Contribute to society or else
At the recent World Economic Forum in Davos, Laurence Fink, CEO of global investing giant BlackRock, told companies they need to contribute to society in order to receive BlackRock’s support.
When someone with Fink’s clout tells everyone to jump, the appropriate response is: “How high?”
“To prosper over time,” said Fink, “every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
I have two quibbles with this comment.
First, isn’t that how a company delivers financial performance? By making a positive contribution to society?
Apple, Nike, General Electric … BlackRock itself: these companies do things that society values. They make a positive contribution. And that’s why they are rewarded financially.
What Fink really means is that companies must “serve a social purpose”. They must “respond to broader societal challenges”.
That’s a big ask. To respond to a societal challenge is not some sideshow. It’s a full-time job. Indeed, it is the concern, not of a handful of people, but of a fully-fledged company with the right competencies for the task at hand. It is time and profit consuming. Meddling half-heartedly can make matters worse, not better.
So, I would argue, as my second quibble, that an effective way for a company to make a meaningful contribution to society is through its brand. Not all brands do this, of course. Not by any means. Many brands degrade society, rather than enrich it.
But consider three brands that not only deliver financial performance, but also do their bit for society.
“Just Do It.” Nike has inspired millions of people to get off their butts and out the front door. And it has done so for decades. Hasn’t the brand made an invaluable contribution to the world’s fitness levels and feelings of wellbeing? I don’t know what corporate social investment (CSI) initiatives Nike has undertaken since it was founded, but have these in any way been as impactful? It’s hard to imagine.
The big take-out:
While it is relatively easy for brands to make a social contribution through community donations that can be photographed, perhaps the greater good comes from brands that make an intangible contribution through their core business.
“Dirt is Good.” In many countries around the world, Unilever, through its brands Omo and Surf, reminds mothers that getting dirty is a healthy way for children to grow up. It’s a medically proven, genuine and valuable contribution. And it’s not some arbitrary add-on but perfectly aligned with what the product does.
Then there’s Dove’s “Campaign for Real Beauty”. The one that reassures women they don’t have to look like supermodels. What a contribution to a society inundated with retouched images and an artificial norm. Invaluable.
At this point, Fink may well remind me that Unilever, under CEO Paul Polman, is becoming “a globally responsible company”. It is improving the health and wellbeing of millions of people – teaching them to wash their hands and eat well. It’s reducing its environmental impact – greenhouse gases and water usage. And it’s enhancing livelihoods – for instance, embedding human rights, paying a living wage and sourcing responsibly.
But what company in Unilever’s line of business doesn’t want children to wash their hands and improve their nutrition? And doesn’t want to reduce its water usage?
CSI initiatives are easy to describe and easy to take photos of. The investments are easy to quantify. I presume this is how Fink will be persuaded that a company does, indeed, contribute to society. That it won’t need to face his “Or else” option.
By comparison, improving a young woman’s self-esteem is less tangible. More difficult to measure.
Except for one thing.
The brands that respond to broader societal challenges can easily prove that they do – simply by pointing to the financial performances they deliver.
• Mark Varder is co-founder of the brand consultancy, Varder Hulsbosch.