A Source of Encouragement: Corporations Stepping Up to Advance Social and Environmental Goals

June 8, 2018


We are seeing something important happen. Consider these recent news reports:

·     “Despite the President’s Paris pull-out, U.S Companies Pursue Clean Energy.” (NYT)

“Walmart has installed on-site solar panels in the parking lots of at least 350 stores.  Dozens of Fortune 500 companies, from tech giants like Apple and Google to Walmart and General Motors, are voluntarily investing billions of dollars in new wind and solar projects to power their operations.”

·     “Target pledges to get salaries to $15 an hour by 2020.”

·     “Starbucks offers paid sick leave and stock grants to baristas.”
  
        Starbucks closes 8,000 stores to provide their employees “implicit bias” training.

·     Walmart partners with three universities to offer associate and bachelor degrees to 1.4 million part-time, full-time and salaried Walmart and Sam’s Club employees in business supply and sales management. Walmart will cover the cost of tuition, books and fees.  Employees will pay only $1 per day for the duration of their study.
  
·     Procter & Gamble launches the major “Love over Bias” advertising campaign that directly takes on the issue of bias.

·     Procter & Gamble creates the #LikeAGirl movement addressing gender bias by building girls’ confidence which often wanes at puberty. The videos are viewed 76 million times globally, with 4.5 billion impressions. 

·     Walmart ends sale of sporting rifles, including AR-15s. Increases the age restriction for purchase of firearms and ammunition to 21.  Bans sales of bump stocks and similar accessories.  Goes beyond federal laws on background checks. Federal law permits sales following a background check if an answer has not been received in three business days, Walmart policy prohibits the sale until an actual approval is given.

These are a few of many examples I am seeing on almost a daily basis of corporations are stepping up to take action on social and environmental issues in a way that I have not seen before.

This is especially important and perhaps partly explained by the fact that implementing policy change at the federal is too often stymied by political gridlock.  No wonder surveys show a continuing decline in people’s trust in government.  Pew surveys show us that the percentage of respondents trusting government “to do what is right just about always or most of the time” dropped from almost 80% in the mid-1960s to 18% today.  

To be sure, the conviction that business should play an active role in improving the quality of life is not entirely new. No one stated this more succinctly than Roberto Goizueta, former Chairman and CEO of the Coca-Cola Company.  Decades ago, he said, “When we were once perceived as simply providing services, selling products and employing people, business now shares in much of the responsibility for our global quality of life.”

That same conviction has motivated one Procter & Gamble CEO after another.  

Still, why are we seeing more explicit actions to do that today?  I think there are several reasons.  

To a greater extent than ever, company employees and their consumers are expecting, even demanding, it.  Social media is making it easier than ever for them to register that expectation.  A recent study by Edelman Research revealed that 75% of those polled felt that a “company can take specific action that will both increase the economic and social conditions where it operates.”

Year after year, I have seen an increasing number of students whom we talk with on campuses ask, “What is your company doing for the environment and for the community?”  Of course, these students are focused on getting a good job.  But, more than ever, they are concerned about social and environmental issues.

Consumers are concerned too.  We see that, for example, in the increasing popularity of “fair trade” products.

Corporate leaders are increasingly seeing the often unexpected, benefits that arise from “doing the right thing” in advancing social and environmental values.  That has been the case for me.  

One example goes all the way back to 1989.  I had traveled to Hunt Valley, Maryland to meet with George Bunting, CEO of Noxell, the home of the leading cosmetic brand in North America, Cover Girl. We were there to express our interest in partnering with Cover Girl.  It was a low-key approach; we weren’t proposing a particular form of partnership.

After exchanging pleasantries, George Bunting’s response almost blew me out of my chair.  

“John,” he said, “you’ve come at an opportune time.  We have concluded that our company does not have the resources to achieve the potential which Cover Girl deserves.  And we have concluded that Procter & Gamble is the only company with which we would want to join.”

I had to restrain myself.  If I allowed my full enthusiasm to show, I feared the asking price might expand by several multiples.

Bunting asked me if I would like to know why P&G was the onlycompany they would choose to merge with.  I said, “of course.”  “There are three reasons,” he responded.  “The first is that we know that you know how to build brands. The second is, we admire the way you take care of your people.  And the third, we have seen how strongly you support your communities.” 

P&G’s values came back to benefit us in a totally unexpected way.  

We went on to acquire Noxell. It came at a fair price, but there was no auction.  Noxell talked to no other company than P&G.  P&G’s values and actions to support those values helped make this possible.

Two years later, in 1991, I encountered another demonstration of this.  We had been searching for the best site for what would be our first plant in Central and Eastern Europe.  We decided on a plant in Rakovnik, a small town located about 100 kilometers from Prague.  

Our challenge was that our key competitors also wanted this plant.  Our product supply experts visited the plant; so did those of our competitors. After several months of negotiation, P&G won the bid.  

I visited the plant about a month. As I was about to leave, the plant manager came up to me and asked if I would like to know why he had strongly recommended to the government officials (it was a state-owned plant) that P&G be acquirer.  I told him I would love to know.

When our competitors had visited the plant, he said, they had focused almost exclusively on how they could reduce costs and eliminate jobs.  The P&G people were different.  They, too, had emphasized the need for productivity, but their primary emphasis was on how the plant could reduce its environmental impact and ensure the workers’ safety and improve product quality.  It was that difference in emphasis that led him to recommend P&G as the buyer.  I don’t know to what degree the plant manager’s recommendation influenced the government’s decision, but I suspect it played a part. 

Again, P&G’s commitment to societal and environmental goals led to an unexpected benefit.

To be clear, nothing is going to supplant consumers’ demand for products and services that provide better performance and represent good values.  And nothing will take the place for the long-term success of a business than its being growing and profitable.  But that is no longer enough, at least not in the minds of many, if not most, of the leading corporate executives who I know in this country.

I don’t want to appear to be naïve.   We still see improper business practices; we always will.

We also continue to see a fairly high level of distrust for business in general.  In the Edelman research study I referenced earlier, only 52% of respondents said they “trust business to do what is right.”  But that can change, and I think it will change as consumers and employees see more businesses taking action to achieve a sustaining, successful business anda sustaining, healthy environment in which they operate.

As always, balanced consideration of our responsibilities is critical.  We have to provide products and services of superior performance and value.  We have to provide places of good employment.  I wasn’t surprised to read that respondents to the Edelman survey I referenced earlier listed the “best ways business can build a better future is to pay fair wages, offer better benefits and create more jobs.” All of that requires a healthy growing business.

Still, I believe we are increasingly seeing that businesses are recognizing they have a critical role, as Roberto Goizueta counseled decades ago, “to improve our global quality of life.”

Business must do this as a partner with non-profit organizations and governments, demonstrating that progress is not only possible but can be made to happen.  I find this to be very encouraging.



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