A Time For Courage
5 minute read
On 6th February 2025, Accenture, who employ 800,000 people worldwide, became the latest large US-listed company to ditch its diversity, equity and inclusion goals in reaction to the new political climate. They will surely not be the last consulting business to do so. UK business leaders may not be facing Presidential Executive orders, but they will have to navigate the growing polarisation fomented by the Trump administration – the “anti-woke” agenda spreading far and wide, and reflected in the growing influence of right-wing populists including in the UK.
So far the response of many UK businesses has been to carry on but stop talking so much. Net Zero, diversity and inclusion strategies, purpose-led approaches, the language is already being powered down. But the change in tone is already having negative impacts, fostering uncertainty and disillusion, with a seeming loss of clear direction. Many worry this is only the first step. An emboldened chorus is urging businesses to ditch all the changes adopted over the last decade and return to the beguiling simplicity of the Friedman view that their sole job is to maximise profits for shareholders, and thereby unleash the animal spirits of capitalism.
Never Miss A Story
We should be careful what we wish for. Those animal spirits ultimately led us to the financial crisis in 2008. As a group of City leaders wrote in the Financial Times in September 2010:
“If the only question is, “Is it legal and profitable?”, then all that matters is that what is done complies with the regulations in force and makes a profit for the seller and the institution they represent. At its most extreme this philosophy undermines any concern for the best interests of the customer, and subordinates these entirely to the pure self-interest of the seller in maximising profit as an end in itself. It legitimates exploitation and in the end subverts the very basis of trust in the market on which all profitable activity depends.”
So if we don’t want to go back there, yet we do want to cultivate the vitality and impetus of entrepreneurship we so badly need, we have to disentangle what is valuable in the shifts that have taken place and what is not.
“An emboldened chorus is urging businesses to ditch all the changes adopted over the last decade and return to the beguiling simplicity of the Friedman view.”
The most important has been in the understanding of the role of business in society. In place of the narrow view of businesses as simply vehicles for delivering profits to shareholders, a more realistic understanding that they are social organisations has gained ground. And beyond that, at least some leading businesses – with varying degrees of commitment – have come to accept that they should have a purpose beyond profit which genuinely shapes strategy and gives direction. They still have to perform, of course, but the art is to deliver profits through, not in spite of, pursuing their purpose.
Viewing businesses as social organisations, as the Covid-19 pandemic revealed, helps us recognise that shared prosperity arises through the quality of relationships – the common goods – created by shared enterprise when people care and work collaboratively. This perspective will matter even more in shaping massively consequential decisions now being contemplated about the deployment of AI systems and agents. A purpose-led business, crystal clear about its desired impact, the importance of human relationships, and respecting the dignity of people will think and act very differently from one focussed purely on short term profit as an end in itself.
“Viewing businesses as social organisations helps us recognise that shared prosperity arises through the quality of relationships.”
A legitimate criticism from some investors is that some boards and executives have become distracted by having too many different goals and objectives, giving too much time to secondary matters and losing focus. There is certainly room for a reset here: not all social and environmental factors have the same materiality for a given business. There can be difficult trade-offs but there are often significant business opportunities for innovation and collaboration in addressing material social and environmental issues in different sectors. And what is the aim? In an economic system of profound environmental instability and social injustice, businesses can be either agents of positive change or purveyors of the status quo. There is no neutral hiding place.
One of the drivers of purpose-led business over the last decade has been the competition for talent. Many gifted people are working for organisations because they are genuinely seeking to have a positive impact. Whether or not we end up going backwards to a narrower view of business success depends a lot on the courage and agency of such people within large organisations and their leaders, as well as on enlightened long-term investors. We need economic growth, and we need profits. But beyond that we also need well-run businesses – and their leaders – steadfast in their commitment to deliver long term shared prosperity on a more resilient planet. And whilst discretion has its place, and action matters more than words, they also need the courage to tell their story publicly and confidently.
Charles Wookey is a co-founder and trustee of a charity, A Blueprint for Better Business
