The RSA has Labour leader Ed Miliband speaking tomorrow on the NHS. His team has kindly let me see a draft of the speech and I am impressed. It is, of course, a critique of the Coalition’s reforms, but rather then being an oppositional or ideological diatribe it is much more thoughtful and balanced. As I guess I am likely to post tomorrow on how the speech goes, I thought I would briefly now add to my thoughts last week on corporate responsibility.
Some of the comments on last week’s posts were pretty scathing about the idea that major corporations – like PepsiCo or Kingfisher – can really commit to doing business in a more progressive way. Maybe I am being a sap, but I do think some retailers are waking up to the idea that it is not a sustainable long-term business plan to encourage people to do things that are bad for them, society or the planet.
Building a second assumption on the first, my sense is also that while businesses that sell stuff to consumers may be open to new ideas, businesses that invest money on our behalf – in other words financial institutions – show few signs of a similar openness to change.
Many people argue that the short-termism of financiers is inimical to a more responsible way of thinking about business development. At last week’s FRSA Profit with Purpose event I was told that while ethical funds are growing, and while those funds avoid investing in certain industries (tobacco, arms etc), they are otherwise just as short term as just about everything else in the market.
So why is that those investing our life insurance, pension funds, unit trusts etc are so unreconstructed? And why is that our desire to know out retailers are responsible isn’t matched by our aspirations for our fund managers? Here – from a position of substantial ignorance (which is a bit worrying as my lecture on ‘Big Society business' is only two months away) – are three possible reasons:
1. Structural: the way investment happens through funds which combine billions of pounds from millions of investors with shares in thousands of companies means that stewardship and responsibility are almost impossible to exercise, both from the point of view of investment managers and ordinary citizens.
2. Cultural: As we have seen vividly before and since the banking crash, those who are senior in the financial sector seem utterly impervious to any sense of responsibility or any concern about public opinion. Perhaps talking about social responsibility with financiers is like talking about feminism at the local rugby club.
3. Money and the mind. There have been experiments that suggest people simply need to be prompted by the word ‘money' to become less likely to display altruistic motivation. Perhaps when we think about goods and where they come from and what they do we are able to use our critical faculties, but when it comes to the idea of using money to make more money those faculties get switched off.
If any or all of these theories are true there isn’t much room for optimism. The way modern capitalism – and perhaps all capitalism - works the investing tail wags the productive dog. Even if there are good intentions in many global boardrooms they may rarely get turned into authentically different ways of doing business.
In his fifth post for the RSA Living Change Campaign, Matthew Taylor explores some of the implications of the framework he has outlined over the last month and asks why ideas like these aren’t more widely known and used.
As we emerge from Covid-19, Ruth Hannan argues there is an opportunity to shift from short-term solutions to approaches based on deeper understanding of citizens’ needs and which focus on systemic change.
If young people are to flourish in this new world of rapid change and insecurity, we need policies that support young people in the here and now, whilst also protecting their futures. Thinking about economic security is one way to do this.