The pandemic is accelerating many trends in society, such as the rapidly growing use of online shopping and virtual technologies like video conferencing. Less obvious but no less important is the changing role of business in society. In recent years we’ve heard lots of talk about the need for companies to play a positive role in society, and not just tend to the bottom line. The current crisis presents us with an opportunity to make this a reality: how businesses act and behave in the coming months will determine how they are seen for many years to come.
Society’s expectations of business have never been higher. Many of our most urgent problems, from climate change to social and economic exclusion, defy quick or easy policy solutions. The private sector faces growing pressure to play an active role. For many companies this pressure comes from the growing ranks of institutions that incorporate environmental, social and governance criteria in their investment decisions, through to their employees and customers who want to work for and do business with firms that share their values. Increasingly in their eyes, if you’re not part of the solution, you’re part of the problem.
The coronavirus pandemic, which threatens the security of millions of Britons and risks worsening our economic and social inequalities, will only amplify these pressures to do the right thing not just say the right thing. So too will the anti-discrimination protests sparked by the Black Lives Matter movement in the United States and around the world. At Nationwide’s annual general meeting in July, the big questions our members asked included what were we doing to support members hurt by the crisis, and how were we acting to address climate change?
Do these pressures risk diverting business from its purpose of providing goods and services efficiently and earning a profit for shareholders? I do not believe that is the case. At Nationwide, we have been clear that we need to manage the business in the long-term interests of our members and the society in which we operate. That means we need to be an efficient and effective organization if we are to meet our members’ and society’s broader expectations over the long-term.
How do boards ensure that companies walk the talk? Transparency holds the key. At Nationwide, we set a goal of having women fill 33 percent to 35 percent of our most senior roles this year, a target I’m proud to say we’ve met. Now we are working to have as many as 15 percent of senior roles filled by Black, Asian and minority ethnic staff.
We have a strong incentive to succeed because we know we risk losing many of our best employees if we fail to deliver. Yet boards can’t just stick to minding their own shop. If we’re serious about changing business’s role in society, we need to be willing to call out poor behavior elsewhere. For example, I find it disappointing that there is still one company in the FTSE 250 Index that doesn’t have any women on its board, and more than a dozen others with only one.
We are living through the second great crisis in as many decades, and the coming months will be critical. Just as banks discovered after the global financial crisis, how business acts in the next 12 to 24 months will determine how we are perceived, and whether we will retain our effective license to operate for the next decade. We can’t afford not to meet society’s expectations.
David Roberts is chair of Nationwide Building Society and vice chair of NHS England. This column summarizes a presentation he made at an online meeting of the Oliver Wyman Forum.