The COVID-19 pandemic has raised many challenges for companies over the past few months. It has also highlighted the critical role firms play in the broader fabric of society and how much they can, and should, contribute as responsible businesses.
From supporting staff and facilitating comfortable remote working conditions through to providing other stakeholders with a seamless experience of the business through potentially disruptive lockdown conditions, companies have had to step up to the challenge of navigating the changes imposed on them by this unprecedented health crisis.
Business responsibility is not a new concept. It is a process and culture in an organisation where the management and staff choose to take responsibility for all their actions and ensure that they have a positive impact on everything they do when it comes to:
- the environment
- the communities within which they operate
- their clients
- their staff and shareholders
- their suppliers
- the industry in which they operate
With a growing proportion of clients and investors now prioritising responsible and ethical behaviour in where they choose to work, companies are coming to understand that they cannot adopt a box-ticking approach and need to embrace being a responsible business in a genuine way.
It's more than deciding where to spend money
Being a responsible business is not only about how you spend your profits but, more importantly, how you make them. Before doing anything, a company needs to approach all decisions and actions with the ethical consequences top of mind.
If the action or decision has the potential to cause harm to society or the environment in which the company operates then it should be considered socially irresponsible. Looking at the world through a responsible business lens will also guide you in the partnerships you are willing to establish.
Being responsible and ensuring the company you run has a bigger purpose than merely generating profits is also about tackling the challenges facing society as a whole. There are a few main areas you need to consider when looking at what it means to be a responsible business.
- how you do business with clients
- how you can contribute to the betterment of the industry in which you operate
- how you should treat clients/staff/shareholders
- how you should treat the environment
- how you should respond to specific social requirements in the countries/environments in which you operate
These are tough asks and have an impact on all aspects of how you do business. For example, how do you approach the rules and regulations that govern your industry? Do you make sure you are always on the right side of the regulations, operating within the spirit of the law, or are you always looking for grey areas and loopholes that you can exploit? Are you always looking at what you can get away with as a business, or do you ask yourself the following question: If you read about an action or decision your business had taken in the headlines of the newspaper, would you be embarrassed or proud of it?
Partner with clients for the long term
To be a responsible business, in our case as an asset manager, you need to view every client investment as a performance promise and a commitment to making a difference in their life by improving their living conditions, for example facilitating access to water or electricity or enabling them to retire respectably.
Several businesses view their clients only as a way of making money, prioritising how much profit can be extracted from each client. This short-sighted approach does not take the long-term best interests of the business or your client into account. Your business is far more likely to benefit from treating each client as a long-term investment and as a partnership with yourself.
To establish whether you are treating customers purely as profit generators, you need to ask yourself the following questions:
- If there is an error, will you always make good on it for the client, even if they are not aware of it?
- If pricing has changed and your client is still paying too much for historical reasons, will you adjust the client fee without being prompted by the client?
- If you have underperformed, or have not delivered on your client promises, will you consider reimbursing them a portion of the fee?
These are essential questions you need to answer because if your clients don’t benefit from what you’re doing, then your work and your business quickly becomes irrelevant – and so do you.
Another crucial question to ask yourself is whether you will take on any client at any cost and whether you consider the reputational and ethical risk of doing business with clients that may operate in an unethical manner or in grey areas of the law. As a company, where do you draw the line on whether you are comfortable taking on that business?
Play a role in uplifting the industry as a whole
All businesses operate in an industry, and in Futuregrowth’s case, it is in the financial services industry. As an industry player and a responsible company, it is critically important that you play an active role in improving the sector to the benefit of clients and other stakeholders.
Business leaders can do this in many different ways. They can participate in industry bodies that press for change, call out unfair business practices and actively promote regulatory changes that will benefit the industry and its clients.
Trying to foster change in an industry can be tough, though. You are dealing with many vested interests and, as a result, you will sometimes need to make brave and unpopular moves to have an impact. It is much easier for businesses to operate underneath the radar, rather than spend time and resources on improving the industry to the benefit of clients and investors.
Some practical things you can do to improve the industry in which you operate include:
- highlighting the areas where regulations and client protections are weak and actively fighting for change; for instance, Futuregrowth has been an active participant in challenging the shortfalls in the JSE bond listing requirements and pushing for these to be changed
- standing up when other stakeholders are compromised; for instance, in August 2016, Futuregrowth decided to withhold funding from state-owned enterprises due to the corruption and malfeasance taking place in these entities
- calling out any malfeasance you see happening in an entity and standing up for what is right, even if it imposes a cost on your business
Taking transformation seriously
Black economic transformation is an important initiative aimed at broadening the economic base of the country, stimulating further economic growth, and creating much-needed employment in a country that suffers from massive unemployment and income disparity.
As a responsible business, you need to ask yourself the following when you apply the BEE legislation in your business:
- Do you pay BEE lip service and skirt around the edge of the regulations?
- Do you try to do as little as possible, using smoke and mirror structures to maximise your points by aiming to spend the minimum rand per point?
There is another way to approach transformation and that is to tackle it as a responsible corporate citizen of the country. If your goal is to be a responsible business, you need to ask the following questions:
- Do you make sure that you never get involved in any tenders that appear to be corrupt?
- Do you embrace the spirit of what the legislation is trying to achieve?
- Do you encourage your staff to get involved in your company’s CSI projects?
- Are your employment policies and practices set up to ensure that your organisation transforms your staff complement, ensuring there are no unfair biases in your processes?
- Do you reach your staff targets by poaching staff from other organisations, or are you actively bringing young students into the asset management industry and giving them opportunities by creating an environment of learning and growth?
- Do you make decisions only to score points on a scorecard or are your efforts part of your organisation’s higher purpose of doing business by investing to make a difference in people’s lives and improve our country?
Treating the environment responsibly
Part of being a responsible business also entails being environmentally conscious and investing in its sustainability. You can do this in many ways, including:
- investing in, and applying pressure on, investee companies to be more environmentally friendly
- maximising effectiveness when you are engaged in activities that will result in carbon emissions; for example, when you have to fly somewhere on a business trip, you can increase the number of appointments and engagements you schedule so that you minimise the amount of flights you need to take
- making recycling available in the office
- considering the environment when making investment decisions
- using efficient lighting and turning off screens overnight
- educating your staff to be environmentally responsible
- eliminating plastic water bottles in the office
- minimising the use of paper
Treating staff fairly and with respect
A crucial part of being a responsible business is treating your staff fairly and humanely – and that does not mean offering the legislated minimum benefits. It does mean doing what is right for your staff members, including providing flexibility during times of hardship or illness and building a productive and fair work environment for your staff. Measures you should take include:
- creating a conducive work environment, with ample resources available to your staff, enabling them to fulfil their responsibilities
- implementing fair employment policies
- treating people fairly and as part of the organisation’s family when they experience hardship or experience severe illness instead of treating them as a disposable item you can replace
- in the COVID-19 environment, making business decisions around your operating practices that prioritise your staff and their families’ health, safety and security
Operating as a responsible business does not mean you are running a charity that has no focus on performance. Instead, it means thinking deeply about everything you do and considering whether your actions are adding positively to society, communities, the environment and people. Acting as an agent of change could well pay off even more than focusing on short-term revenue generation because your business will be built on solid, sustainable foundations and benefit from the improvements you make in society, your industry and the country as a whole.
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