theeffectiveness of those efforts. For instance, when problems like the Kozee Sleep case are acknowledged, companies often respond by making vague references to training programs to help suppliers and service providers share good practice, or to generic ethical auditing programs. For instance, Tesco’s modern slavery statement describes the requirement for all of its UK suppliers to attend a one-day training on modern slavery that “offers a support network where challenges and good practice can be shared among peers and experts”. While this may be a valuable initiative, the company does not report on how effective this program is in actually addressing the pattern of forced labour that has by now been well-documented in UK agricultural supply chains. This makes it difficult to assess whether or not progress is being made.

Big business has a long way to go if it is serious about reducing its reliance on forced labour in the developing world. But the governance gaps surrounding forced labour in global supply chains are not the only ones to persist in the wake of the Modern Slavery Act’s passage. Companies looking to fight forced labour should start with their domestic supply chains, where they have high visibility, traceability and control as well as strong state resources that they could mobilise, if they really wanted to.

 

This article was originally published under a Creative Commons Licence by Beyond Trafficking and Slavery on the Open Democracy website. Beyond Trafficking and Slavery seeks to help those trying to understand forced labour, trafficking and slavery by combining the rigour of academic scholarship with the clarity of journalism. 

A more extensive version of this piece was recently published in the academic journal Regulation and Governance. For download options, please see the Wiley Online Library.

Image by Nick Saltmarsh

 

Corporate environmental impact - why self regulation isn't enough

  , , ,

📥  Business and society, Environment, Research

 

Globalisation, the demise of the state and rising stakeholder expectations have resulted in the proliferation of  a self-regulatory approach to managing corporate environmental impacts. Self-regulation is now a major feature of environmental protection and is largely synonymous with the management of corporate environmental responsibility. In this piece, Kostas Iatridis questions the wide belief that environmental self-regulation represents an effective means of addressing environmental challenges, and suggests this can be achieved only through a collaboration between public and private bodies.

 

The rise of self-regulation

The prevalence of neo-liberal economic views in running the economy, along with the transformation of our world into a global village, have promoted environmental self-regulation as an effective means of dealing with increasing environmental challenges. State regulation has been criticised as ineffective, non-flexible and costly. Instead, voluntary action has been used to advocate a market-fundamentalism that puts the workings of the market first. Environmental laws and institutions are expected to conform to the laws of the market in order not to restrain trade and economic profitability.

This shift towards market autonomy has resulted in new, prosperous markets. This in turn has facilitated the proliferation of voluntary self-regulatory tools for environmental protection (e.g. ISO 14001 and EMAS). Such tools have been endorsed by armies of consultants, policy makers, and auditors as a panacea to harmful environmental practice. Governments too have supported self-regulatory approaches as a means of facilitating corporate responsibility and some have even declared their incapacity in dealing with environmental issues.

Following the wide endorsement of self-regulatory tools, one might expect to find a positive relationship between their adoption and improvements in corporate environmental performance. Yet, studies have questioned the effectiveness of environmental self-regulation by suggesting that its adopters might not necessarily perform better than non-adopters. Critics highlight the commercial relationships formed between self-regulating firms and external auditors, as well as a lack of knowledge amongst auditors, as particularly problematic. They take the view that due to these issues, auditing mechanisms might not always be as robust as they should be, enabling firms to behave opportunistically and in their own interests.

Furthermore, the tendency of earlier studies to focus on firms’ motives for adopting such self-regulatory approaches, along with a belief that environmental certification is synonymous with improvements in environmental performance, have offered limited views on the real potential of self-regulation to reduce environmental impact.

 

Does self-regulation mean better environmental performance? 

It is only recently that discussions have moved towards the effectiveness of self-regulation in safeguarding environmental performance. Interesting views have emerged suggesting that the latter might depend on the institutional environment. In particular, it is suggested that stringent external environmental regulation might discourage firms from adopting environmental self-regulation in the first place. This is because, in such institutional contexts, the marginal gains in efficiency and strategic differentiation associated with environmental self-regulation are very small. In contrast, when firms operate in the weak institutional environments often found in developing countries, and seek to export to countries characterised by strong institutional regimes, they tend to adopt and substantively implement environmental self-regulation because of strong motivations to improve their internal efficiency.

These are important insights, making us think differently about environmental regulation. Self-regulation alone might not always serve the common interest, thus state regulation has a role to play. The times in which we live are challenging for governments, as globalisation has transformed many states into little more than transit stations in the world-wide trade of goods administered by multinational corporations. In many instances, states have lost the power to define the conditions that affect economic activities within their own territories. As a result, we have seen states retreating and, in the name of efficiency and cost cuts, passing more responsibilities over to the private sector. However, phasing out state regulation, as has been advocated by supporters of market autonomy, cannot ensure effective environmental protection. No single governance actor, private or public, has the independence, expertise or operational capacity to pursue effective environmental regulation. What is needed is cooperation between the public and private sectors.

 

Public-private cooperation

The big question is whether public governance actors have an appetite for taking this on. Recent developments, such as Trump’s decision to withdraw from Paris’ climate agreement, contrasted with Senate’s recent approval to fund the United Nations’ climate change body, not to mention Brexit as well as several geopolitical tensions, send contradictory messages and, in some instances, question whether environmental issues should even have a place on the international agenda.

To sustain the momentum of action for environmental protection, business leaders, academics, policy makers and civil society organisations need to acknowledge the questionable outcomes of environmental self-regulation and engage in discussions that promote collaboration. The recent crossing of the northern sea route without ice breakers signals the undisputable significance of environmental challenges and the necessity for finding the right mix of state and self-regulation to address them.

 

Image by Kris Krug

Careers in sustainable business - the Two Loops theory

  , , , ,

📥  Business and society, Education, Employers

 

As September approaches, our current Masters students look ahead to starting their careers and a new cohort begin their studies in Sustainability and Management.  Many of them will be considering whether and how they can make an impact on society and industry. In this piece, current MSc students Sanum Jain and Elliot Johnston use the Two Loops theory to consider where their work and fresh ideas can have the most impact and instigate the most change.

 

What is the Two Loops theory? 

The Two Loops theory, developed by the Berkana Institute, is all about change within our social and economic systems. According to the theory, socio-economic activity can be split into two ‘loops’. The first loop is the ‘incumbent loop’ - which represents the status quo, the way things have ‘successfully’ operated for decades. The second is the ‘disruptive loop’ which represents progressive change and alternative ways of doing business or operating in society.

The theory states that as the incumbent loop reaches its peak in output, ‘disruptors’ start considering more efficient and socially progressive ways of operating. Breakaway individuals look to invest in these ideas, taking intellectual and financial capital out of the first loop and starting to build up the second ‘disruptive loop’. The best way to visualise this is as two waves. As the incumbent wave crests and reaches peak economic output, the disruptive wave starts to build in its shadow.

 

 

Change in the energy industry

The concept of waves of progressive change is particularly relevant to sustainable development. Let’s use the energy sector, specifically fossil fuels and inefficient energy grid systems, as our representation for the first loop. We would argue that we currently sit on the downward curve of the first wave. While non-renewable fossil fuels are still our main source of energy, the threat they pose to our planet is increasingly recognised. At the peak of the coal, oil, and gas industries, pioneers began to experiment with alternatives - nuclear, wind, solar - beginning the disruptive second loop.

The viability of these new technologies has increased and before long the renewable energy industry - or the disruptive loop - will usurp the fossil fuel industry in terms of output. This threat to incumbent firms is already being felt. Large oil companies are making huge investments in renewables in a bid to survive society’s shift away from fossil fuels, as exemplified by Total’s acquisition of SunPower. Such acquisitions are an example of corporate movements beyond traditional CSR, which tends to focus on mitigation of the negative impacts ‘business as usual’. These forays into the disruptive renewable energy industry are representative of what incumbent firms need to do to stay relevant.

 

What does this mean for sustainability

The Two Loops theory does not only work on an economic, practical level.  We believe it should be seen as a representation of a prevailing narrative within business and society.

Seen through the lens of the Two Loops theory, incumbent firms own the concept of sustainability, but they approach it from an institutionalised position. Most firms engage in philanthropic activities for the sake of reputation gains and slowly adhere to the pressures of stakeholders to implement responsible business measures.

We could identify the second loop, which intends to represent an alternative, disruptive vision of how the world could be, as a developing system of innovative, mission-driven organisations and social entrepreneurs whose goal is to solve problems, bring change and benefit society.

Unlike the energy sector, the social endeavours of businesses are at an earlier stage of development, but change is coming. We have seen organisations emerge who represent a shift in the status quo.

Divine Chocolate, for example, is proving that employee owned cooperatives can shift a company’s focus towards a more positive impact for its stakeholders. We have also seen the introduction of Community Interest Companies (CICs), businesses with primarily social objectives whose surpluses are reinvested in the business or in the community, rather than distributed to shareholders. CICs help to protect the mission of smaller disruptive organisations and prevent any dilution of the integrity of the second loop.

 

Creating change in the workplace

What might this theory mean for us, as young people preparing to enter the workplace? Understanding and appreciating the potential for industries to work differently is something that will be key in instigating further change. Thinking about what these changes might look like could provide us with a different path as we start to navigate our professional journeys.

In the context of the Two Loops theory, we may have only considered the option of working for firms that make up incumbent loops. It is very easy to assume these firms will continue to operate in the way they always have, and during the early steps of our careers, maintaining the first loop may seem like the sensible option.

But, as the next wave of business professionals, we believe that it is imperative to look ahead at the future of careers, our industries, and society. We will have the opportunity to contribute to strategy, operational, and CSR efforts within the companies we work for. We will have the chance to act as change agents within these firms. This might lead us or those around us to head out and act as pioneers in new firms that start the next disruptive loop, or we may stick around to help the incumbent loop move closer towards the disruptive loop before it fades into insignificance,

We don’t know if the journey towards a truly sustainable world lies in this next disruptive loop, or the one after that. What we believe though, is that if progress is going to be made we should be using our education and newfound skills to take a risk and invest our careers into nurturing an alternative, progressive, disruptive system.

Image by Daniel Parks

 

 

Thriving in the cold - the challenge of sustainable development in the Arctic

  , ,

📥  Business and society, Environment

 

Despite the sometimes questionable reputation of the extractive industries, it's possible that mining can contribute to comprehensive sustainable development in the Arctic. Partnerships with host communities can create value for stakeholders and promote inclusive economic growth. In this post by Bath MBA graduate Pernille Moeller, we look at two very different mining projects and examine how their contrasting approaches affected the outcome of their bids.

 

To most, the Arctic offers a window into the effects of climate change - into what may be described as the trailer to the world’s slowest disaster movie. But the Arctic is about more than melting icecaps and polar bears. It is also home to large indigenous groups who are struggling with poverty and lack of economic opportunity.

Sustainability (as traditionally defined by the Brundtland Commission) is a two-legged beast. We need "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". In theory, economic growth, environmental protection, and social equality will promote each other in sustainable development, but practice can at times prove harder than theory. For the Arctic it may seem there is a certain trade-off between what we think of as international sustainability versus inter-generational justice.

As the world is slowly waking up to the fact that melting ice has real and massive consequences for the rest of the world, the knee-jerk reaction has been to conserve and protect the pristineness of the Arctic. We might define this as international sustainability, ie at least a few places are left untouched in the world.  However, conservation tends to only cater to the environmental aspect of sustainability. It rather conveniently forgets about the needs of the present, such as the need for a diversified economy to withstand the increasing pressures from climate change.

Greenland holds significant amounts of natural resources: oil, gas, iron, diamonds, rubies, zinc, hydropower. The list is long and large parts of the island are still only superficially mapped. Mining is likely to be the key that can unlock economic sustainability for the territory. To leverage this sizable potential, foreign expertise and capital is needed. High rewards are often linked to high (operational) risk, and the logistical challenges in Greenland are significant. Infrastructure is lacking at the most basic level: no two towns are linked by road and trained labour is scarce.

To succeed in this challenging, but potentially very rewarding market, requires a particular approach. A comparative analysis of two incoming companies indicates that this success is determined by  partnership, social capital and perhaps just something as simple as genuine respect.

The two companies in the analysis were both early to the market, but different in every other respect.  The first company, one of the world’s largest producers  of aluminum, proposed a £2 billion operation that  would take raw aluminum from Africa and ship it to Greenland. There it would make use of the plentiful cheap energy from hydropower for its highly energy-intensive refinement process. The second company had just one other smallish mine in Arctic Canada, their operational model depended on less than 100 people and their product (red rubies) was local and well-known.

On paper, the large multinational seemed so much more capable than the smaller company. It was the smaller company, however,  that successfully entered the market, while the multinational’s bid failed.  Both companies sought partnership, but did so in significantly different ways. The multinational went in with a state ambassador and negotiated hard for favourable conditions with politicians and high level officials. The smaller project also sought partnerships but on a much more local level.  Its  strongest advocate in the permit process became the small settlement which now hosts the mine. It also chose to establish a local office early in the process, which enhanced the perceived legitimacy of the project.

Close ties to government can be tricky, not least when you seek to extract natural resources in developing economies. There is risk of corruption, and the reputational risk from that may outweigh the initial benefits. Buy-in from local government certainly helped both projects, however it was the real partnership with the local settlement that secured the smaller company a steady supply of workers and the necessary licence to operate. Time, an essential component of social capital, was a vital ingredient.

Local rumour has it that when the first liaison team from the multinational arrived, there was a major storm. Delays meant a chief executive’s luggage had been lost. Local officials offered to help secure the gentleman a new outfit. However, he refused the offer, as he wasn't intending to stay long enough for a change of clothes to be needed. Looking back, that might have been the moment when everyone should have realised that this was not a partnership worth pursuing.

Extractive industries in highly fragile ecosystems are controversial. Most of us have an urge to protect what little pristine nature is left. However, blocking commercial investment may jeopardize sustainable development, because business – when done well – can be such a powerful tool for inclusive growth and poverty alleviation. This case study shows us how understanding the context in which one plans to operate is crucial to a successful bid. Early explorers to the Arctic learned the hard way how incredibly difficult it is to survive on one’s own in a harsh and unforgiving environment. That is still a relevant lesson for the explorers of today.

 

About the author
Pernille has spent the last decade working and living in Nuuk Greenland, focusing on issues relating to climate change, international cooperation and inclusive growth. She worked for the Government of Greenland for a number of years in roles including Head of Office for Climate and Energy. She currently runs a social enterprise in East London, also aimed at marrying inclusive growth and prosperity with environmental sustainability. Originally trained as a political scientist, she is a graduate of the Bath MBA.
Image: Construction of transmission cables near Qorlortorsuaq by Nukissiorfiit

 

Careers in sustainable business: risk consulting in financial services

  , , ,

📥  Business and society, Education, Employers

 

In the first in our series on careers in sustainable business, University of Bath alumnus Joe Hill of FTI Consulting speaks with current MSc students Elliot Johnston and Sanum Jain about how he helps firms tackle the ethical challenges of the financial services industry.

Hi Joe, thanks for taking the time to talk to us. Could you tell us a little bit about what you’re doing now?

I’m a consultant in FTI Consulting's Financial Services team. We work with financial institutions of all shapes and sizes, from multinational global investment banks to small wealth management firms in London - there’s a whole spectrum.

We tend to help firms in four areas that are relevant to sustainable practices in financial services. These are: governance, financial crime (prevention rather than participation) regulation, and conduct.

Generally, we help clients to manage their regulatory risk and their reputational risk. Within the perspective of sustainability both of those are crucial, because in financial services it’s all about people’s confidence in the system. People need to have access to financial services, and they need to have confidence in those services. The industry’s lifeblood is people’s trust in these institutions that trade on their behalf.

 

Did your education at the University of Bath play a part in your desire to pursue a career in the sustainability-related parts of financial services performance or was that career goal something you found earlier?

Well, I studied politics and international relations at undergraduate level, and the global governance and accountability module I sat at Bath pointed me towards the space between politics and business as a place I’d like to explore professionally. When FTI came calling after I had graduated, the opportunity offered a perfect marriage of my interests. In that regard, taking part in the global governance and accountability course was important and quite pivotal in leading me toward this profession. It offered something that the rest of my Masters degree didn’t: a focus on the importance of ethical and sustainable corporate performance.

Interestingly though, now I’m in London I’ve found that sustainability is considered an essential part of financial services performance. This is partly due to the proximity of the 2008 crisis as well as the stringent regulation that is now prevalent. While I was at Bath, the reputation of the financial services industry was at its nadir, and this was an issue that was openly discussed on the course. My classmates brought a range of cultural and contextual ideas into the discussion from a sustainability perspective. Such diverse thinking has been crucial in driving sustainability up the financial services agenda, with increasing international collaboration over issues such as money-laundering and tax evasion.

 

You’ve mentioned the damage the financial crisis did to the financial services industry eight years ago. Is the industry still recovering from that damage? And what do you think are the biggest challenges faced by the industry now?

In a post-2008 world, there’s still a big rebuilding job to be done after faith in the industry was shattered. Financial services play an absolutely vital role in everyday lives which means the industry simply can’t afford to keep getting this stuff wrong. Opportunities in the ethical and regulatory space within the industry have opened up since the 2008 crisis and many firms have stepped up to try and rebuild faith in the industry. One of the most immediate challenges in the industry is addressing the disparity between a firm’s espoused culture and the actions of its employees. There is also the wider challenge of ensuring equal access to financial services.

Access to financial services is a sustainability issue that is not easily solved. Everybody should have access to financial services. Sadly, in reality, it can sometimes be difficult for people both in the developing world and even here in the UK to have access.

Ultimately, financial services should be available to everyone, easily accessible and act as a safeguard to ensure that our economic system works effectively. However, lots of different factors continue to play a part in the ability of financial services to achieve these goals. Things like whether people have valid documentation, which isn’t always as straightforward as it sounds, or whether regulations actually discourage banks from taking on certain individuals because they’re deemed to be riskier customers. You can end up in a situation where those on lower incomes are struggling to gain access to proper financial services, yet they are the people who would benefit the most.

 

How does all of this effect what you do at FTI?

While at its heart what FTI's Financial Services team does is management consulting, we know that the issues we’re working on have a wider societal importance. We know that the consequences of the City getting things wrong are pretty severe, which everyone saw play out after 2008, so it is nice to be working on something and knowing that it has a positive impact. The interesting thing about financial services, I guess, is that it had to “switch on” more quickly to the fact that operating in a way that benefits society actually goes hand in hand with being profitable, perhaps more so than in other industries. As we’ve seen with the LIBOR and PPI scandals for example, behaving badly means fines and remedial costs which can have a big impact on bottom line performance.

In terms of the systemic importance of what we do, sustainability and its importance is really integral to everybody who works here. Hopefully that will become more of a factor now because firms are judged so heavily on their sustainability credentials these days. That can only be a good thing.

 

Image by Ken Teegardin

 

Public reasoning and the public intellectual

  , , , , , ,

📥  Brexit, Business and society, Education, Uncategorised

 

In our post-truth times, we are in need, more than ever, of public intellectuals. Sadly, we recently lost one of our own most spirited and courageous free thinkers in the business and society field, Malcolm McIntosh, a Senior Visiting Fellow at the School of Management. Malcolm passed away on 7th June 2017 after a long battle with cancer. In this extract from his forthcoming book, In Search of the Good Society, he speaks of the need for elites such as academics and other experts to reengage meaningfully with society in order to address the world's most pressing social and environmental problems. We shall greatly miss not having Malcolm with us on that journey, but his words shall remain a touchstone. 

We have challenges that must be considered carefully and tackled with quiet and earnest intent: reforming the global financial system to bring it back within our control; developing economies that nurture, rather that destroy our natural capital; managing the development of biotechnology such that it provides solutions, and does not create problems; keeping control of AI, such that, as with the development of writing and printing, we know where we are going and have some control; and, turning our media tech companies into responsible publishers so that they are subject to the sort of social controls that govern our print media and daily libel and slander laws. If democracy is to work, and be more of a viable option for the 50% who don’t currently have it, it must be based on what Edmund Burke, and more recently Amartya Sen, call ‘public reasoning’. Burke said that ‘the only thing necessary for the triumph of evil is for good men to do nothing’ - and in this time fake news and ‘alternative facts’.

This requires the empowerment of what Pierre Bourdieu, and more recently Edward Said, call ‘the public intellectual’ who through clear public engagement restore the role of the expert and dispel the propagandists that populated the Nazi regime and drive the Trump administration and the Brexiteers. Those who voted nihilistically against those they thought to be the elite, who were the elite, must be engaged so that they can see the wholeness of society, both locally and globally, or we are doomed. Rather than coasting on our laurels we must reengage with everyone, everywhere. We must win the argument with reason.

This ‘high-opportunity, high-risk’ society is open to everyone, but also only those who have access to education and free information. As Antony Giddens says: ‘knowledge and innovation always cut both ways’. The future does not lie with nativism or isolationism. Indeed such moves defy the tide of history, the interdependent nature of all our lives, what we now know about the science of the planet, and what Karl Jung called our collective unconscious which holds the soul of humanity. At the heart of the good society should be an understanding of what Jung called instinct, for these aspects are central to what it means to be human: hunger, sexuality, activity, reflection, and creativity. And I count both art and science as forms of creativity.

Globalisation, like trade and capitalism its bedfellows, is not dead, it just needs reforming. This is not a binary, it has to be nuanced. A balance must be found on a global basis to forge what Sen calls a ‘democratic global state’ through public reasoning. The forces of financialisation, social media and consumption are out of control and have formed a model of AI such that we are beholden to their algorithmic vicissitudes. As Angus Deaton, 2016 Nobel prize winning economist, has said: ‘I don’t think globalisation is anywhere near the threat that robots are . . . globalisation for me seems to be not first-order harm and I find it very hard not to think about the billion people who have been pulled out of poverty as a result’. Deaton and his wife Anne Case have explained through enormously useful and detailed megadata trawling both the Brexit and the Trump votes: the ruling elites have been completely out of touch with white working class people. For instance, Deaton and Case highlighted the fact that the only demographic group to decline over the last fifteen years in America, because of ‘deaths of despair’, were white, poorly educated, working class men.

This is the same group that in the UK and the US have not only seen zero social mobility, but where the bottom 10% have gone backwards – they are poorer now than they were before. In the US they are now in the same position as the African-American population have always been. Just as it took the Babbage Report in the village of Haworth in Yorkshire a hundred years ago to highlight the appalling toll of poor sewage and the need for clean water so this may be a time for the elites, that’s you and me, to take a look at what really matters for everyone – at the top and the bottom of society. China and parts of Africa continue to pull people up over the poverty line, while the UK, the USA and India continue to oppress working people. Japan and most of Scandinavia have virtually eliminated extreme poverty, while parts of Europe, such as the UK, seem to lack empathy for those who suffer most. In the UK this group voted for Brexit, and in the USA for Trump. In both cases fear and ignorance triumphed. The answer is not xenophobia led by elitists (Trump and the Brexit leadership - Gove, Johnson and Farage – all of whom are rich with elite backgrounds). And the groups that voted for Trump and Brexit shot themselves in the foot, like turkeys voting for Thanksgiving and Christmas.

It is not too late. All the statistics prove that globally we have made good progress over the last seventy years and we will look back and see that 2016 was a moment to take a deep breath and ask what went wrong, and then move forward again. The megalomaniacs, the greedy, those lacking in empathy and many corporate interests will always try to take over, but just as meerkats and bonobos run on cooperation so the best of humanity has been when we collaborate and cooperate. We must work for a feminised future not an avaricious masculine past. The future is liberal, collective and progressive but it requires us not to walk past on the other side or hide in a dark room listening to Beethoven with our headphones on until the world blows over. Art may be the best way forward, for it is through artistic expression in different dimensions that we can see the world afresh.

 

This is an excerpt from In Search of the Good Society by Malcolm McIntosh, which will be published by Routledge on 26th October 2017.

Tackling child labour in the fashion industry - why the best firms have the most to lose

  , , , , ,

📥  Business and society, Consumers, Human rights, Modern slavery, Policy, Supply chains

 

New research suggests that firms with a good reputation for ethical sourcing in the fashion industry are judged more harshly than their peers when child labour is discovered in their supply chainMeggan Caddey, a final year PhD student, and Johanne Grosvold and Stephen Pavelin, all from the Centre for Business, Organisations and Society at the University of Bath, explain their findings.

Child labour remains a major societal challenge. The International Labour Organization (ILO) estimates that 168 million children are involved in child labour today, which the United Nations (UN) defines as “work for which the child is either too young – work done below the required minimum age – or work which, because of its detrimental nature or conditions, is altogether considered unacceptable for children and is prohibited”. Many of these children work in the garment and fashion apparel industry.

The drive for child labour

According to the organisation Stop Child Labour, fast fashion has resulted in high demand for children who are willing to work for very low pay and in dangerous conditions. Some have suggested that their employment is tantamount to modern day slavery. Some of our best known high street brands including Adidas, H&M and Nike have relied on manufacturers who have subsequently been exposed as using children to work in unsafe conditions.

Increasingly, global firms are recognising that failure to address the challenge of child labour can seriously impact on their corporate reputation. However fashion supply chains are complex, relying on numerous suppliers, sub suppliers and manufacturers. According to H&M’s Head of Sustainability Helena Helmersson, these supply chain networks are so complex that “it is impossible to be in full control”.

Corporate responsibility and corporate reputation

Prior research indicates that, by going above and beyond the basic requirements for fulfilling their corporate social responsibilities, proactive firms can engender goodwill that acts as an insurance against potential damage to their reputation.  The theory goes that if news of wrongdoing emerges from the supply chain of such a proactive firm, its reputation will suffer less because people will give it the benefit of the doubt - 'surely, this good firm must not be to blame'. Other firms that have no such record of exemplary behaviour would be more readily blamed and, as a result, their reputations would suffer more. According to this theory, H&M would suffer less of a reputational impact if child labour was uncovered in its supply chain, as it is now working strategically to become the most ethical fashion chain on the high street. We set out to test this theory in relation to supply chains in the apparel industry.

Research findings

Our study used an experimental vignette method. This involved presenting study participants with carefully constructed, lifelike scenarios, to evaluate their attitudes, opinions and views of a firm’s actions regarding child labour in the fashion supply chain. Over 800 participants took part in our study, and our initial results are surprising. We found that a firm that had taken steps to address child labour and unsafe working conditions in its supply chain enjoyed a better reputation than a firm that had not. However, when something went wrong, people judged these firms more harshly than they did the firms that had previously behaved less responsibly. So, while firms that are more socially responsible tend to benefit from an improved reputation, such goodwill is accompanied by greater reputational risks - specifically, such a firm experiences greater harm to its reputation if unsafe labour practices are subsequently discovered in its supply chain.

Our findings imply that it is in firms’ interests to address unsafe practices in their supply chains, as doing so results in a better corporate reputation. However, our results also suggest that steps taken to stamp out child labour and poor working conditions tend to strengthen the imperative for a firm to maintain a consistent commitment to responsible sourcing. If they don’t, they risk particularly stringent reputational punishment. In effect, this can create something of a virtuous cycle, which gives momentum to firm's steps towards stamping out child labour and unsafe working conditions. Careful reputation management implies that firms setting high standards must continue to live up to them.

The business case for doing good

There is an increased policy emphasis from both governments and NGOs to reduce the use of child labour and unsafe working conditions in the supply chain. There is also evidence that firms are increasingly taking the problem of child labour seriously, with some estimates suggesting that reliance on child labour was reduced by 30% from 2002-2012. As our research shows, tackling this issue can bring benefits for both children and firms.

We provide distinctive new evidence that guides us towards a more detailed understanding of the business case for being good and doing good. By illustrating the reputational benefits of sustainable supply chain practices, our research findings can help motivate firms not already on board, and inspire those who have already taken action to sustain and expand their efforts. This may in turn encourage them to sign up to independent initiatives such as  GoodWeave, which awards companies the right to carry the GoodWeave label if they can show that no child labour or bonded labour was used in the production of their goods. With 11% of the world’s children still sacrificing school in order to work, this is no time for business to be complacent.

Image by Zoriah

 

 

Going the extra mile at work - good for your career, bad for your mental health

  , , , ,

📥  Business and society, Employers

 

"Going the extra mile" at work - helping colleagues, going beyond the confines of a narrow job description, taking on extra responsibilities - can help people feel more engaged with their work, improve job satisfaction and increase promotion prospects. But as Bruce Rayton explains, this doesn't come without a cost.  

Mental health is becoming a hot topic. Boosted by a high profile awareness campaign fronted by the Duke and Duchess of Cambridge and Prince Harry,  recent months have seen public figures from the worlds of music and sport as well as Prince Harry himself speak out about the challenges they’ve faced.

Businesses too have joined the conversation, and it makes sense for them to do so. After all, paid work is the primary activity for many people during their waking hours, and the costs associated with employees’ mental health problems are significant.

The UK’s National Institute for Health and Clinical Excellence estimated the cost of impaired work efficiency associated with mental health problems at £15.1 billion a year. This figure is almost twice the estimated annual cost of absenteeism (£8.4 billion). These costs are associated with loss in productivity because of sickness absence, early retirement, low engagement, and increased staff turnover, recruitment and training.

 The mental health risks of being a good citizen at work

Our recent research helps us understand an important piece of this problem.  Our findings show that employees who work beyond the narrow boundaries of their job roles are at increased risk of mental health problems. We found that going the extra mile at work can lead to higher levels of emotional exhaustion and work-family conflict. We also found that these effects were most pronounced for employees who already performed well in the core elements of their jobs.

We defined ‘going the extra mile’ using well-known academic measures of organisational citizenship behaviour (OCB), with a particular focus on the dimensions of ‘altruism’ (helping colleagues) and ‘conscientiousness’ (going beyond the minimum). We were especially interested in the effects of conscientiousness and altruism because these time-consuming activities have the potential to exhaust employees emotionally and leave less time for family life.

OCB is widely regarded as being beneficial for both employers and employees. We know from earlier work that OCB improves group and organisational performance and influences managers’ decisions on an individual’s performance ratings, promotion and pay. The worker puts in extra time, or takes on extra responsibility, and as a result feels more engaged with their work and positive about their career prospects. The employer gets committed staff, with improved productivity or results. However, our work suggests that there is also a cost to be paid for these benefits. Somewhat surprisingly, these costs are disproportionately paid by those who are doing “the day job” well.

What can employers do?

Managers are prone to delegate more tasks and responsibilities to conscientious employees who are likely to try to maintain consistently high levels of output. We can see the sense in using today’s strengths to solve today’s problems. However, we think that companies should think twice before asking the same ‘good soldiers’ to take on yet more additional tasks and consider how the burden might be shared.  Even the highest performers will eventually run out of emotional energy and the consequences for their mental health will have further consequences for their employers.

We believe that much greater consideration needs to be given to the kinds of behaviours that HR practices are encouraging and how organisations might cope with the consequences. Reviews of practices in three key areas are necessary:

·         A narrow focus of reward and performance management systems on short term goals might encourage the kind of ‘sprinting’ which increases the longer term costs of OCB.

·         Education and training practices for both line managers and employees could aid recognition of situations where employees risk becoming emotionally exhausted.

·         Health and safety practices, especially those associated with mental health and emotional well-being, can help those who suffer from the problems we identified.

An opportunity to “go the extra mile” is something that many employees want employers to provide. The resulting benefits including learning opportunities, skill development and knowledge transfer, can all have a substantial impact on the bottom line for firms and on the career development of individual employees. That said, managers need to keep an eye on the bigger picture if the performance gains associated with providing these opportunities are to be sustained. The human capital developed through OCB can only create value for organisations if the employees are healthy enough to use it to good effect.

Employers should pay attention to more than the quarterly bottom line. They should make themselves aware of both the current state of and potential threats to the mental health of their employees, particularly their high performers. If nothing else, this awareness holds the prospect of helping firms avoid turning today’s solutions into the sources of tomorrow’s problems.

Image: Working late by Victoria Pickering

Trump’s first 100 days have triggered political activism among corporate America

  , , , ,

📥  Business and society, Environment, Human rights, Policy

 

President Trump has introduced a flurry of legislation in his first 100 days. Companies and their CEOs are responding by taking stands on political issues in ways rarely seen before. Andrew Crane asks whether this could end up transforming the way we think about corporate responsibility.

President Trump’s first 100 days have not been good for the planet. While the question of whether he will fulfil his campaign promise of rolling back the US’s commitment on the Paris climate deal is still to be settled, he has stuffed his cabinet with climate change sceptics. Most notably, the appointment of Scott Pruitt to head up the US Environmental Protection Agency met with a storm of criticism. This was hardly surprising given his ties with the energy industry, his denial of man-made climate change, and a long history of fighting the very agency he has been appointed to lead.

Trump and his cabinet have not been slow in rolling back environmental regulation introduced during the Obama presidency. As part of an effort to revive the coal industry, an executive order last month started unravelling Obama’s clean power plan (CPP). As the New York Times reported, the order effectively ceded the US’s leadership in addressing climate change and turned “denials of climate change into national policy”.

While such developments were hardly unexpected, what has been interesting has been the corporate response. Last November, nearly 400 US companies including Nike, Levis Strauss and Starbucks demanded that he leave in place low-emissions policies. In the wake of the CPP announcements in March many companies again took a public stand against the policy reversal. For example, Mars Inc. expressed disappointment at the policy change while tech companies including Apple, Amazon and Microsoft signed a joint statement supporting the CPP.

It is rare to hear companies, and US companies in particular, arguing to keep regulation. They are also usually unwilling to take explicit political stands in the public eye, preferring to use lobbying and more covert forms of political influence to sway governments to act in their interests. But the corporate response to the climate rollback seems to be part of a broader change of heart among senior executives to take public positions against what they see as undesirable policy shifts.

This change was first noticeable following Trump’s immigration ban back in January that saw wholesale restrictions on refugees and others from predominantly Muslim countries from entering the US. As Business Insider reports, “Before the day was over, Facebook's CEO had published a post denouncing the order. By the end of the weekend, Starbucks' CEO had outlined plans to hire 10,000 refugees. And, within a week, Uber's CEO had quit Trump's economic team as thousands deleted their accounts with the ride-hailing app.”

The response by corporate America to the immigration ban was significant and widespread. Rather than the usual caution about taking a political stand on a hot button issue, companies as diverse as Coca Cola, Google, and Ford came out against the policy. The tech industry’s response gained a lot of attention, not only because high profile companies and their leaders such as Sergey Brin at Google actively spoke out against the executive order, but also because regular tech industry employees staged walkouts and protests rarely seen before in the industry. For many in tech, the Atlantic reported, this was the first time they had taken part in political activism in their lives.

 

company-reaction-immigration-ban

 

So what does all this mean? There are a number of ways of looking at this, but the big change for me is that US companies are starting to acknowledge a meaningful role for themselves as explicit political actors. In the past, few company executives would ever admit that their actions were in any way political. “We don’t do politics” was the mantra, despite the billions of dollars spent on lobbying and trying to buy influence in Washington. However, as companies have more openly started addressing issues traditionally thought of as government responsibilities – protecting human rights, providing public goods, enforcing social and environmental standards, and the like – the cloak has gradually slipped.

Scholars of corporate responsibility such as myself have been analysing these developments over the past couple of decades, labelling these new corporate behaviours variously as “corporate citizenship”, “political CSR”, or “private governance”. So the response by corporate America to Trump’s first 100 days is not so much a sudden change in their core corporate responsibility behaviours, more a new found willingness to start acknowledging what has been increasingly apparent all along: corporations do indeed play an explicitly political role.

Acknowledging something is the first step to dealing with it. And the role of business in politics is something that we certainly do need to address as a matter of urgency. Most business leaders may not be completely comfortable yet with admitting their political role, but many do want to start thinking more seriously about their impact on the world, as Mark Zuckerberg’s recent 6,000 word manifesto exemplifies. Further radical announcements from the Trump administration are likely to incite yet more corporate political activism. So while we may not be able to thank President Trump for his impact on the planet, he may yet be responsible for a breakthrough moment in companies’ understandings of their changing role in society.

Header image by Ted Eytan

 

Business students need a new perspective not a new framework

  , ,

📥  Business and society, Education

 

Two current students on the University of Bath’s MSc in Sustainability and Management, Sanum Jain and Elliot Johnston, discuss the impact that business ethics and sustainability modules have had on their business education. They pose the question: can we talk about business ethics being as important as business economics as part of a management degree?

Management students have the opportunity to sit an array of compulsory and elective courses during their time at business school. As sustainability students, the business ethics module was a mandatory requirement for us, whilst few traditional management students saw this course as an attractive elective. However, it soon became apparent that this course would shape the way we navigate business in a way we think is important for every management student, regardless of specialism.

We became well-versed in the theories of business ethics and came to understand how sustainability needs to be considered as integral to strategy rather than a side-lined marketing tool. Furthermore, we were exposed to the factors that could affect our ethical decision making as agents within a company. Now we field questions about profit making in the face of sustainability limitations, as if we are living in a world where ethical decision making and profit making are mutually exclusive. Our peers in other classes may often label us ‘idealists’ for voicing a perspective we have gained through business ethics. We can't help but wonder if this would be the case if business ethics was compulsory across the School.

Within the first week of studying at Bath, we were introduced to a variety of frameworks upon which we were to base our understanding of business. Most notably, in business economics, we were introduced to Michael Porter’s Five Forces Framework and his Theory of Competitive Advantage. The theory of competitive advantage teaches students about low cost strategies and product differentiation strategies to maintain a focus on profit maximisation, with the end goal of achieving a larger market share. This theory provided the backbone of business strategy from which many other concepts have branched. But not for us.

Our module in business ethics introduced us to a deeper perspective, challenged us to ask more existential questions about business and to understand the ‘why and the how’ behind profit. However, this was not a prescriptive course. We weren’t provided with a specific framework to follow. We engaged in case studies that explored the actions of individuals just like us who had behaved unethically for the benefit of their employer. We delved into the problems created by globalisation, analysed the responsibilities of corporations in the modern world, and looked at the theories we might use to understand how complex ethical problems can be approached in a business environment.

We didn’t just gain a perspective through which to view the business world. Business ethics added a dynamic to the content we were introduced to in our other courses. We were encouraged to question our own values and the way we might view decision making in other realms such as marketing and operations. Furthermore, it led us to understand who we are personally, in relation to the corporations who may hire us in the future.

As sustainability students, we are not alone in our way of thinking. Indeed, Michael Porter himself is now an advocate for sustainable development created through business. In his recent TED talk, he called for commercial organisations to address social issues with alternative business models in order to create “shared value”. At the same time, he called competitive advantage seeking differentiation factors “trivial” in the face of greater challenges.

“Shared value is capitalism, but it's a higher kind of capitalism”, Porter said. “It's capitalism as it was ultimately meant to be, meeting important needs, not incrementally competing for trivial differences in product attributes and market share. Shared value is when we can create social value and economic value simultaneously.”

This isn’t a debate as to which framework should be taught in lieu of another. Michael Porter’s business theories are undoubtedly imperative to a management student’s education. However, even Porter recognises the need to change the perspective from which we learn and operate. Knowing what we know, it is the responsibility of business schools to ensure that the next generation of the workforce are equipped to tackle the ethical challenges they might face. We know from research conducted in our own School that this is starting to happen, but more could be done. Conventional management frameworks should be taught through the perspective of business ethics in order to create managers of the future who can successfully contribute to a sustainable world.

Image: businessmen by David Drexler

Are future managers learning enough about sustainability?

📥  Business and society, Education

 

While many business schools claim to be incorporating concepts of sustainability and responsibility within their teaching programmes, they are not always effective in doing so.  In an era where failing to walk the talk carries reputational risks, Annie Snelson-Powell asks what determines whether or not business schools make good on their promises to deliver responsible management education?

A question increasingly asked by society and scholars alike is whether business schools are really doing enough to prepare future managers for the social and environmental challenges facing society today.  Are they merely trumpeting empty rhetoric that seemingly supports these ideas, but delivering little in the way of change?  It is a long-held concern that business schools are failing in delivering on their responsibilities in this regard.  New challenges to business school legitimacy ensue with each corporate scandal, not least following the most recent financial crisis where critics suggested that self-serving, business school-educated managers put profits and self-interest ahead of longer-term responsibilities to their employees, stakeholders and the global economy.

Business schools have not ignored these concerns. They have in ever-increasing numbers pledged to address sustainability and social responsibility by committing to delivering responsible management education.  As illustrated by the growing list of signatories to the UN’s Principles of Responsible Management Education (PRME), hundreds of business schools publicly commit to this agenda. Management education, as envisioned by PRME, should be designed to equip future managers to do the right thing when they enter the world of business.  Alongside the traditional corporate objectives, they should be ready to navigate matters of inclusion, sustainability and social responsibility.

However alongside this evident progress come questions over the genuineness of these public claims, given the complexity the associated change implies.  Integrating sustainability and responsibility as core concepts in business schools involves reconciling an underlying tension. To engage with sustainability means thinking of corporate strategy in a way that balances financial concerns with social and environmental issues and impacts: an agenda seemingly at odds with the traditional theories taught in business schools which have historically promoted a profits-first ideology.

This setting provides the context for our research which sought to establish what happens next once commitments like PRME are made.  We tried to identify those features of business schools which are significant in determining whether these promises end up in meaningful activity, or remain the kind of window-dressing that stakeholders are increasingly suspicious of.

We focused on UK business schools and carried out interviews with 68 Deans as well as studying data on rankings and financial performance.  The analysis  revealed that while the presence of sustainability/CSR expertise within the faculty was important, business schools do not require substantial financial resources if they are to make good on their commitment to incorporate sustainability into their teaching in a meaningful way.  Since earlier work suggests that financial resources are a barrier, this is an intriguing and encouraging finding. It suggests business schools across the spectrum of financial means have the ability to meaningfully engage with sustainability through their teaching.

The study also looked at business school prestige and revealed a link between the more prestigious schools and successful implementation.  Since the link was not due to financial resources, it may instead suggest that the enhanced expectation and scrutiny bestowed on those with high prestige creates an impetus to walk the talk.  The implication of these findings provides grounds for hope, since the actions of the prestigious serve as an example to other business schools about how to behave. If prestigious business schools readily engage with sustainability, others may follow.

These findings are important for all business schools wishing to avoid the potential reputational risks associated with claims that do not tally with a fulsome engagement in practice. The insight that it is the expertise of faculty that is critical to efforts to implement sustainability, as opposed to substantial financial resources, means that all business schools are capable of mitigating these risks. This could be by considering how they prioritise specialist sustainability/CSR skills in their recruitment strategies or by developing more of this expertise in-house amongst existing faculty.

An Economist article featuring this research argued that the view of business school graduates as Gordon Gekkos is outdated.  Certainly our findings support a more optimistic view of business schools, which are in many instances making progress in walking the talk on their sustainability commitments and approaching the agenda in a genuine way.  Despite these initial advances, few schools are all the way there: sustainability and responsibility in management education is a continuing challenge, and much work remains to be done.  However our research should serve as encouragement that by seeking to introduce sustainability into the skill-base of business school faculty, schools will be moving in the right direction and playing their part in the solution rather than the problem.

The findings of the study will also be presented at a University of Bath School of Management conference later this month organised to celebrate the 50th anniversary of the University of Bath: ‘The contribution of business schools to inclusive development in Africa and Europe’.

Image by Nic Delves-Broughton

 

Getting women onto the board – why some countries fare better than others

  ,

📥  Business and society, Gender equality, Policy

 

The world over, there are more men than women in corporate boardrooms. This means that business is missing out on the talent and skills of a hugely important group that could make business more competitive. Here, Dr Johanne Grosvold and Dr Bruce Rayton discuss research which shows how four key institutions - family, education, economy, and government - either facilitate or hinder women’s rise to the boardroom.

Following the collapse of Lehman Brothers in 2008, Christine Lagarde of the World Bank questioned whether the bank would have collapsed had it been the Lehman Sisters, rather than the Lehman Brothers. She suggested that insufficient gender diversity in the upper echelons of financial institutions was partly to blame for the financial crisis and corporate collapses.

The continued under-representation of women in corporate boardrooms across the world remains a thorn in the side of big business and politicians alike. Increasingly though, governments and businesses are beginning to consider what can be done to redress the balance. Some countries such as France and Sweden are leading the way with up to 41% of women on the board, while others such as Greece and Malta lag behind with rates of only around 5-10%.

Given such cross-national variation, we set out to understand why it persists and to identify what could be done better to make gender diversity in the boardroom a reality. Taking a sample of 23 countries, including most of Western Europe, the USA, Asia and Latin America, we analysed the role of education, family, religion, economy and the role of the government in influencing board diversity. Our results were both surprising and encouraging.

Out of the five institutions we analysed, four were statistically significant in helping to explain why women do or don’t make it to the boardroom. Family, education, economy and the government all played a role while religion was the only factor that had no apparent effect.

Education - in countries where women and men enjoy similar levels of enrolment in higher education, women are better represented in the boardroom.

Family - in countries where there are fewer incidents of divorce, there are fewer women on the board. In other words, we found that an unintended outcome of higher rates of the divorce over the last few years has been greater labour force engagement and executive ambitions amongst women.

Economy - where women make up a smaller proportion of the managerial labour force, there are fewer women on the board.

Government - in countries where governments back their welfare legislation and family friendly policies with money and, for example, subsidise childcare, women are better represented in the boardroom. Passing legislation and instigating initiatives designed to encourage women to balance family and working life only give the desired results if there is adequate funding to make these initiatives meaningful and effective.

We believe these results may be good news for business and women alike. Increasingly more women than men are pursuing higher education, which means they are giving themselves the best starting point for climbing the corporate ladder. It is important, though, that governments consider the potential effects of their broader policies on women and families, to ensure that these help rather than hinder women to capitalise on the benefits of higher education.

In many countries, women retain the role of primary carer. Governments are, however, increasingly attuned to the need for providing better funded welfare provisions such as subsidised childcare to ensure that women are able to contribute fully to society and economy. This suggests that going forward, business is likely to reap the rewards of even more and better talent. To maximise these benefits, business could play a more active role in complementing government action, for example by including subsidised childcare in remuneration packages in countries where such provisions are not routinely provided by the state.

Welfare provisions of this kind have typically been associated with liberal or social democracies. But the growing acknowledgement of the business case for supporting women's career progression means that governments and employers in all countries should do more to encourage gender balance in the boardroom.