Picture: 123RF/OTICKI
Picture: 123RF/OTICKI

Following the recent World Economic Forum in Switzerland, there has been renewed interest in the concept of stakeholder capitalism.

Broadly, this is the idea that the business of business is not simply to maximise profits, but rather to create value for employees, consumers and communities too. As it should be.

Much as the catchphrase “stakeholder capitalism” suggests that the interests of consumers, employees, the environment and communities, as well as those of shareholders, should concern business, it is not a new concept, but rather an iteration of an approach that has worked for many years in some businesses that have been built to last.

This would include Pick n Pay, which has operated from inception on the principle that advancing the common good is fundamentally in its own interests too. Or, simply put, doing good is good business.

A society in which the basic needs and aspirations of all citizens are met is one in which entrepreneurs and free enterprise can thrive. The fractures in our own society have made this point abundantly clear, perhaps more insistently than elsewhere.

Equally, managing the human impact on the environment has grown in significance as a business consideration — brought home by the recent water crisis in the Western Cape and continued drought in the Eastern Cape.

As a consequence, the idea of a social compact between business, labour, the public sector and civil society to generate more inclusive and sustainable growth has been gaining traction.

That this approach can work in practice is illustrated, for example, by Pick n Pay’s strategic investment more than 10 years ago in enterprise development through mentorship and business development support.

It now has an impressive pipeline of new and enterprising products reaching its shelves from suppliers it has helped to establish, more than repaying its faith in the programme.

One of the greatest challenges ... is drastically cutting the amount of food wasted along the entire value chain — from field to fork

With the fourth industrial revolution (4IR) disrupting traditional ways of doing business, the management of intangible assets has become a more significant source of competitive advantage. A company’s agility, talent management and an innovative corporate culture are becoming increasingly important bottom line issues, directly affecting business performance over time.

For a concern with shared value to be reflected in practice, environmental, social and governance (ESG) considerations must be integrated into a firm’s strategy, allocation of resources, performance evaluation and reporting.

Pick n Pay, for example, has aligned its sustainability goals to those of the International Consumer Goods Forum and the UN sustainable development goals (SDGs).

One of the greatest challenges, and where the company is putting sharp focus, is drastically cutting the amount of food wasted along the entire value chain — from field to fork.

Eliminating food waste is but one facet of building a more sustainable and resilient agricultural system, that is less resource- and water-intensive, and the same focus is required on reducing the energy and water demands of manufacturing.

For example, it is estimated that, today, plants receive almost three times more water than they need. More research, under SA conditions, into new technologies such as precision agriculture, micro-biome treatments, synthetic biology and other developments, could significantly lighten the demands we place on the environment to feed ourselves.

What is more, it would also make good business sense, and a simple change in perspective to factor in environmental externalities helps to see this more clearly.

We are making a substantial effort to reduce carbon emissions, to ensure greater energy efficiencies, to reduce water consumption, and in the drive to recycle and reduce plastic consumption.

Ultimately, the return on responsible, sustainable business practices can’t be measured on a short-term basis, and this requires a shift in emphasis, including in shareholder expectations, to the longer term. Business leaders are compelled to better understand the trade-offs involved between the longer-term benefits of investing in more sustainable practices and short-term imperatives, which are usually easier to measure directly.

This should come naturally in a country whose past has taught us that trying to keep the spoils of prosperity for only a few is a futile and destructive exercise.

We also have to recognise that we are in this together, and no business or government can make a big enough difference on its own to address the scale of the challenges.

While the private sector needs to devise a business policy that is more holistic and sustainable, the government must also consider the bigger picture when crafting new policy and legislation, and ensure that comprehensive socio-economic and environmental impact assessments are always done before new measures are implemented.

We can, and must, forge a better future together.

• Ackerman is chair of Pick n Pay.