Resilient, sustainable business models offering public value are well placed in modern accountability. Witnessing the current societal and environmental transformations, corporations need to be increasingly agile, open on the outside, and clear on the role they play in society and towards nature if they want to avoid disruption.
We wanted to hear from sustainability experts in business and responsible investment firms how public value was implemented and where the obstacles remained. Meeting at Vattenfall Europe for our Berlin Public Value Lab, sustainability experts from international corporations, responsible investment firms, and civil society organisations described why business should embrace public value:
“Business has the means and power to change the rules of the game”.
“Corporations should find win-win solutions through shared responsibility”
“Rationally speaking, the future path is about love and compassion”
“Public value explains how you get from short-term action to long-term impact”
“It’s a medicine that turns your collective headache into a badge of honour by participating in collective change for the common good”.
In a rich exchange, participants shared their best practices and discussed remaining obstacles for public value to be properly implemented in business. The tone was candid and constructive, as participants clearly cared about the common good and implementing public value more widely. Many of them reminded us of the Sustainable Development Goals and the role of business in making them a success. But they also reminded us that corporations need to make profit and that public value should never be considered as altruism.
Below are the main points discussed in the morning panel. As we encouraged participants to be candid and exchange on their difficulties, we reproduce only few quotes and refrain from mentioning who said what, in a Chatham House spirit.
CARING BUSINESS FOR SOCIETY AND THE ENVIRONMENT
“Public value is our long-term license to operate. To us, it is about ensuring that our environmental and social impact is a net positive impact. If we do so we know we can secure our long-term license to operate.“
“We’re not going to get to a sustainable world if we keep on thinking about growth the way we have been. Using public value to generate growth opportunities the way we have been doing so far will maybe help raise awareness of current problems, but not solve any issue. Business needs to rethink its role in today’s society.”
“It’s also a matter of urgency, both for our planet and people, and for your organisation. For the moment people look at public value as a ‘nice to have’, but I think it is a necessity both business and society, and it should be put higher on the agenda”.
“In our corporate strategy, sustainability is named and is part of it, and our CEO speaks a lot about sustainability internally. I personally believe that in the long run it has huge benefits and potential for increasing our profitability if we invest strategically in sustainability or public value or ESG, whatever we want to name it. But it’s very slowly developing.”
“It is quite hard to successfully develop a corporate purpose. One needs to care about it and about everyone involved. A lot is about compassion.”
– What would it take to companies to be accountable to everyone?
– Changes in the legal framework – there’s no other way”
RESPONSIBLE INVESTORS SHAPE A NEW ECONOMY
“Investors start choosing companies that have the higher financial performance. But the question we ask ourselves is: How does this business get there?”
“When investors tell us –an energy company- that they won’t purchase any of our bonds if we purchase coal… that dramatically changes our strategy and the way we operate. And this decision can even survive several CEOs.”
“Public value is an intangible space; it is like a black swan for business. All goes well until a scandal suddenly explodes. And when it does, it’s often too late. When assessing an investment decision, we cannot consider only the opportunity. We also define the risks that go with the investment. Reputation risks can take you down to 30 or even 40%. The problem always remains in what is not said.”
MEASURING PUBLIC VALUE
“It is a real challenge to measure what public value is. One way to do so is to measure customer satisfaction. Companies do not exist without customers. Customers are human beings and they care about the environment and society. And so, to please them, companies need to increase their positive impact on society and the environment. […]
To please their customers, companies need to listen to them and understand what matters to them. This means developing genuine respect towards them and shaping a corporate culture able to demonstrate results and constant improvements.
Behind a happy customer, there’s also a happy employee. All employees in all companies everyday make decisions that impact public value. What we call “corporate culture” relates to employees’ day-to-day decisions and ways of working when they have enough space to operate autonomously. Company cultures need to be studied to understand the environment in which companies operate.
If we take one step further, it’s important to understand what makes both customers and employees happy, and what makes them aligned. People want more than products or services nowadays; as human beings they need to be positively impacted. This is where public value lies.”
“With the many Key Performance Indicators (KPIs) we have at our disposal, we all try to measure with an objective approach. But let’s think out of the box and bring some subjectivity into the discussion. In a way, public value is about measuring the gap between the public’s expectations and what it gets. This gap is increasingly widening. For companies, it is of the utmost importance to hear and integrate the outside perspective into their core strategy to be aligned with the values of their customers, their ecosystem. It has to be accepted by society.”
“We don’t have a sustainability strategy per say, but our corporate strategy is built around related principles. These principles are key factors our stakeholders are concerned about today, and will remain in the coming years. This is where the necessity to demonstrate impact hits your business and how companies address the needs of society and the environment in their overall strategy”.
THE PUBLIC’S ROLE
“We still are at the level of awareness-raising of the role business plays in creating public value. People still need to know what public value is. Many would tell you that it’s “public sector earning money”… No, for business it’s about building together a better world and reaching the public at large, beyond customers.”
We –the public- play a role increasingly strategic. Investors have noticed a higher level of engagement among customers who are looking for investment opportunities. At the end of the day, it is about us, about our life. We are the ones giving money to banks and trusting them to manage it the best possible way. All investors want to have as clean as possible a portfolio. And of course, the bigger the corporation taking non-financial engagements, the better the outcome is for all of us citizens. When companies fail to deliver on their engagement, dissatisfaction can be very high. Organisations and corporations that engage themselves into this path of goodwill need our support, and increasingly so”.
“I have the same hope as everyone here, but I’m afraid that overall the industry is not yet there. It’s a minority, a bubble that is talking about this. I hope we’ll manage to transform this approach into a system, but I think it will take us some time. Very few investors call us up, very few customers actually care, and very few activists groups blame us or try to hold us accountable, so there’s still a lot to do.”
“I would say public value is both an opportunity and a recognition process. It is not co-creation – this is a path to recognition. Although they developed slowly, companies have finally become customer-centric. Now is time to bring passion for the good of business, and more importantly for the good of society and the environment.”