As countries respond to the devastation caused by COVID-19, enterprises are discovering positive ways to address the gaps that exist in our society.
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As countries respond to the devastation caused by COVID-19, enterprises are discovering positive ways to address the gaps that exist in our society. How should we be collaborating to enhance and achieve a sustainable and inclusive future? To address these pertinent issues, on June 22nd, Cheung Kong Graduate School of Business (CKGSB), held the latest CKGSB E-Dialogue Series on ‘The Future of Sustainable Business’, with support from Catalyst, Mars Incorporated’s internal think-tank and Mars China.
Opening the webinar, CKGSB Professor of Marketing, Academic Director for the EMBA Program, and Director of the Social Innovation and Business for Good Center, Dr. Zhu Rui (Juliet) discussed the idea of the purpose of a corporation, and how that has changed over time. “Originally, the sole purpose of a corporation was to maximize your shareholders money and make as much money as possible. That idea has changed over time. Jumping to 2020, we see that whilst the individual shareholder is essential, importance and emphasis must also be placed on taking care of your community, as well as your shareholders,” she said.
Whilst corporations have created a tremendous amount of wealth, they have also been the root of environmental and social problems such as pollution, wage inequality and discrimination. Because of this, the public is demanding for more responsibility. Professor Zhu detailed the promising nature of this by explaining that, “in such a hard time and the current environment, responsibility and ESG (environmental, social and governance) may not be the highlights of conversations, but I see the opposite. There is a growing demand for companies to take more responsibility in these trying times. For example, Luckin Coffee, the rising star promising to challenge Starbucks dominating market share, had recently fabricated sales data. This caused public outrage, the company’s stock prices expected to plummet and consequentially it was forced to delist from the stock exchange. The movement is that people are becoming less tolerant, demanding more transparency and better governance.”
She further elaborated on her idea that instead of solely focusing on profit, we must focus on ESG. As outlined in her new book ‘Companies of the Future: A Three-Step Approach for Sustainable Business’, having a value system with mutual benefits is crucial. Of key importance, she explains the significance of finding the intersection between your core competence and society’s pain points. “This is where you can spend the most effective effort in enhancing both your company and society’s wellbeing. In order to make sure your value is supported, you need to have a comprehensive governance structure, to make sure what you are doing business wise is aligned with your values,” she said.
Chief Economist of Mars, Incorporated and Founder of the Economics of Mutuality (EoM) Bruno Roche further supported this notion by elaborating on the Economics of Mutuality movement and the approach taken by companies like Mars in balancing profit and social responsibility. The argument he puts forward is that “there is both an opportunity and a duty for business leaders, business schools, investors, and policy leaders to reposition the corporation positively in ways that reflect the changing needs of society and the environment. To reset business on the right bedrock foundation of practical application rather than on the shifting sands of unfulfilled promises. Whilst capitalism has been very useful to some extent to entrepreneurship, it needs to be fundamentally reformed in order to be useful and relevant for years to come.”
Elaborating on the Economics of Mutuality, Bruno emphasized that we must “understand that the purpose of business is not to maximize profit, but to develop profitable and scalable solutions to the problems of the people of the planet and not from profiting by creating problems. When businesses choose such a purpose, this purpose is a source of innovation. The role of business is not to dominate the ecosystem, but to orchestrate in such a way that it mobilizes resources. As a business, we have a responsibility to organize the ecosystem beyond the shareholders and employees that are non-financial, to equip the business with a new accounting system. The purpose of business is to reach a higher level of performance apart from financial.”
Moderated by CKGSB Assistant Dean Zhou Li, Professor Juliet and Bruno then further deliberated and discussed on these notions of sustainable business and social innovation, stressing on the key importance and idea of mutuality.
For Professor Juliet, the key concept surrounding her model is sustainability. “Whether you are creating a positive impact to the economy, as well as to the environment and the society, you need to find what you are good at and how that interacts with society’s pain points.”
Bruno elaborated on the notion of successful sustainable business and how that has evolved throughout time by starting with the charity model, using the Bill and Melinda Gates Foundation and Microsoft as an example. “This phase is the first phase of sustainable business where businesses create a foundation to give money, however the issue with this model is that the purpose of the business and the foundation are completely different,” he says. “Phase 2 of the sustainable business model is CSR, if you have negative costs such as pollution, child labour, etc in your supply chain then you feel more responsible to mitigate this risk and to manage carefully the ‘doing good at a cost’ idea. Phase 3 is about combining the doing good for society and doing well for the business. We need to rethink the purpose of business, it should be to do something else like fixing pain points of society through businesses that are responsible, but can also perform at a higher level financially.”
For more information and details on the webinar, visit: https://english.ckgsb.edu.cn/new/ckgsb-dialogue-e-series-the-future-of-sustainable-business/