Far from Just Talk: A Stakeholder-Focused Approach Exists Today

Two years ago when Hurricanes Irma and Maria tore through southern Florida, St. Thomas, St. Maarten and Puerto Rico, leaders at Royal Caribbean Cruises quickly moved into action. With airports closed, they rerouted all of their ships to ferry supplies and volunteers to the islands and refugees away from them. “We turned all of our skillsets – logistical planning, itineraries, moving resources – toward get our ships to someplace where they could do some good,” said Rob Zeiger, Royal Caribbean Cruise’s VP, Global Chief Communications Officer. In all, Royal Caribbean ships evacuated 6000 people and 130 pets, and brought 40,000 gallons of clean drinking water, 32,000 cases of food, 4,000 mattresses and 450 generators to the islands. For Royal Caribbean employees, perhaps the most touching moment occurred as ships coming from Puerto Rico docked back in Miami. “We knew there would be thousands of people with relatives in Puerto Rico. We let employees reach out to friends or family and get them a state room on a ship,” Zeiger said. (The full story can be found in Ethisphere Magazine for those who want more)

I am reminded of this story for several reasons. First, it’s hurricane season. Second, I’ve been reading all week about The Business Roundtable’s announcement about redefining the purpose of corporations to deliver value to customers, invest in employees, deal fairly with suppliers, support communities and generate long-term value for shareholders.

The Business Roundtable’s shift in stance was met with a range of reactions – from millennials applauding the move, to others suggesting it is all talk. Although I understand why there would be skepticism, I believe that companies are ahead of the game and already working away to serve all stakeholders. I think this Royal Caribbean story exemplifies the way corporate leaders think today about how their company can work to serve a broader societal purpose, support communities, take care of customers, and empower employees.

Rise of the Values-Based Organization

The role of corporations has been shifting for some time. Today, transparency and trust are at the top of the agenda for both corporations and stakeholders. Here’s just a sampling of statements CEOs – all signatories to the Business Roundtable announcement – made at our Global Ethics Summit last March:

Tamara Lundgren, CEO of Schnitzer Steel, stated “Employees are picking employers that are aligned with them on impact, or personal values. People didn’t used to talk about values. That said, today, values and purpose resonate very differently than compliance, or conduct.”

Roger Krone, Chairman and Chief Executive Officer at Leidos, advises compliance professionals to ask themselves whether their board is willing and able to take a stand, in order to be on the right side of certain controversial issues. “It used to be that the sole reason for a corporation to exist was to create value for shareholders. Over the past 40 years, corporate America has figured out they’re here for a lot more than shareholder value – we’re also here for stakeholder value.”

Investing in Employees

Diversity and inclusion aren’t just buzzwords when it comes to today’s workforce. BMO Financial Group was named to Bloomberg’s Gender Equality Index due in part to "…workplace initiatives that have led to 40 per cent of senior BMO leaders being women, educational tools that help women to take control of their finances, and our commitment to provide $3 billion in capital to women-lead businesses…"

EY has a Diversity and Inclusion Roadmap and its US Executive Committee has signed the EY Board Diversity Statement, among other actions. Voya Financial, Inc. was included in the 2018 Disability Equality Index (DEI) in recognition of the company’s commitment to prioritizing the inclusion of people with disabilities.

Companies are also getting creative when it comes to employee benefits. Fifth Third Bank’s maternity concierge offers pregnant women and new moms access to a variety of services to make work and their personal lives a bit more manageable.

It’s not all positive – there is still a lot of work to be done when it comes to many issues, including gender equity. However I am hopeful to see that the World’s Most Ethical Companies honorees have a greater proportion of women in leadership roles – 25 percent – as compared to S&P 500 companies, at five percent.

Being Good Partners

Earlier this week, our CEO presented at the Dell LatAm Partners Summit about the importance of business integrity across value chains. That was not a one-off dialogue – we’re seeing more and more serious conversations around the partnership between companies and their suppliers, resellers and distributors, particularly those in higher-risk regions. Across the board, companies are increasingly sharing best practices, training, resources and guidance for anti-corruption and other issues. This is a win-win scenario: global companies gain some assurance that third parties have the capabilities to meet contractual obligations; and third parties build enhanced trust with customers and a competitive advantage when going after new business.

Supporting Communities

Mexican mining company Industrias Peñoles engages communities on education, infrastructure, the environment, small business growth and culture. One such activity is focused on building a strong social infrastructure, including sports to attract young people and teach them teamwork, spirit, and how to be on time and to follow rules. They also invest in educating teachers. S. Fernando Alanís Ortega, Director General of Industrias Peñoles, notes that “All of these activities are focused on trying to build better citizens, better communities, and better families.” They also think of the long-term. “A mine is a non-renewable resource, so one of these days the mine’s life is going to end. When we start new operations, we try to identify the competencies of the community. We try to find an economic activity to help them to be independent of our activity, so the day we finish and close the mine, they are not going to suffer. We strongly believe in the development of communities, and we help them to be self-sufficient.”

Generating Long-Term Value for All

Contrary to some of the more cynical takes on the Business Roundtable statement, we don’t have to eschew profits in order to broaden the focus – quite the opposite, in fact. Earlier this week, Ethisphere’s CEO Tim Erblich wrote about the link between profit and purpose. In short, the data supports that companies with a strong foundation in business integrity achieve better financial performance.

Does it require a long-term strategic vision that puts the broad group of stakeholders at the center of the company’s work? Yes. Is that impossible in today’s market, or as some have called it, “mere lip service”? No. It requires a company that knows who it is and where it is going, and can tell that story to investors, along with other stakeholder groups. To paraphrase Kofi Annan, “to live is to choose. But to choose wisely, you must know who you are and what you stand for, where you want to go and why you want to go there.” I believe that the Business Roundtable signatories want to go somewhere that will benefit all of us – and I’m along for the ride.

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