Giving voice to the silent stakeholder
By Mark Pufpaff
Associate Director - Content and Communications, Paradigm Consulting
When Robert Solomon described the environment as the “silent stakeholder” of every business in his 1999 book, It’s good business: Ethics and free enterprise for the new millenium, he wasn’t being idealistic. He was being realistic. For the environment is “the precondition for every corporation’s very existence.”
Fast forward to 2019 when the Business Roundtable, comprised of over 200 CEOs of leading American companies, issued a statement redefining the purpose of a corporation from principally serving shareholders to considering all stakeholders in their decision making – the environment included. In their own words: “We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.” [1]
Shifting contexts to Asia, ReThink Hong Kong in September brought together local and global businesses to discuss the pressing needs around sustainability as well as the strategies needed to accelerate our net-zero transition. At the heart of this event was the acknowledgement that business strategy cannot be considered independent of sustainability, but must be seen as intimately aligned to it.
Thinking of the environment in this way, as a stakeholder without a voice, provides a compelling basis for making sustainability strategic and the net-zero transition both good for business and good for the planet.
If the global business community has contributed to the state we’re in vis-à-vis the environment, we have a responsibility to change course and forge ahead in a new direction. But this is obviously easier said than done.
If the environment could talk
Although silent in terms of not being an employee or shareholder of a company, say, or on its board of directors, the environment is still “speaking” to us through its scarcity of resources, severe weather events, and other phenomena that are having short- and long-term impacts on business activity. The onus is on us to “listen” carefully to these effects as they evolve and act accordingly.
Along these lines, Apple recently put out a video that imagined the environment as a stakeholder to whom we’re accountable. A personification of mother nature attended a meeting where Apple employees updated about what the company is doing on her behalf. It concludes with mother nature brightening and being cautiously optimistic about the future. This light-hearted exercise makes a serious point, namely, that beyond being the right thing to do, there are significant opportunities linked to the sustainability transition.
But what are those opportunities? And how can you make the business case for transitioning? Let’s discuss six key areas:
Creating economic value - The Business and Sustainable Development Commission estimates that achievement of the UN Sustainable Development Goals could result in at least US$12t worth of market opportunities a year for the private sector by 2030. [2] The market incentives are therefore huge as the global economy increasingly values sustainable business activity.
Achieving legal compliance - Sustainability efforts often require adherence to environmental regulations and standards. Informing stakeholders of compliance measures is crucial for assuring them of a company's commitment to legal and ethical operations. Transparency in this regard not only builds trust but also mitigates regulatory risks and potential legal liabilities.
Sending positive signals to the capital markets – According to Bloomberg, ESG assets could reach US$53tn by 2025, which would comprise over a third of the projected global assets (US$140.5tn) under management at that time. [3] And although Europe was the first mover and accounted for half of global ESG assets in 2021, the latest source of growth in this area is expected to come from Asia. Investors are increasingly screening for ESG factors and the opportunities around, for example, green bond issuance are growing as a result.
Attracting talent - The modern workforce is increasingly seeking purpose-driven organisations that prioritise sustainability. This not only showcases a company's commitment to social and environmental progress but also can attract and retain top talent. A 2023 Deloitte study found 55% of Gen Z and 54% of millennial talent will research a firm’s environmental impact before accepting a position with them. [4]
Meeting market expectations - Consumer preferences are shifting towards brands that demonstrate ethical and sustainable practices. Also from the Deloitte study, 59% of Gen Z and 60% of millennial consumers were willing to pay more for sustainable products and services, while 30% and 29% respectively said they consider a company’s sustainability claims and credentials before buying. [5] Transparency around sustainable initiatives helps to align a company's offerings with market preferences as well as enhance brand loyalty and competitiveness.
Delivering trust - Trust is the cornerstone of business relationships with stakeholders. Sustainable actions must be accompanied by clear and regular engagement to build and maintain this. When stakeholders see a genuine commitment to sustainable practices it supports collaboration and contributes to a positive brand perception.
Layering on a communications perspective, these opportunities presuppose effectively telling our sustainability stories. For authenticity matters and poor communications can just as quickly turn an opportunity into a reputational crisis.
Paradigm Consulting’s Executive Director, Vivian Lines, previously wrote about how companies can navigate the complexities around sustainability communications, and this will indeed determine how our efforts are received by the market and by the range of stakeholders interested in our progress.
Our ultimate stakeholder
Despite being silent, the environment is rapidly becoming our ultimate stakeholder, for without her in good health the “precondition for every corporation’s very existence” will be disrupted. May we therefore think about the environment as a legitimate stakeholder and acknowledge a responsibility to act in her interests – interests, we cannot emphasise strongly enough, that are firmly aligned to our own as companies and participants in the markets she makes possible.
If you’d like to discuss your sustainability communications, our team of consultants and advisors are standing by. Contact us today.
[1] https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans
[2] https://sustainabledevelopment.un.org/index.php?page=view&type=400&nr=2399&menu=1515
[3] https://www.bloomberg.com/professional/blog/esg-assets-may-hit-53-trillion-by-2025-a-third-of-global-aum/
[4] https://www.deloitte.com/global/en/issues/work/content/genzmillennialsurvey.html
[5] Ibid.