The root of all evil? - RSA

The root of all evil?


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.

Be the first to write a comment


Please login to post a comment or reply

Don't have an account? Click here to register.

Related articles

  • Nine famous female Fellows inspiring inclusion

    Dean Samways

    International Women’s Day 2024 invites us to imagine a world where all genders enjoy equality. Where prejudice and discrimination no longer exist. This is the world our work is helping deliver to this and future generations.

  • Fellows Festival 2024: changemaking for the future

    Mike Thatcher

    The 2024 Fellows Festival was the biggest and boldest so far, with a diverse range of high-profile speakers offering remarkable stories of courageous acts to make the world a better place.

  • Inspired by nature

    Rebecca Ford Alessandra Tombazzi Penny Hay

    Our Playful green planet team summarises a ‘lunch and learn’ at RSA House that focused on how the influence of nature can benefit a child’s development.