Having already covered why investors want to see accountability in supply chains, this article should come as no surprise to our regular readers. Social accountability in big businesses is the positive trend that the economy needs right now. Without it, companies will quickly fall behind with consumers, regulators and their investors in today’s evolving market.
Currently, the world is facing major transformations in both macro and micro capacities. For instance, Oxfam reported that in 2019, the world’s 26 wealthiest people own as much as the population’s most deprived 50% combined. With statistics like this in mind, it’s no wonder that consumers are spending less and are becoming more conscious of their purchasing decisions. On top of these social issues, there is also the environmental issue of supporting businesses that are leading contributors to the current climate change issues that surround us.
In today’s current socio-economic climate, corporations who strive for positive social impacts will benefit immensely. Both consumers and investors are seeking out companies that aim for sustainability, and that create a positive impact through their actions. As Marc Benioff puts it, “yes, profits are important, but so is society.” For that reason, in this article, we will unpack Benioff’s concept of “new capitalism” and how businesses can start accepting broader social responsibilities, courtesy of The Economist.
What is “New Capitalism” and How Does it Relate to Social Accountability?
Benioff, the chairman and co-CEO of Salesforce, describes “new capitalism” as a more fair, equal, and sustainable system that works for everyone. It calls on businesses to give back to their communities rather than take from them. In other words, it’s about taking action to resolve social issues and go beyond the final dollar that is amplified by greed.
For this ideal of capitalism to be achieved, Benioff speaks of 2 steps. First, business leaders need to take a broader vision of their responsibilities by focusing on all stakeholders and not just benefactors. By all stakeholders, we mean employees, customers, communities, and the planet. As such, businesses will require profits to be considered in the large scheme of a triple bottom line of people, planet, profit. The next step is to formalize this commitment by publicly disclosing key stakeholders and how they are impacting these players. For social accountability to be effective, transparency is essential.
The trend of ethical consumerism doesn’t just stop at the final customer, either. In fact, young workers are expecting to work in places that reflect their values too. Attracting and maintain strong talent for the future is just another one of the many reasons businesses are encouraged to assess their environmental, social, and governance goals to address the world’s daunting problems of climate change and economic inequality. Instead of funnelling profits into shareholders, the pressure is being put on big business to invest in strategies that uplift their local and global economies.
Why are Businesses Being Held Accountable for Social Change?
Of course, running a profitable business comes with its perks and its pitfalls. Perhaps one of the most significant cons is the increase in public scrutiny. For companies who only want to make a profit, this approach to business is no longer viable in a digital age where one slip-up can go viral in seconds. In addition to this, the public is shifting its focus from government-driven solutions to how businesses are ethically trading to bring about social justice.
For many businesses, giving back to their communities may be a second thought. However, most ESG goals can be upheld on a micro-level, starting with how they operate internally. For instance, most companies have a pay gap that not only perpetuates gender discrimination but is also a catalyst in unfair working conditions. Then there’s the supply chain. Even though companies may work with outside suppliers, they must consider how they’re contributing to their overall ESG goals. Furthermore, businesses should assess how their partnerships help fulfil their values too.
At the end of the day, businesses are being held accountable for social change due to the influence they hold. Big corporations don’t just have the funds to invest in sustainable ESG strategies; they have the power to create a legacy of improved working standards.
The Bottom Line
We are seeing more articles like these from The Economist and the New York Times being published regularly. Similarly, we see more companies going under the microscope for their unethical and unjustifiable actions. Social accountability in big business is not going anywhere, it’s only just beginning to be used as a key advantage as well as a potential risk factor.