[Music] what is the purpose of business is it to
what is the purpose of business is it to
what is the purpose of business is it to make money for the owners or is it to
make money for the owners or is it to
make money for the owners or is it to create opportunity and prosperity this
create opportunity and prosperity this
create opportunity and prosperity this question has been on my mind for a while
question has been on my mind for a while
question has been on my mind for a while now when we see the headlines of
now when we see the headlines of
now when we see the headlines of corporate scandals layoffs poor labor
corporate scandals layoffs poor labor
corporate scandals layoffs poor labor conditions that question of purpose cuts
conditions that question of purpose cuts
conditions that question of purpose cuts to the heart of the matter and I think
to the heart of the matter and I think
to the heart of the matter and I think it’s a question we need really need to
it’s a question we need really need to
it’s a question we need really need to grapple with because the globalization
grapple with because the globalization
grapple with because the globalization of business has had a profound impact on
of business has had a profound impact on
of business has had a profound impact on us it’s certainly get opened the door to
us it’s certainly get opened the door to
us it’s certainly get opened the door to opportunities but it has also put
opportunities but it has also put
opportunities but it has also put enormous pressure on our environment and
enormous pressure on our environment and
enormous pressure on our environment and our communities according to the latest
our communities according to the latest
our communities according to the latest Trust Barometer by Adelman trust in CEOs
Trust Barometer by Adelman trust in CEOs
Trust Barometer by Adelman trust in CEOs is at an all-time low and the support
is at an all-time low and the support
is at an all-time low and the support for anti business policies is
for anti business policies is
for anti business policies is overwhelming and yet there is an
overwhelming and yet there is an
overwhelming and yet there is an expectation that businesses take a
expectation that businesses take a
expectation that businesses take a leadership role in improving the
leadership role in improving the
leadership role in improving the conditions of our social and environment
conditions of our social and environment
conditions of our social and environment environmental conditions in our
environmental conditions in our
environmental conditions in our communities populist movements have been
communities populist movements have been
communities populist movements have been on the uprise and they’re taking aim at
on the uprise and they’re taking aim at
on the uprise and they’re taking aim at the business elite who they see as the
the business elite who they see as the
the business elite who they see as the cause of job losses stagnating wages
cause of job losses stagnating wages
cause of job losses stagnating wages environmental harms just last week the
environmental harms just last week the
environmental harms just last week the Prime Minister spoke about this in
Prime Minister spoke about this in
Prime Minister spoke about this in Hamburg and he said we need to take this
Hamburg and he said we need to take this
Hamburg and he said we need to take this frustration seriously and we do what I
frustration seriously and we do what I
frustration seriously and we do what I believe underlies this is really a
believe underlies this is really a
believe underlies this is really a debate between two worldviews the
debate between two worldviews the
debate between two worldviews the stakeholder theory and the shareholder
stakeholder theory and the shareholder
stakeholder theory and the shareholder theory and those two have been largely
theory and those two have been largely
theory and those two have been largely confined to the pages of business
confined to the pages of business
confined to the pages of business journals in the corners of boardrooms
journals in the corners of boardrooms
journals in the corners of boardrooms but I want to talk to you about both of
but I want to talk to you about both of
but I want to talk to you about both of them the shareholder theory
them the shareholder theory
them the shareholder theory as can be summed up into three words
as can be summed up into three words
as can be summed up into three words maximize shareholder value and that idea
maximize shareholder value and that idea
maximize shareholder value and that idea has dominated the North American economy
has dominated the North American economy
has dominated the North American economy since the 1970s and they really got
since the 1970s and they really got
since the 1970s and they really got going when Milton Friedman wrote an
going when Milton Friedman wrote an
going when Milton Friedman wrote an article in The New York Times saying
article in The New York Times saying
article in The New York Times saying that the social responsibility of
that the social responsibility of
that the social responsibility of business is to increase profit and the
business is to increase profit and the
business is to increase profit and the idea here was really that the owners
idea here was really that the owners
idea here was really that the owners would take the money and they would
would take the money and they would
would take the money and they would apply it in society as they saw fit and
apply it in society as they saw fit and
apply it in society as they saw fit and so that gave birth to this idea that you
so that gave birth to this idea that you
so that gave birth to this idea that you know what the shareholders wanted was
know what the shareholders wanted was
know what the shareholders wanted was most important what the shareholders
most important what the shareholders
most important what the shareholders valued was most important and therefore
valued was most important and therefore
valued was most important and therefore we took value and profit and we put them
we took value and profit and we put them
we took value and profit and we put them together our stock markets our economy
together our stock markets our economy
together our stock markets our economy they’re all driven by quarterly
they’re all driven by quarterly
they’re all driven by quarterly financial results and that’s driven a
financial results and that’s driven a
financial results and that’s driven a culture of short-term thinking when you
culture of short-term thinking when you
culture of short-term thinking when you hear about things like layoffs R&D
hear about things like layoffs R&D
hear about things like layoffs R&D spending being slashed product recalls
spending being slashed product recalls
spending being slashed product recalls labor strife even consumer backlash
labor strife even consumer backlash
labor strife even consumer backlash that’s where it comes from the
that’s where it comes from the
that’s where it comes from the stakeholder theory on the other hand is
stakeholder theory on the other hand is
stakeholder theory on the other hand is far more nuanced in 1984 Edward Freeman
far more nuanced in 1984 Edward Freeman
far more nuanced in 1984 Edward Freeman really talked about this idea of
really talked about this idea of
really talked about this idea of rethinking the purpose of business as a
rethinking the purpose of business as a
rethinking the purpose of business as a vehicle to coordinate stakeholder
vehicle to coordinate stakeholder
vehicle to coordinate stakeholder interests that really means that when we
interests that really means that when we
interests that really means that when we come up with a strategy for business
come up with a strategy for business
come up with a strategy for business we’re not just thinking about the
we’re not just thinking about the
we’re not just thinking about the shareholders we’re also thinking about
shareholders we’re also thinking about
shareholders we’re also thinking about the other stakeholders employees
the other stakeholders employees
the other stakeholders employees consumers suppliers the government and
consumers suppliers the government and
consumers suppliers the government and communities that’s a complex undertaking
communities that’s a complex undertaking
communities that’s a complex undertaking though now there are pieces of this
though now there are pieces of this
though now there are pieces of this already in place we have things like
already in place we have things like
already in place we have things like talent development we have corporate
talent development we have corporate
talent development we have corporate donation programs we have you know
donation programs we have you know
donation programs we have you know ethical sourcing and social
ethical sourcing and social
ethical sourcing and social environmental standards but we still
environmental standards but we still
environmental standards but we still tacitly subscribe to this idea that the
tacitly subscribe to this idea that the
tacitly subscribe to this idea that the shareholder is dominant
shareholder is dominant
shareholder is dominant so where does that leave us well the
so where does that leave us well the
so where does that leave us well the desire for change is absolutely here
desire for change is absolutely here
desire for change is absolutely here there’s a whole generation of talented
there’s a whole generation of talented
there’s a whole generation of talented young people stating very clearly
young people stating very clearly
young people stating very clearly they’re seeking more from their
they’re seeking more from their
they’re seeking more from their workplace than just the pursuit of
workplace than just the pursuit of
workplace than just the pursuit of profit there is greater demand for
profit there is greater demand for
profit there is greater demand for accountability and transparency from
accountability and transparency from
accountability and transparency from consumers and advocacy groups and there
consumers and advocacy groups and there
consumers and advocacy groups and there are companies who are actually taking a
are companies who are actually taking a
are companies who are actually taking a leadership role so take for example the
leadership role so take for example the
leadership role so take for example the Tata Group they are a multinational
Tata Group they are a multinational
Tata Group they are a multinational conglomerate based in India they do
conglomerate based in India they do
conglomerate based in India they do about a hundred billion dollars of
about a hundred billion dollars of
about a hundred billion dollars of revenue a year they have been investing
revenue a year they have been investing
revenue a year they have been investing in their communities and they’ve been
in their communities and they’ve been
in their communities and they’ve been doing this through healthcare services
doing this through healthcare services
doing this through healthcare services job skills training and education and
job skills training and education and
job skills training and education and they’ve been doing that for 150 years it
they’ve been doing that for 150 years it
they’ve been doing that for 150 years it is built into their DNA they aren’t just
is built into their DNA they aren’t just
is built into their DNA they aren’t just investing in the prosperity of today
investing in the prosperity of today
investing in the prosperity of today they are investing in the people who
they are investing in the people who
they are investing in the people who will one day want to buy their products
will one day want to buy their products
will one day want to buy their products Schneider Electric is another example
Schneider Electric is another example
Schneider Electric is another example they’re an energy management and
they’re an energy management and
they’re an energy management and automation company in Europe and they
automation company in Europe and they
automation company in Europe and they have committed 50% of their executive
have committed 50% of their executive
have committed 50% of their executive and shareholder compensating the SEC you
and shareholder compensating the SEC you
and shareholder compensating the SEC you t’v and senior management compensation
t’v and senior management compensation
t’v and senior management compensation to achievement of their environmental
to achievement of their environmental
to achievement of their environmental social and governance goals or take
social and governance goals or take
social and governance goals or take Unilever at the core of Unilever
Unilever at the core of Unilever
Unilever at the core of Unilever strategy is a simple idea sustainable
strategy is a simple idea sustainable
strategy is a simple idea sustainable living and to that end they have
living and to that end they have
living and to that end they have invested in 800,000 farmers in their
invested in 800,000 farmers in their
invested in 800,000 farmers in their sustainable practices and those farmers
sustainable practices and those farmers
sustainable practices and those farmers supply Unilever they have invested in
supply Unilever they have invested in
supply Unilever they have invested in reducing their energy consumption by 20%
reducing their energy consumption by 20%
reducing their energy consumption by 20% and most interestingly they have
and most interestingly they have
and most interestingly they have eliminated waste that they send to
eliminated waste that they send to
eliminated waste that they send to landfills in 70 countries
landfills in 70 countries
landfills in 70 countries so of course Unilever makes money but in
so of course Unilever makes money but in
so of course Unilever makes money but in 34 countries there
34 countries there
34 countries there considered an employer of choice because
considered an employer of choice because
considered an employer of choice because people are looking for purpose in their
people are looking for purpose in their
people are looking for purpose in their work this kind of long-term thinking
work this kind of long-term thinking
work this kind of long-term thinking actually produces greater value
actually produces greater value
actually produces greater value investing in the strength and
investing in the strength and
investing in the strength and sustainability of a supply chain
sustainability of a supply chain
sustainability of a supply chain investing in the development of
investing in the development of
investing in the development of communities investing in efficiency and
communities investing in efficiency and
communities investing in efficiency and the elimination of waste those are all
the elimination of waste those are all
the elimination of waste those are all good business decisions but those things
good business decisions but those things
good business decisions but those things also create and sustain jobs they create
also create and sustain jobs they create
also create and sustain jobs they create greater well-being in our society and
greater well-being in our society and
greater well-being in our society and they reduce the burdens on our
they reduce the burdens on our
they reduce the burdens on our environment because when we invest for
environment because when we invest for
environment because when we invest for the future we ensure there is something
the future we ensure there is something
the future we ensure there is something there for us in the future so what is
there for us in the future so what is
there for us in the future so what is the purpose of business I believe that
the purpose of business I believe that
the purpose of business I believe that business is a platform for ingenuity
business is a platform for ingenuity
business is a platform for ingenuity creativity and prosperity it gives us a
creativity and prosperity it gives us a
creativity and prosperity it gives us a way to focus our resources on solving a
way to focus our resources on solving a
way to focus our resources on solving a problem it gives us a means to aligning
problem it gives us a means to aligning
problem it gives us a means to aligning a complex set of stakeholder interests
a complex set of stakeholder interests
a complex set of stakeholder interests and it compels us to invest today for a
and it compels us to invest today for a
and it compels us to invest today for a benefit tomorrow and that kind of bigger
benefit tomorrow and that kind of bigger
benefit tomorrow and that kind of bigger picture longer-term thinking is why I
picture longer-term thinking is why I
picture longer-term thinking is why I think the stakeholder model will
think the stakeholder model will
think the stakeholder model will ultimately win the debate because how we
ultimately win the debate because how we
ultimately win the debate because how we answer the question of purpose is a
answer the question of purpose is a
answer the question of purpose is a reflection of what matters to us what we
reflection of what matters to us what we
reflection of what matters to us what we value
value
value now of course profit is an important
now of course profit is an important
now of course profit is an important measure don’t get me wrong but it is not
measure don’t get me wrong but it is not
measure don’t get me wrong but it is not and I believe it cannot be the only
and I believe it cannot be the only
and I believe it cannot be the only measure of value what if we measured
measure of value what if we measured
measure of value what if we measured value through other things like economic
value through other things like economic
value through other things like economic impact or wage growth
impact or wage growth
impact or wage growth what about quality of life happiness
what about quality of life happiness
what about quality of life happiness what about life expectancy maybe poverty
what about life expectancy maybe poverty
what about life expectancy maybe poverty reduction or reduced carbon footprint
reduction or reduced carbon footprint
reduction or reduced carbon footprint what if we committed those kinds of
what if we committed those kinds of
what if we committed those kinds of measures to the core of our business to
measures to the core of our business to
measures to the core of our business to the core of our strategy I believe that
the core of our strategy I believe that
the core of our strategy I believe that if we can take a broader view of what
if we can take a broader view of what
if we can take a broader view of what value is we will land at the doorstep of
value is we will land at the doorstep of
value is we will land at the doorstep of so
so
so thing called purpose-driven strategy and
thing called purpose-driven strategy and
thing called purpose-driven strategy and that’s where I’ve committed myself to
that’s where I’ve committed myself to
that’s where I’ve committed myself to put more time and energy because I
put more time and energy because I
put more time and energy because I believe it is at the heart of what will
believe it is at the heart of what will
believe it is at the heart of what will transform our economy and our society so
transform our economy and our society so
transform our economy and our society so I want to leave you with something to
I want to leave you with something to
I want to leave you with something to think about
think about
think about whether you’re in a business or a
whether you’re in a business or a
whether you’re in a business or a non-profit or you’re in a volunteer
non-profit or you’re in a volunteer
non-profit or you’re in a volunteer group whatever it might be how does your
group whatever it might be how does your
group whatever it might be how does your organization define value and therefore
organization define value and therefore
organization define value and therefore purpose it will take thoughtful
purpose it will take thoughtful
purpose it will take thoughtful resourceful leadership to tackle the
resourceful leadership to tackle the
resourceful leadership to tackle the complex challenges of creating value the
complex challenges of creating value the
complex challenges of creating value the challenges that are ahead of us but in
challenges that are ahead of us but in
challenges that are ahead of us but in doing so we’re going to give ourselves
doing so we’re going to give ourselves
doing so we’re going to give ourselves permission to move away from short-term
permission to move away from short-term
permission to move away from short-term reactive thinking and towards long-term
reactive thinking and towards long-term
reactive thinking and towards long-term value creation that will have a greater
value creation that will have a greater
value creation that will have a greater impact on our shared prosperity and the
impact on our shared prosperity and the
impact on our shared prosperity and the sooner we get down to that hard work of
sooner we get down to that hard work of
sooner we get down to that hard work of figuring out what it is we truly value
figuring out what it is we truly value
figuring out what it is we truly value the sooner we can actually get down to
the sooner we can actually get down to
the sooner we can actually get down to the business of creating that value and
the business of creating that value and
the business of creating that value and we can get companies to take that
we can get companies to take that
we can get companies to take that leadership role and make a real
leadership role and make a real
leadership role and make a real difference in our communities in our
difference in our communities in our
difference in our communities in our environment and in our shared prosperity
environment and in our shared prosperity
environment and in our shared prosperity thank you
thank you
thank you [Applause]
[Applause]
[Applause] [Music]
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