Blueprint for Better Business: how to add value by adding values

by 05th Nov 2014
A member of a Village Savings and Loan Association in Madagascar A member of a Village Savings and Loan Association in Madagascar © CARE/Cyril le Tourneur d’Ison

We need to provide a more prescriptive view on the purposes that companies are allowed to pursue – otherwise the Blueprint for Better Business will be one more fad...

Last Thursday I spent most of the day at the Putting Purpose into Practice conference in London, run by ‘a blueprint for better business’. Whilst there were some good insights from senior figures like Paul Polman and John Kay, and interesting case studies of businesses struggling with redefining their purpose, I was left with the uncomfortable feeling that the ‘purpose’ approach was curiously values-free.

Blueprint for Better Business is an initiative which grew out of the belief of some business leaders that the tradition of Catholic Social Teaching could help bring about change in business. They engaged in dialogue with the Catholic Cardinal Archbishop of Westminster (who was at the conference) and they developed the aim of the initiative as “uniting corporate purpose and personal values to serve society”. So it seems fair to cast it as a ‘faith led’ and values-oriented initiative.

Social values

Last week was the initiative’s second conference, and seemed aimed at getting practical buy-in from businesses and civil society to pushing forward the commitment to ‘purpose’. There was an excellent contribution from civil society’s favourite CEO, Paul Polman of Unilever, who set out why he believes that Unilever has to engage broadly with society, be transparent and build a much more sustainable business. He focused on his personal values and the values that infuse Unilever as a company, established by Lord Lever in Victorian Britain – tackling pressing problems in a way that is also successful as a business.

Personality and purpose

This echoed some of the points raised by John Kay, the academic and FT columnist, in a fascinatingly wide-ranging talk from Aristotle’s view of purpose to the lawyers’ view of corporate personality, and the duties on directors imposed by the Companies Acts. In doing so, he thoroughly demolished the ‘maximising shareholder value’ view of the role of management. Rather, he argued, that companies have a real personality (legal personality is not just a legal fiction – a company is not just a “nexus of contracts” ), that they can therefore have a purpose, and only a very obtuse interpretation of the word ‘purpose’ would justify seeing shareholder maximisation as the sole purpose of a company. Any company has to steer a course through constant change and can never be a ‘maximiser’ of anything, and certainly not of shareholder value. Rather, “making profit is no more the purpose of a company, than breathing is the purpose of life.”

Four concerns

So far, so good. But why then the concerns? I had four main, interrelated worries:

1. The Blueprint for Better Business initiative has put some effort into developing a ‘scorecard’ based on the Five Principles of a Purpose Driven Business which they have developed. They then applied these to the FTSE 100. Interestingly the seven ‘best performers’ against these criteria included three carbon extractives companies. So it is not clear, at least to me, how their definition of purpose relates to one of the defining and truly existential issues of our time, climate change.

2. As part of a discussion on whether a metric which puts Royal Dutch Shell at the top of the leader board is quite capturing everything it should be capturing, a number of people in the room and in coffee time discussions seemed to be of the view that we should not be judging the legitimacy of businesses based on what sector they are in (and that is not just about carbon, people also explicitly mentioned armaments and tobacco).

3. In a keynote speech Sir Mike Rake (President of the CBI and Chair of BT Group, inter alia) explained how the identification of BT’s true purpose was a key part of moving the group away from short-term financial engineering towards long-term investment and a re-engagement of staff. However, when there was a discussion of what companies should be doing in relation to tax avoidance, he quickly slipped into framing the issue as one that gets attention in the Boardroom because of the associated ‘reputational’ issues. This does not inspire confidence – if purpose is important to Boards, should they not be discussing tax avoidance strategies with rather more reference to companies’ obligations in society, rather than a worry as to whether they will get dragged in front of the Public Accounts Committee?

4. Where were the trade unions? Who was representing the workers? The NGOs were there, the think tanks were there, the academics were there, the churches were there. But I could not see a single trade union representative on the delegate list. Were they invited? Aren’t they engaged? I would have thought that looking at a greater sense of purpose for business and aligning it with the personal values that people take to work might benefit from input by some workers’ representatives.

These all led me to worry that the concept of purpose, deliberately left neutral to draw in as many companies as possible, does not really lead us very far. Whilst I am not as sceptical as Jo Confino of The Guardian who claims that “Blueprint for Better Business gives companies a ‘get out of jail free’card”, I do believe that we all need to work on a more prescriptive model of what the purpose of business should be, or else the Blueprint for Better Business will fizzle out as another briefly fashionable idea which has no real impact on the problems it seeks to address.

Gerry Boyle

I lead CARE International UK’s policy analysis and advocacy around value chains and dignified work. I originally joined CARE as the Senior Policy Adviser on Private Sector Engagement. With the advent of our new Global Programme Strategy which put a particular emphasis on women’s economic empowerment, my focus changed a little, although I still work extensively with issues in the private sector and with CARE’s corporate partners.

Until recently I spent a lot of my time on financial inclusion, now looked after by my colleague Fiona Jarden. I also co-chair the Bond Private Sector Working Group.  Immediately before I joined CARE I worked for Oxfam as Head of Business Relations for about three years, but the vast majority of my career was spent as a management consultant including being a consulting Partner at Deloitte, where for a time I led Deloitte UK’s Consumer Business consulting practice, serving many major multinationals. My original degree was in Law from Oxford University, and in 2008 when I left Deloitte I did an MSc in Philosophy and Public Policy at LSE.

One good thing I've read

Amartya Sen’s Development as Freedom. It provides a framework for many people’s modern understanding of what is development, based on a profoundly human-centred approach rather than anything instrumental. And to check whether one personally is doing enough to fight poverty, I recommend Peter Singer’s The life you can save: Acting now to end world poverty – it’s very clear and easy to read but very challenging! Finally, Ha-Joon Chang’s Bad Samaritans: Rich nations, poor policies, and the threat to the developing world is a very readable guide to economic development which argues strongly against many of the prevailing orthodoxies.

Email: boyle@careinternational.org

Twitter: @gerryboyle10