Filed under: 11 Conversations, Corporate Citizenship, Multinationals, Predictions, Public Opinion, Trust | Tags: 2013, arctic, Aviva, banking, Banks, Corporate Citizenship, corruption, CSR, Disney, ESG, ethical investing, food waste, HSBC, Kenya, mobile money, Oxfam, predictions, Save The Children, Thomson Reuters
As the world of business gets to grips with how it can reconnect to society, here’s five big conversations that corporates can expect to find themselves having in 2013.
I always thought of corruption as a bit of a victimless crime – but my trip to Uganda really opened my eyes to its effects. It undermines everything: economic development, health services, education, the rule of law, democracy. There are plenty of potential good news stories in developing countries: a new tide of entrepreneurial energy, continuing aid support, trade flows from the fast-growing economies – but all of this is threatened by bribery and corruption. And nobody is in the front line of this problem more than global corporates.
→ In 2013, the big multinationals will need a solid narrative on how they deal with corruption – why it matters, and what they’re doing about it.
The global food companies – agriculture, processing, retail, etc – will increasingly find themselves having conversations about food waste. Currently, 1/3 of the world’s food is wasted – and this won’t have escaped the attention of major NGOs like Oxfam and Save The Children, both of whom are planning major campaigns against in 2013. Food gets wasted whilst growing, distributing and selling food – 1.3 billion tonnes goes to waste each year. This is also a massive waste of manpower, land, water and carbon emissions.
→ In 2013, big companies in the global food system will need to decide whether they’re going to be the heroes or villains of this story.
FUTURE OF BANKING
Just when you thought it couldn’t get any worse, 2012 delivered a fresh series of banking scandals: fraud, money-laundering, sanction-busting. This, combined with continued economic pressure, led The Economist to predict “the fall of universal banking” whilst Slate is predicting a busy year for banking reform. Meanwhile, new payment models are sidestepping the banks: already in Kenya mobile payments account for more than 10% of GDP – leaving the traditional banks to figure out their relevance.
→ In 2013, the big banks will need to explain why they are relevant to the future, and why it will be different from the past.
Rio+20 was the biggest fail of 2012 – but it did show that the corporates world is getting its act together, especially when it comes to measuring and reporting corporate impacts on the world. Forbes suggested Rio+20 was a “tipping point” in sustainability reporting. The Sustainable Stock Exchange Initiative and the Corporate Sustainability Reporting Coalition picked up pace, with leadership from the likes of Aviva, HSBC and Thomson Reuters. Meanwhile, the big accountancy firms all published thoughtful reports on sustainability reporting: Deloitte, PWC and E&Y.
→ In 2013, the bar will be raised on how companies measure and report their impacts on the world. It’s a chance to lead the pack – or get left behind.
Of course for business to truly reconnect with society, corporates need to act boldly – they need to disrupt the atmosphere of negativity and mistrust that has settled around the business world. The past year has seen some striking examples of bold action – such as Disney boss Robert Iger announcing a short-term hit by rejecting advertising of “junk” food and drink, and Total SA oil boss Christophe de Margerie coming out against drilling in the Arctic. Tough decisions like these send a strong signal that some businesses are responding to the expectations of society.
→ Hopefully in 2013 we’ll be talking about more hero companies who have taken decisive action on areas of social concern.
And of course if you want a complete overview of the big debates that corporates are in the middle of, have a look at The 11 Conversations.
Filed under: Predictions | Tags: bankers, Banks, bonuses, bribery, corruption, Girl Effect, KPMG, Nike, predictions, Wikileaks
UPDATE After posting these predictions I thought maybe I should read some other people’s thoughts about 2012 – there are plenty out there. Here are some of the best:
Not sure why I’ve never done predictions before, I had fun doing these – see what you think:
BANKERS’ pay will be an even bigger battleground in 2012. Top investors will follow the lead of ABI and demand a full review of pay, and total transparency. Obama will continue toughen his tone – tapping the anger against Wall Street and linking banks with Republicans. Bankers may resort to legal action to protect the bonuses they feel entitled to.
SUPPLY CHAINS will continue to grow longer and more complex, increasing the risk in the system – to operations, and reputations. A KPMG report says supply chains now present “an unprecedented level of risk” – a large part of which is social and environmental impact, and reputation consequences. Supply chain may be the number one issue for corporates this year.
SHAREHOLDERS are increasingly aware that social and environmental factors may present real material risks to the business – and will be demanding more evidence that these risks are being managed. A report from Ernst & Young found that investors find their company’s social and environmental policies correlated with its risk management strategy — and ultimately its financial performance.
EMPLOYEES will be evermore likely to “whistleblow” improper practice: transparency is no longer a choice, it’s a reality. As Julian Assange told Forbes, “Wikileaks means it’s easier to run a good business and harder to run a bad business, and all CEOs should be encouraged by this.”
More CONSUMERS will tend to prefer companies to show some kind of contribution to society. More and more brands will jump on this – from activities like Tide’s Loads of Hope disaster relief or Trident’s Smiles Across America, to sophisticated philanthropic strategies like Nike’s Girl Effect.
The WAR FOR TALENT will be a major driver of improved corporate behaviour. Campaign groups like Amnesty International have long understood that graduate recruitment is a “choke point” for big corporates – and this is only likely to intensify. People want to have some pride in who they work for: increasingly, poor corporate behaviour will reduce a company’s ability to attract and retain talent.
CORRUPTION and bribery overseas will be met with zero tolerance: “the way things are done over there” will no longer be an excuse. Expect a few high-profile slip-ups as multinationals figure out how to comply with the new UK Bribery Act and the tougher US Foreign Corrupt Practices Act.
WORKERS in the global supply chain will become increasingly aware of their rights. Initiatives like Labor Voices – a social network where workers in supply chains can rate and review their employers – will empower people to expose unacceptable working conditions.
INVESTORS will show a growing appetite for non-financial information about companies. According to an HBR paper: some investors regard the fact that a company has thorough ESG reporting as an indication of how investable it is. Goldman Sachs says ESG disclosure quality can be a proxy for management quality.
Image from GenArt.