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Ideas Made to Matter
2 CEOs on how to lead a socially responsible organization
Corporate leadership is undergoing substantial change as advocates for racial, social, and economic justice hold CEOs, and the organizations they lead, to new and different levels of accountability.
Concentrating efforts on a narrow cohort of stakeholders is no longer sufficient. Business leaders today are expected to empower, inspire change in, and answer to a broader swath of stakeholders — employees, customers, and the interlocking communities of people affected by their business practices and processes.
Yet taking a stand on social issues in a hyperpolarized environment can threaten both business and social capital. How do CEOs decide which social stances to embrace, and why?
On a panel at the recent EmTech Next conference, hosted by MIT Technology Review, Chip Bergh, president and CEO of Levi Strauss & Co., and Paul Polman, the former CEO of Unilever, shared their experiences as socially responsible business leaders.
Their advice on how to lead a socially responsible business – and why:
Pick your causes with care
“If you stand for everything, you stand for nothing. So we do really try to approach this very strategically,” Bergh said. “It's a deliberate process. When we decide to weigh in on something, particularly if it's a new area for us, it warrants a conversation or multiple conversations with the board.”
Take a stance that reflects the values of your stakeholders
Whether it's customers, employees, or business partners, “there needs to be a clear stakeholder reason on why we're weighing in on something,” said Bergh, citing climate change and gun control as issues that affect the rights and health of Levi’s workers and customers.
“When we run research with young consumers who are our target audience, we know that gun violence is one of the top two issues on their mind. So after the Parkland shooting, we decided to weigh in on this issue.” In 2018, the company pledged more than $1 million to support nonprofits and youth activists working to end gun violence.
Commit to the long term
When Polman took the helm at Unilever in 2009, the multinational consumer goods conglomerate was in financial straits and beset by speculative short-term investors — and confronting an environmental legacy that included charges of deforestation and plastics pollution.
“I felt that Unilever needed a business model that obviously brought growth and success back, but was also based on the deeper values that this company was founded on,” he said.
The Unilever Sustainable Living Plan, designed to decouple the firm’s growth from its environmental footprint and increase its overall social impact, came with 50 targets so people inside and outside the firm could measure goals and gauge progress.
To take the emphasis off short-term performance, “We abolished quarterly reporting, we abolished [earnings] guidance, we moved our compensation system to the long-term,” Polman said.
Shareholders were initially not happy, but came around as returns rebounded. “When data is not available to link these new models to value creation, then it's not surprising that some parts of the financial market react negatively,” Polman said. “It took us a little bit to gain their confidence.” Unilever eventually saw eight years of top-line growth while delivering a total shareholder return of 290%.
Partner for greater impact
When Levi Strauss committed to getting the vote out in 2018, it partnered with Patagonia and PayPal to co-found Time To Vote, a coalition designed to convince CEOs to give employees time off to vote in the midterm elections. Some 2,000 companies have since joined the effort.
“We fundamentally believe that by being the ‘tip of the spear’ on many of these issues, others will follow, and we can create a movement,” Bergh said. Polman took that edict further, leaving Unilever in 2019 to co-found Imagine, a social venture designed to attract “a critical mass of CEOs” committed to tackling climate change and inequality.
“When you do that, you see two things happening,” Polman said. “You get a human transformation — collectively the CEOs become more courageous. And you get a systems transformation. Because you have critical mass, you get the attention of civil society or NGOs, and you get the attention of government.”
Let history be your judge
“The test that I use when we decide to weigh in on an issue is, will history say 20 – 25 years from now that we were on the right side?” Bergh said.
“We desegregated our factories in the south and the southeast years before the Civil Rights Act. We didn't get legislated into doing it. We did it because it was the right thing to do,” he said. “That’s how we view our purpose in weighing in on these important issues. Can we make a difference, and can we lead the world to a better place?”