- 181 CEOs of The Business Roundtable
- Larry Fink
- The Financial Times, to mention just three.
These are not “reds under the bed”. They are gladiators of capitalism, red in tooth and claw. Call it a PR exercise if you wish and you may be right in some cases but the trend towards the primacy of environment, society and governance above profit i.e. ESG is here to stay.
As I write there is news that, in the UK, The Court of Appeal has ruled that a third runway cannot go ahead at Heathrow Airport because “ministers did not adequately take into account the government’s climate change commitments”. That’s about the E in ESG.
Earlier Harvey Weinstein was jailed on the back of the #MeToo campaign and Samira Ahmed won an equal pay case against the BBC. That’s about the S in ESG.
“Today the FRC has released the 2018 UK Corporate Governance Code which puts the relationships between companies, shareholders and stakeholders at the heart of long-term sustainable growth in the UK economy. The new shorter, sharper Code is the product of extensive consultation.” That was the announcement accompany the publication of the new code in 2018. That’s an example of the G in ESG.
What has this got to do with your organisation’s PSB and you?
The context in which your organisation decides its PSB is now in an ESG context. That’s new. That means that there is a stronger chance than previously that your PSB can be taken into account in its decisions.
The interdependence between an individual’s and an organisation’s PSB has always been present but never in the history of business has it been possible until now for that to be a win-win.
This development has a significant implication for decision-making behaviour by CEOs and boards – main and operating.
If your board can reframe its attitude to the people who work in your organisation, including themselves, as career businesses with interdependent PSBs then the opportunities for genuine “transformational change” in your organisation is possible.
Transformation is rare in business and the term suggests, as comedienne Sandy Toksvig one quipped, “as if ordinary change has no change in it whatsoever”.
But transformation is possible if you and your organisation can move away from traditional thinking.
There are some small changes you can do to achieve this:
- think of yourself as career micro-business with a PSB
- think of your organisation as a coalition of micro-businesses with a PSB
- consider therefore how nonsensical it is to try to “align” anyone with anything other than the reality of your interdependence
The flip side of Milton Freidman’s philosophy was that many people started to behave as if the primacy of shareholder value was part of the natural order and that they had to behave accordingly.
It follows that if it isn’t, they don’t.