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Sir
Mark Moody-Stuart, vice chair of the U.N. Global Compact Board
and
chairman of the Global Compact Foundation.
Photo
by: Mark Garten / United Nations
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Strong leadership has the potential to transform the way a
company engages with social, environmental and development challenges. But when
development-minded leaders leave their corporations, the challenge lies in
ensuring those cross-sectoral partnerships and sustainable business practices
live on after their departure.
It’s
a challenge that deserves attention, especially as leaders emerge like Unilever
CEO Paul Polman, who participated with other private sector chiefs to recommend
Sustainable Development Goals framework. But perhaps it begs attention even
more so thanks to the examples of companies that have backslid following the
departure of a leader — when suddenly a bad quarter means a change in
policy.
Devex
spoke with Sir Mark Moody-Stuart, former chairman of Shell, who has been
engaged on these issues for many years, including through his role as
chairman of the foundation for the United Nations Global Compact.
Moody-Stuart shares
his advice on encouraging accountability and the importance of both individual
and coalition leadership in this excerpt from the conversation:
How have you seen private sector engagement evolve? Do you think
we’ve reached a pivotal moment yet?
The
evolution has taken place. If we go back to the 90s … In those days we started
looking at working with multiple stakeholders, looking at stakeholder
requirements viewing companies in relation to stakeholders and looking at what
we used to call nonfinancial elements. There was very little interest from the
investor community.
So
I think it’s really changing. I went to a meeting at the New York Stock
Exchange [in September] where you had stock exchanges from all around the world
talking about the need for listing standards on transparency etc., so it is
spreading.
The
Sustainable Development Goals took a step forward in that area I think. They
were widely consulted, but I still worry in the implementation locally we don’t
necessarily have this combination ... if we’re to deliver the goals we have to
do it in each country and that means building coalitions in the country. You
can’t have real political influence as a single business, even as a coalition
of businesses. We don’t want [just] business coalitions [or just] single
businesses having influence, but if you can combine them with civil society
they can keep each other honest and both sides need keeping honest. And then
they can genuinely influence governments.
Who can go about building those local coalitions?
I
think the U.N. Global Compact local networks are one potential avenue because
they do bring together the affiliates of international business, national
business, small and medium-sized enterprises, national NGOs, civil society and
labor unions where they exist. That is in an ideal world. We’ve got 85 networks
and they’re not all ideal — some of them are quite weak. So we have a lot of
work to do, but I’m sure it’s a very good framework on which to work in the
coming period in the Global Compact.
It’s
going to take hard work and it’s going to take leadership. You only put
together these groups if you have quite strong leadership and that could come
from every sector; it’s very much an individual thing. But one of my drives is
to encourage affiliates of major companies to participate — because sometimes
they don’t — and they have a lot to gain from it and vice versa. So I’m
not saying we’ve solved it and not trying to over talk the strength of it, but
I think it’s a potential solution.
You brought up the issue of individual leadership and we
certainly see some examples of corporate executives who are rethinking the way
their companies do business. How much of that change is because of leadership
at the top and what happens when that leader leaves?
Of
course it depends on leadership, but leadership should be distributed and
institutionalized so the executive team from whom the likely next leader comes
should really believe in it. That again is a question of to what extent, it’s a
question of the penetration of values, which is a complicated issue … It
depends how you built the values and what process you went through; but having
arrived at them, if you allow exceptions to the values, [it is a problem]. So
if you have a member of the leadership team who delivers fantastic results and
is a very able person but doesn’t actually reflect the values, I think you are
in trouble.
The
classic thing is every company says, “Respect for people is one of our major
values,” but there are behaviors at top companies, which basically is nonsense.
If you don’t address that then people think, “Well, actually respect for people
is OK, but making money is more important.” So I think the institutionalization
of values and embedding values and checking that they are embedded is a major
element to leadership.
Corporate engagement on social and environmental issues has
often come in response to a crisis. Do companies need to become more proactive
rather than reactive?
Crisis
is important. But yes, in a perfect world, yes. If you look at the formation of
many things that started 20 years ago — traded markets, forest stewardship
council, sustainable fisheries and so on. The formation of these things has a
kind of common path you can track.
Somebody
raises a problem and that somebody is normally not in a corporation, it’s
[someone] outside the corporation that says, “Oh, we have a problem.” Corporate
reaction might be that, “It’s not a very big threat,” or, “There’s nothing much
we can do about it,” “We don’t do that,” or, “It’s a government problem and the
government should do something about it” — and you don’t get much
happening. And then at a certain point a responsible company says, “I’m not
sure this has anything to do with us, but let’s at least talk about it.” Then
you begin to talk and then out of that comes experimental solutions … and if
they work then that kind of bandwagon builds and I think that’s proactive.
So
the answer is to listen very carefully to your critics. I always say business
schools should teach people to listen, not just to listen selectively but
listen to people who disagree with you. There’s probably a reason and you
better find out what the reason is and you better find out if there’s any fire
behind the smoke and you may be surprised. I think the answer to being
proactive is radar scanning.
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