PURPOSE, INC.

Participants:

Michael Young

Chris Coulter, CEO of GlobeScan

GlobeScan/Oxford Survey of Corporate Affairs: https://globescan.com/webinar-discussion-forum-oxford-globescan-corporate-affairs-survey-2020-findings/

Michael Young:

Welcome to the Purpose, Inc., the podcast where we discuss corporate purpose and stakeholder capitalism. I’m your host, Michael Young.

It’s widely acknowledged that up to 85% of a company’s value today is made up of intangible assets: brand, reputation and trust. And forward-looking CEOs must understand, measure and preserve these assets assiduously if they are to grow enterprise value. My guest today is Chris Coulter, the CEO of GlobeScan and he is ideally situated to talk with us about this topic.

In case you’re unaware, GlobeScan is a leading advisory and strategy firm that helps organizations build and improve stakeholder engagement across customers, investors, regulators, NGOs, community, suppliers and employees, all stakeholders. Chris is a sought-after speaker/facilitator. He’s an author. He regularly briefs client organizations on trends about business and society. Chris has worked in this space for more than 20 years and is a pioneering thinker on the connection between reputation, brand and stakeholder engagement. And today Chris and I talk about his work around organizational leadership. He wrote a book on that topic. We talk about the essential attributes of high-impact corporate sustainability leadership, the intergenerational transition that’s going on now with Generation Z and why that matters so much.

We talk about UN SDGs and the work that his firm does around that with organizations. Chris highlights some of the research that GlobeScan is conducting across the world and some of their tracking studies. We do get into sustainability commitments within organizations especially around COVID. So, it’s a great conversation. Chris has been extremely generous with his time and insights and I’m grateful that he came on the podcast.

So, without further ado, here is my conversation with Chris Coulter, the CEO of GlobeScan.

Chris, thanks. so much for coming on the podcast.

Chris Coulter:

My pleasure, Michael. Great to be here.

Michael Young:

Thank you. So, you, GlobeScan can have been focused on sustainability, corporate purpose, responsible investing for 20 years. Would you give us just a quick brief summary of your background and the organizational journey and what you do and who you are?

Chris Coulter:

For sure. Thanks, Michael. Yes. We’ve been around for actually almost 30 or 32 or 33 years now and originally very much focused on the sustainable development agenda but over the years evolved into a greater focus on things beyond sustainability which included issues such as management reputation and then brand and now purpose as you noted. And we’re an insights and strategy firms so we’re focused on evidence-led strategy for our clients which mostly are global businesses but we also do work with a number of international NGOs and multilateral organizations to kind of round it out a little bit. And our purpose is to help our clients build trusted leadership to create a better future and the underpinning of that is sustainable development is really the only long-term strategy for successful organizations.

Michael Young:

Yeah. And you mentioned a big focus of your work is on organizational leadership. You wrote a book about that. So, walk us through your analysis of leadership and why that is the most important and high-impact aspect of corporate sustainability.

Chris Coulter:

Yeah. I think because a lot of our work is predicated upon understanding societal trends and public opinion and stakeholder expectations, it’s been in our I guess worldview that organizations are really only able to be successful if they have a social license to operate and if they are able to engage and mobilize and work with stakeholders from their employees to suppliers to communities to civil society to governments and investors and beyond. And I think that trajectory of understanding that the real value of business and success of business is predicated much more on a stakeholder centric worldview than a shareholder primacy worldview. I mean this has been an ongoing conversation for decades now. But we’ve seen how dramatically it’s shifted over the last couple of years where the value of operating from a stakeholder centric view is much clearer and it’s almost irresistible as the business method or business model going forward compared to a short-term shareholders’ only let alone first strategy. And I think that the notion of intangible value is become much more tangible for lots of business people and feeling evident. You see the new generation of chief executives that are coming up. We see it in how investors mainstream and more ESG oriented are increasingly looking at these intangibles as predictors of true long-term value creation. And I think we see it amplified in a crisis that we’re going through now of how society and other stakeholders are expecting organizations to look beyond their narrow self-interest. I mean even saying that sounds so common sensical. It’s ridiculous that there wasn’t that sort of debate or there was actually a debate at all that that was the proper way and I think we went through decades of understanding business being much more societal and orientation to that moment 50 years ago when Milton Friedman and I guess a bunch of the Chicago School economists pointed out wait a minute, maybe it’s all about shareholders and that magic of the market will lead everything in the proper way. And it feels like we’ve gone through that cycle finally and we’re kicking back to a more holistic approach to business’ role.

Michael Young:

So, a deeper social contract and I think you mentioned the role or the impact that COVID is having on perceptions of corporate conduct and this balance between corporate financial goals and societal impact and worker health safety. So, how do you see that playing out? I think one of the things I’m hearing and talking about is maybe an idea that there’s not going to be a going back to the way it was. Maybe we should build it better. How do you think about that?

Chris Coulter:

Yeah. I mean I think first of all, no one knows. So, that makes it a very interesting terrain. But we do know that there have been a number of these I think very high-level serious conversations discussions that have been happening at an increased fever over the last decade. So, we know that there is real different types of options on the table in front of us. I think as we’re going through this health crisis and then dealing with the deep economic crisis as well as a climate crisis and I think an exacerbated inequality crisis, everything is on the table and in an interesting way, a very challenging way and a different way. And I think there are—I don’t know if we want to call them battles—but I think these worldviews will need to be reconciled in some capacity and I think the intersection of business, politics and economics is going to have lots of fireworks in the coming months as we have this conversation. The build back better phenomenon that’s happening now with how do we make the best use of the $10 trillion that have been spent so far by the public sector and that number will grow and use it in ways that have multiple benefits beyond just short term transactional support for the economy is one of those important conversations that are taking place right now. And I don’t think that we’re doing a lot. I think it’s understandable in the midst of the crisis of how we have to respond very quickly but now I think is the thoughtful moment for the next six months where governments and business and civil society should be working together to understand how do we make the most use of any additional stimulus and what are the implications going forward. I think the transition on the energy conversation is foremost there but I think it transcends to all different types of sectors as well and it’s a big opportunity to give ourselves an ability to build something different and new that is that refinement that’s been required for many decades and we have a chance to do that.

Michael Young:

Yeah. You mentioned Milton Friedman and I always think of the neoliberal turn in the early 70s. And so, maybe a somewhat convoluted but complicated question, do you think that we’re going to see a return to a different balance between capital labor and state? And do you think that we could ever go back there? I always think of Margaret Thatcher, “There is no alternative,” right? That we just can only go with shareholder primacy rational actor market theory. Is it going to change? Is it going to evolve? What’s your take? And I’m not asking you to categorically decide. I’m just how do you think about that?

Chris Coulter:

This is our decision.

Michael Young:

This is our decision. We can make it here today. Let’s do it.

Chris Coulter:

Well, yeah, I think what this crisis has done in many ways is it’s accelerated decision making and made the visibility of the weaknesses of our system much more apparent. So, we understand that inequalities in our society aren’t just things that are inconveniences or challenges. They’re bloody dangerous and the danger is something that people see more clearly and are much less tolerant of. So, I think that there is a moment where we can have a truer—it’s hard to say a true—but a truer multi-stakeholder conversation between the likes of business, labor, the public sector and civil society to try and create something much more holistic, much more dignified and much more sustainable in all the implications of that word. And I think that the conversations had already begun well before this crisis.

I mean we have had monumental shifts in how investors, mainstream and more peripheral, have taken to the ESG framework to try and understand where true value lies in the private sector and I think early indications are that’s sort accelerated through this crisis and on the backside, it’s probably true too. We see how the potency of science and scientists and academia before the crisis especially on environmental issues has truly changed I think the discourse of society and instigated a whole wave of new types of activism from NGOs like extinction rebellion but also pushed other more pragmatic NGOs like WWF also to look hard at what’s really required and what are the challenges facing the planet and the survival of species and act accordingly. And that I think through this health crisis where we see how valuable expertise is and scientific perspectives and public health officials playing a role in this, I mean that I think will be magnified and will continue into things like climate and I think even into things like inequality when we have better data around it. So, all of these dynamics are the foundational parts of I think the shift for how business is positioning itself. The public sector and consumers or citizens I think have been some of the weakest links in reshaping business and giving the push-pull factors for business. The public sector now, of course, is in a place where it’s needing to spend dramatically but this will be a relatively short term phenomenon. And so, post the crisis, there’ll be even more pressure on business to fund investments and to drive forward some of the ongoing transformations that are required. So, there’ll be a shift that way.

And then the consumers I think that through this moment, there’s always been a lag and huge amounts of intentionality that we’ve found in our work of people understanding that things can’t stay the same, that there’s real important needs to change based on economic, societal and environmental factors but being very stuck and unable to do it. And I think if anything, this crisis has shown and given some agency to people that wow, we as the society can change very dramatically, not under ideal circumstances but very dramatically and some of the habits and even that learning that things can change quite significantly will take us through into another set of behavior changes and expectations for the kind of brands that we frequent and what we want our political officials to do and NGOs we support, etc. So, I think all of the dynamics that existed before the crisis have been ratcheted up almost like a watch with all the different levers and those parts of the watch have been accelerated. And so, the spinning towards those most successful approach for business going forward is even more likely that it has to be sustainable business, purposeful business. Otherwise, we don’t have the license and we don’t have the constituencies to drive forward and that thinking of sustainability makes us more resilient and future fit for the challenges that we’re going to face.

Michael Young:

Chris, I wanted to jump to Gen Z and intergenerational change and transformation and how that can and should be accelerating change here. How do you think about that?

Chris Coulter:

I think it’s a very exciting dynamic and one of those reinforcers and indicators of where business needs to go given again the size and the agency of that generation. On the Millennials, we had done lots of consumer research and looking at different demographics and we weren’t as convinced that the Millennial generation was as impactful as some of the conversations around companies suggest that it were. I think Millennials were a large group and there were some qualitative difference around perspectives and how they viewed business and things like sustainability. But it was a very big group, as we know, and also a quite a diverse group. And so, while on one hand you did have a super cluster of Millennials that fit all of the characteristics or stereotypes of Millennials and those are the ones that I think found themselves mostly in the corporate sector which is why I think in companies, they would say our Millennials are very demanding and expecting. But there was also another group of Millennials that were pretty happy to sit in their parents’ basement playing Xbox and to tune out and drop out. Gen Z is different and the early indications in some recent research we did last year with an ad agency out of Brooklyn called BBMG did show that they’re much more demanding and higher expectations for companies and trying to engage them will take even more I think consistency and passion from brands and companies to demonstrate that they’re really on the side of the long-termism which is in this generation’s interest. We’re about to do a global study on this to try and confirm that this is truly across the world and our expectation is that their demands for business and addressing things such inequality will be even higher. And that was one of the interesting differentiations between Gen Z and Millennials even is that the inequality conversation was much more relevant for them, both economic and social, and I think all the indicators are in society that inequality has exploded to the top of the of the leader chart from an issues perspective and we’re curious to see where this generation will take it.

Michael Young:

And maybe talk a little bit about the work that GlobeScan does with organizations and how do you help organizations get this right.

Chris Coulter:

Yeah. Well, we’ve always believed that an evidence-led approach was the most powerful way to try and understand positioning strategy development, goals and how you ultimately build trust and deepen relationships and to do that, you need to listen, listen deeply, understand the context, how things are shifting and then to respond based on best practice and where expectations are leading you. And that’s been the approach we’ve taken and sometimes that means playing a role on providing insight into where stakeholders are viewing you and seeing how you’re doing and using frameworks like reputation that can be quite valuable on what are driving things like trust or propensity to be a partner and that speaks especially to the corporate affairs or corporate communications teams. We do lots of work then on how do you understand the sustainability agenda and those expectations from those stakeholders and what is viewed as authentic and ambitious leadership and how do you create those sort of structures and infrastructures inside organizations that allow you to be recognized as a leader and to drive impact. And then there’s also been work around what do we stand for, what’s our purpose, what’s our positioning as an organization or corporation. I think what’s been interesting the last couple of years, we’ve seen it’s very hard to do any of those different aspects on their own. They need to be fully integrated and that internal collaboration and coordination across an enterprise where you have four or five, sometimes six functions working together to truly align not just materiality and material issues of sustainability but issues management in an enterprise risk management framework and not just our high-level positioning of what’s our tagline or campaign for the company but what is the deeper North Star and what’s our purpose and then how do we operationalize that purpose through sustainability. So, I think that’s been a really interesting part of the evolution of where companies are going and coming from and their need to integrate internally in order to respond to these expectations that have become I think pretty formidable in defining the course of their futures.

Michael Young:

Yeah. Deep purpose rather than tagline shallow purpose, hugely important.

Chris Coulter:

Absolutely. And there are many companies, we just did a study with Oxford University on, we called The Corporate Affairs Survey, but surveying corporate affairs and corporate communications professionals across the world and there’s between 80% and 90% in any region of the respondents we surveyed say that their company has a purpose. But I think if we step back and look, I mean there are very few companies that are truly purposeful. And so, there are lots of organizations that do develop a purpose and they kind of have a bit of a tick boxing exercise. But there are very few that have embedded it and operationalized it throughout the organization which takes a hell of a lot of work. It’s not something you do overnight. But there is this I think separation between those that deeply get it and are living it and putting it into strategy and those that kind of get it and they see the utility of it and it’s sort of a bit of a shiny object but it hasn’t been built on a deep foundation which doesn’t make them feel purposeful according to their stakeholders.

Michael Young:

Yeah. And interestingly, I think you said earlier that, and I’ve heard this from other guests, is that investors in private capital are especially now looking through the ESG lens to manage risk, to allocate capital based on corporate priorities. And maybe the last question is do you see all of this getting stronger post-COVID? Do you think there’ll be any budgetary pressure to sort of shelve some of these initiatives? Or do you think we’re at that jumping-off point where there’s kind of no going back?

Chris Coulter:

I think we’re in a place where there’s no going back and I say that because the last great recession a decade ago plus, 2008/2009, we looked very carefully at how sustainability functions and companies that were committing to a broader purpose, how they managed through that downturn. And before that, previous recessions there was a real decimation of the function and commitments and resources and budgets. But a decade ago, it withstood. There were certainly some places where they were declines of headcount but there was I think more or less a consistency and a commitment through that process and in some cases, it even got stronger I mean certainly in the financial sector. We saw the notion of becoming purposeful and more committed to society grew quite significantly on the back of that financial crisis understandably. We’re just doing a survey right now of sustainability teams across the world and the preliminary results are that there is going to be some financial pressures across the board in many companies but the commitments and the value of sustainability as a function for the company going forward is increasing and seem to be increasing. And I think the principles of sustainability being long-term, systemic in nature, understanding interconnections, bringing in multi-stakeholder voices, being precautionary, being science-driven, I mean all of these facets are real assets for an organization to make the right decisions, to move at the right pace and the right scale and the value of that function now can be I think integrated and actually amplified across strategic planning in most organizations that get it.

Michael Young:

Yeah. And to the last recession, there wasn’t quite the commitment to ESG portfolios then as there are now.

Chris Coulter:

Absolutely. You’re right. And I think it feels like—and it’d be interesting to see if someone could diagnose this—but it feels like the ESG became mainstream 18 months ago to 24 months ago. I think the second last, I think Larry Fink’s 7th letter was the true turning point as an indicator and there’s lots of other were going around in other mainstream investors and passive and active asset managers doing this. So, I think we’ve come to that and as we were talking before, I think the evidence suggests so far that those companies that have been strong in ESG are weathering the current storm better and if we’re looking at a long term play, this is a fantastic lens for investing vehicles.

Michael Young:

Yeah, yeah. All right. Sounds like there are a couple of studies out that are coming out. We’ll want to link to those in the show notes. But Chris, I very much appreciate you coming on the podcast. Unfortunately, we’re going to have to leave it there.

Chris Coulter:

My pleasure, Mike. Thank you so much for having me.

Michael Young:

You bet.

Michael Young:

The Purpose, Inc. Podcast is a production of Actual Agency, helping innovators communicate in a changing world. More at www.Actual.Agency.

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