Modern Slavery Risks and Compliance: What Boards and Executives Need to Know
Modern Slavery is the umbrella term spanning illegal acts that remove people’s freedom. The United Nations defines modern slavery as “an umbrella term covering practices such as forced labour, debt bondage, forced marriage, and human trafficking. Essentially, it refers to situations of exploitation that a person cannot refuse or leave because of threats, violence, coercion, deception, and/or abuse of power.” Despite being illegal globally, modern slavery persists in all regions of the world, including Australia. Globally, Modern Slavery is Increasing not Decreasing Modern slavery is a gross violation of human rights. Global authority, Walk Free Foundation based in Australia, calculates that 50 million people worldwide are trapped in modern slavery, with an estimated 41,000 of them in Australia. This is a 10 million increase on the numbers estimated in 2016. Forced Labour is the Most Prevalent Problem which Makes it a Business Issue 28 million – nearly two-thirds of all cases are forced labour cases, linked to global supply chains, impacting workers across a diverse range of sectors and at every stage of production. Past reports from Walk Free revealed that a horrifying 12% of those in forced labour are children. Walk Free Global Slavery Index 20231 identifies the top five high risk sectors are electronics, garments, palm oil, solar panels and textiles. With such high % related to labour practices there is a significant responsibility on businesses to identify and fight it. This involves actively identifying, preventing, and mitigating slavery risks within operations and supply networks. By thoroughly investigating and addressing issues, businesses not only protect vulnerable populations but also set a positive example for their stakeholders, contributing to wider societal efforts against modern slavery. Modern Slavery Legislation and Reporting The Commonwealth Modern Slavery Act 2018 came into effect on 1 January 2019. The legislation introduced an annual Modern Slavery Reporting Requirement for large businesses and entities operating in Australia that generate more than A$100 million in annual consolidated revenue. “The dual aim of the Act is to increase business and government awareness of these modern slavery risks, and support entities to identify, report and address the risks.”2 Attorney General’s Department A Review After Three Years Resulted in 30 Recommended Improvements Similar to the UK Modern Slavery Act process, Australia’s Modern Slavery Act 2018 was reviewed after three years in practice, to identify what works and what needs to be improved. In 2023, Professor John McMillan, AO, led the review with support from the Attorney-General’s Department. The objective was to assess the effectiveness of the Act in its first three years of operation.IFRS S1: Sets out overall disclosure requirements for sustainability-related financial information. Hundreds of Submissions Received The Review invited submissions, receiving 136 written submissions from domestic and international stakeholders, 30 responses to the online questionnaire and 496 responses to the online survey for reporting entities. This delivered extensive feedback provided valuable insights into the Act’s strengths, weaknesses, and areas for improvement. Review Recommendations The review made 30 recommendations to the Australian Government. An Australian Anti-Slavery Commissioner will be Appointed The appointment of the Australian Anti-Slavery Commissioner is the first direct implementation of a key recommendation from the 2023 Modern Slavery Act review. The Government is currently in the process of selecting the inaugural Commissioner. Responsibilities of the Commissioner: A Blend of Compliance, Education and Advocacy The Commissioner’s role will be to ensure compliance with the Act’s requirements by businesses and government agencies, raise awareness by educating the public, businesses, and government about modern slavery and its impacts, and advocacy by representing the interests of victims of modern slavery and advocating for their rights and support. The government will provide updates on its progress in implementing some of the remaining recommendations in the coming months and years. This could include legislative changes, policy updates, and additional resources allocated to combating modern slavery. Other Recommendations: Expand Scope of Legislation, Due Diligence and Reporting Quality Lower the Revenue Threshold from $100 million to $50 Million to Include More Organisations The review proposed reducing the reporting threshold from $100 million to $50 million significantly expanding the number of companies required to report. The proposed reduced reporting threshold would include specific guidance for small and medium-sized enterprises to meet their reporting requirements. Tighten Due Diligence The most substantial recommendation is to impose a mandatory due diligence obligation on reporting entities. This would require companies to assess and address modern slavery risks within their supply chains. Introduce Guidance to High Risk Sectors and Penalties for Inadequate Reporting A further recommendation is to introduce penalties for non-compliance or inaccurate reporting to strengthen enforcement. And providing tailored guidance for industries or sectors with a higher risk of modern slavery, such as agriculture and garment manufacturing, was also recommended. What Does this Mean for Boards and Executives? Recognise that Good Practice Enhances Business Value Many businesses view compliance with the Modern Slavery Act as an additional expense or a burden. However, reframing compliance with the regulations as a strategic, business practice improvement and value creating investment can deliver qualitative and quantitative benefits. Adopt an Impact, Risk and Opportunities Mindset Purposeful Boards and executives can approach Modern Slavery reporting obligations through the lenses of impact, risks and opportunities, in the same way that they approach environmental and other social responsibilities. Success Comes from a Two-part Response: Systems and Culture Walk Free estimates that $468 billion of goods imported by G20 countries are at risk of modern slavery. Systems This means modern slavery can exist in any business or supply chain, regardless of industry or location. By assuming that risks exist, you can adopt a thorough and vigilant approach to combating modern slavery. This means diligently examining every aspect of your supply chain, including direct suppliers (Tier 1) and their suppliers (from Tiers 2 to Tiers 5-6 including importers, exporters and trading companies). Culture Integrating anti-slavery measures with your company’s core values and ESG strategies underscores the importance of the issue. This alignment ensures that the fight against modern slavery
Best-Practice Environmental Management Systems: How to use ISO 14001 as a framework for transformation
As the global community grapples with the pressing challenges of climate change, sustainable business practices are no longer optional — they are essential. The Australian government has responded to these challenges with new Climate Change legislation that places greater responsibility on businesses to minimise their environmental impact. The government is also currently developing new legislation to mandate climate-related financial disclosures by businesses. As a result, the imperative for sustainable business practices has never been more pronounced, and Australian businesses are increasingly recognising the urgency of adopting environmentally responsible measures. And whilst the greatest pressure is being felt by large listed entities that will be the first to be affected by mandatory reporting, the small and medium businesses who work with them are also needing to prepare reliable and transparent data around their environmental impacts and improvement pathways. This will increasingly become a condition of being able to work with large organisations. One pivotal strategy is the implementation of an Environmental Management System (EMS), with the ISO 14001 framework emerging as a guiding force. This article explores the critical role of Environmental Management Systems in transforming business operations, and how aspiring and existing B Corps are using EMS’s to become more sustainable and environmentally conscious. What is ISO 14001? ISO 14001 acts as a compass for businesses navigating the complex landscape of environmental management. It was developed by the International Organisation for Standardisation (ISO) to provide a comprehensive framework for organisations to establish, implement, maintain, and continually improve an Environmental Management System. In doing so, ISO 14001 provides a structured approach to ensuring compliance with existing regulations, and proactively identifying and mitigating environmental risks. Through a robust EMS, organisations can not only meet emerging reporting requirements but also enhance their environmental performance and foster a culture of continual improvement. The PDCA (Plan, Do, Check, Act) cycle embedded within ISO 14001 ensures a systematic approach to environmental management. The cycle consists of four clear action points: Plan (establishing objectives) Do (implementing processes) Check (monitoring and measuring) Act (continual improvement) What are the benefits of using the ISO 14001 framework? Environmental Impact: By implementing an EMS, businesses can systematically assess and improve their environmental performance, leading to reduced resource consumption, waste generation and increased energy efficiency. Establishing clear environmental objectives and targets enables proactive measures to prevent pollution, conserve natural resources, and enhance overall sustainability. Operational Efficiency: An EMS’s systematic monitoring and measurement components enable data-driven decision-making, fostering continuous improvement in operational performance. Cost savings: Implementing an Environmental Management System isn’t just about regulatory compliance; it’s also a strategic move that can yield significant cost savings. By optimising resource use, reducing waste, and increasing energy efficiency, businesses can experience tangible financial benefits that contribute to long-term sustainability. Enhanced reputation: An EMS is a visible commitment to environmental responsibility. This commitment goes beyond legal obligations. It resonates with stakeholders who increasingly prioritise environmentally conscious businesses. Using the ISO 14001 framework enhances the company’s reputation and fosters trust. Market access and competitive advantage: An EMS using the ISO 14001 framework can put you on the radar of many domestic and international companies that seek out environmentally responsible business partners. Embedding an EMS provides a competitive advantage, and opens doors to partnerships and collaborations that might otherwise remain closed. Employee engagement and morale: The adoption of an EMS isn’t solely a top-down initiative; it’s an inclusive journey that engages employees at all levels. This process helps to create a workplace culture that values sustainability and fosters a sense of pride and purpose among employees. This boosts morale and attracts and retains talent — particularly from a Gen Z workforce that actively seeks employers with a commitment to corporate social responsibility. What are the challenges of implementing an Environmental Management System (EMS)? While the benefits of an EMS are clear, the journey toward implementation may pose challenges. Resistance to change, the complexity of integrating new processes, and initial resource investments can be daunting. However, overcoming these challenges is integral to realising the long-term advantages. A dedicated implementation team, effective communication, and a commitment to continuous improvement are crucial elements in solving these challenges. What is the role of an EMS for aspiring or existing B Corps? By embracing an EMS, B Corps underscore their pledge to diminish their environmental footprint, champion environmentally conscious innovations, and contribute to a more sustainable and resilient global business landscape. In essence, the incorporation of an EMS is not merely a strategic decision; it serves as a testament to a B Corp’s unwavering commitment to the triple bottom line — people, planet, and profit. For aspiring B Corps, it epitomises a steadfast commitment to sustainable business practices, and ensures that environmental considerations are intricately woven into the fabric of the organisation’s operations. This proactive stance not only aligns with the B Corp ethos of environmental stewardship, but also establishes a robust foundation for enduring sustainability. Having an EMS in place also means additional points are assigned in the Business Impact Assessment (BIA), the framework utilised for verification and B Corp certification. For existing B Corps, the integration of an EMS reinforces their dedication to perpetual improvement and serves as a cornerstone for upholding B Corp certification. An EMS furnishes a systematic framework for identifying, monitoring, and mitigating environmental impacts, thereby fostering transparency and accountability. How can you use EMS data to demonstrate transparency and accountability? Beyond the immediate operational benefits, the data generated by your EMS becomes a powerful tool for transparency and accountability. Consider this data as a foundation for creating a comprehensive Sustainability Impact Report. By analysing and presenting key environmental performance indicators, your business can showcase its commitment to sustainability to stakeholders, clients, and the wider community. Our expert team can guide you through the implementation of an EMS using the ISO 14001 framework, and assist in leveraging the valuable data to create a compelling narrative that demonstrates your environmental stewardship. Ready to transform your business by embedding an EMS? Embarking on the journey to embed an
5 Levers you can pull for explosive growth in your business
For the purposes of this article we are going to assume that growth means an increase in the overall value of a business to shareholders or private owners over a period of time. ”All brands are smaller than they want to be”Byron Sharp And we’ll explore a range of tactics B2B and B2C businesses can flex to generate longer term sustained brand growth: 5 Levers You Can Pull for Explosive Growth in Your Business There are 5 levers you can use as part of a business growth strategy, to grow your business. The balance is between capability (people and culture) and budget (resources) as to the mix of the levers you use to hit growth goals. Find out how your business can grow by applying the 5 Levers of Growth Find out more about Business Growth Book A meeting With Phil 1. Geography All businesses market within particular regions and those areas of focus can range from international down to individual suburbs, depending on the scale of the organisation. Large FMCG brands like Coca-Cola sell in most countries of the world, telcos such as Optus or Telstra sell their services to people and businesses all around Australia while dentists have a hyper-local market with most of their customers coming from a few surrounding suburbs. Expanding outside the geography that businesses currently operate in is a fast way to grow their brands and acquire an entirely new set of customers previously outside their reach. To activate this lever of growth, companies should first test if there is demand in new geographic regions and if their existing product or service will have traction with customers there. Once a market opportunity is identified the cost of opening up that new region needs to be established so business leaders can decide if the investment is a viable one that will deliver a return. Moving into the massive Chinese market can be a very attractive proposition, but with high barriers to entry, it can be very expensive, and many businesses have tried and failed. Done well, opening up new geographic markets can deliver fast customer acquisition and new brand growth. 2. Distribution Channel For many businesses, the advent of digital in the early naughties provided new channels to reach customers. Previously limited to retail stores or face-to-face sales for B2B, companies were limited in the ways they could sell to customers. With the rise in the always on customer it is important for businesses to make sure their product or service is easy to buy, by being just a click or walk away from wherever customers are. Always on and omnipresent is the name of the game to make sure customers spend their hard-earned with our brands rather than competitor brands. To test this Growth Lever, organisations need to make sure they have recent customer research that addresses the question of where potential customers want to be able to purchase (what they say they will do) and where they might purchase (what channels they are active in). If customer behaviour insights identify channels that may drive additional sales with existing customers, or acquire new customers entirely, then the business should activate these new distribution channels as soon as feasible. Some of the distribution channels available include; 3. Customer Customer retention is vital for business survival and stability, but new customer acquisition is the best way to drive growth. This can be through marketing and advertising that ensures the brand is front and centre when target customers are considering purchasing. But more importantly, using this Growth Lever means finding new customers outside of existing target customers and then targeting them with marketing and advertising to put a brand on their consideration set. Once the existing target market opportunity has been filled, acquiring more customers within that group will have a high CPA (Cost Per Acquisition). A high CPA can be an indicator to look elsewhere to find new customers to the buying category. By widening the top of the funnel with more prospects, the customer base can be expanded, and revenue grown. Finding different customers to the product or category means a larger prospective market. This could include targeting a different demographic with similar drivers to a business’ customer, particularly if they risk saturation with their core customer. A recent example is when Nike moved into eSports and began targeting the gamer who is similarly performance-driven to Nike’s core customer, albeit in a different activity. 4. Category or product By stretching the boundaries of a category or introducing a new product or service, businesses can expand what they can sell to an existing market. Pulling this lever means maximising the sales to an existing pool of customers by giving them more purchase opportunities from a brand they have already purchased from. Uber expanded out of its P2P taxi service into food delivery. 5. M&A Mergers and Acquisitions are a very effective way for businesses of any size to grow rapidly, but risk needs to be carefully managed by ensuring any acquisitions are aligned strategically and carefully planned and any debt taken on can be serviced. Growth can be driven out of M&A’s in a number of ways – the acquisition may accelerate market access for products, it might exploit a business’s scalability or it might enable the acquisition of skills or technologies at a faster rate than they can be built. Apple’s acquisition of Beats Electronics allowed Apple to quickly get into the fast-growing streaming business whilst the iTune’s model was in planned decline. A successful business growth strategy will use a combination of these 5 levers. The mix of which ones, and to what extent each is pulled is dependent on the ambition, strategy and appetite a business has for rapid growth. What is key is that each lever is evaluated, and that an in depth understanding is established of the required cost versus return for each, particularly against both short and longer term objectives. Lastly, to truly
5 Tips for Bringing Your Brand’s Decarbonisation Strategy to Life
After ranking last for climate policy among more than 60 nations, the Australian government’s climate change performance was widely slammed at the recent UN COP26 summit. Fortunately, the Australian business community has its eyes wide open to the climate challenge. According to a global Deloitte report, 81 percent of Australian business leaders believe climate change will negatively impact their operations. This is more in line with community demand for climate action, and it is now an imperative for businesses to place societal responsibility at the heart of their strategies. Speaking at an online forum organised by Trans-Tasman Business Circle, Jon Briskin, Executive General Manager of Retail at Origin Energy, said this imperative is being driven by skyrocketing customer demand for environmentally-responsible brands. “Customers clearly want to purchase from brands they trust, and that they believe will do the right thing for the planet,” he said. “This change in customer sentiment is not linear. It is absolutely exponential, and it’s just taking off now.” 5 Tips for Bringing Your Brand’s Decarbonisation Strategy to Life Here are five things you can do to help tell your brand’s decarbonisation story: 1. Be authentic Authenticity is critical to creating the brand trust consumers are craving. And that means implementing genuine and measurable steps to decarbonise your business, with transparent Environment, Social and Governance (ESG) reporting. “Tangible ESG objectives and outcomes are far more important than they have ever been,” Briskin explained. “We all saw the green washing of brands, and a lot of that gets called out now. Customers see through it. You need to express proof points that show how you stand behind your brand promise.” 2. Get certified Briskin said that obtaining proper certifications is important to building transparency and trust. At The Growth Activists, for example, we help companies achieve BCorp certification that demonstrates the business adheres to the highest standards of verified social and environmental performance. 3. Tell your story You’ve done the work, now you need to tell your story. But when it comes to sustainability, there is no finish line. The bar keeps getting higher and higher, and you need to continuously engage with your customers to keep telling the story of your brand’s on-going decarbonisation. This storytelling needs to happen at the individual customer and at the community level. At The Growth Activists we assist businesses to craft those narratives with credibility and authenticity. We also enable their employees to share those stories with confidence, which is critical for truly powerful activation of their ESG efforts. 4. Engage with the individual You need to make your decarbonisation story part of your customers’ day-to-day lives. This will keep the conversation going, and position your brand as part of your customers’ personal sustainability efforts. “For example, at Origin Energy our ‘Spike’ initiative allows customers to earn rewards when they reduce their energy use in peak demand periods,” Briskin said. 5. Engage with the community You need to tell your decarbonisation story at a community level too. For example, Octopus Energy in the UK purchased community-based wind generation assets, and offered discounts to local residents whenever the turbines were spinning. “Within a couple of weeks they had 800 communities across the UK asking if they could join the Octopus Fan Club and get those wind generation assets in their communities too,” Briskin said. But it all depends on authentic actions, measurable outcomes and transparent proof points. Make a real ESG commitment, measure and prove it by adopting credible impact-measurement standards or by undertaking BCorp certification, then engage your customers and their communities with continuous storytelling. The Growth Activists are experienced B Consultants. We’re here to support organisations through the complex B Corp certification process with the right advice for your business. Get in touch to learn more about how we can help. [/vc_column_text][/vc_column][/vc_row]
When CEOs Become Activists
Why more business leaders are putting Purpose first. There was a time when no CEO in their right mind would dare make a statement that risked customer alienation. Back in 1990, when Michael Jordan was asked why he failed to endorse a local black candidate running against an openly racist incumbent, he was infamously attributed as saying “Republicans buy shoes too”. Even though it’s never been categorically proven that Jordan said this, the quote stuck. For years it was upheld as an exemplar for business leaders to heed. But times have changed. As the most progressive global organisations become increasingly purpose-driven, their leaders are also taking a more public stand on the issues that align with their companies’ values. Topics such as gender, race, sexual orientation, religion, immigration and the environment are no longer off-limits. Start With Why The primary driver for CEO’s becoming increasingly vocal on controversial topics is the evolution towards purpose-led business strategy . This business approach acknowledges that the corporation has a responsibility not just to shareholders, but to a broader group of stakeholders. These stakeholders include customers, employees, suppliers, local communities and the environment. This empowers the CEO to advocate on behalf of a larger group of stakeholders, and as a result to address a broader group of topics that affect them. There is also the fact that CEO’s understand that the general public expect more of them, and the businesses they represent, than ever before. The 2019 Edelman Trust Barometer demonstrates that trust in business sits at 56%, higher than trust in government or media which are at 47% each. This makes it clear to CEO’s that there is an expectation that they deliver on the trust invested in their organisations. This sentiment is particularly strong with influential millennials. 47% of them say that CEO’s have a responsibility to speak out on social issues. And 56% say that the imperative to be vocal is much greater now than in the past. Millennials are also more likely to buy from brands helmed by CEO activists and to stay as loyal employees with CEO activist bosses. And there is the growing frustration that governments do not make fast enough progress on key issues. Political gridlock, slow bureaucracy and failure to represent constituents are amongst the reasons business leaders are stepping up to lead public discourse. CEOs are using their positions to raise awareness for the causes requiring attention. And they’re wielding their economic power to influence policies and legislation. When CEOs Become Activists 3 Activist CEO’s Advocating with Purpose and Impact Marc Benioff – Salesforce Benioff has made headlines over the last few years, weighing in on topics ranging from taxes assisting the homeless in San Francisco to gun laws. But his most high-profile foray has been in support of the LGBTQI community. When the state of Indiana passed a controversial law allowing businesses to deny services to same-sex couples, he acted decisively. Benioff threatened that Salesforce would boycott the state completely. Other business leaders joined him and the bill was soon overturned. Benioff acknowledges he represents a broader group of stakeholders, saying, “CEOs need to stand up not just for their shareholders, but their employees, their customers, their partners, the community, the environment, schools, everybody.” His position on activism is that he only advocates for what is important to his people. He says, “My job as CEO is to listen deeply to my employees and customers and to respond to them effectively.” Rose Marcario – Patagonia Rose Marcario has tripled the company’s profits since stepping into the CEO role in 2009. She has also exponentially elevated the brand’s profile through relentless activism. As a certified B Corporation, Patagonia commits to countless courageous initiatives doing good for people and planet. But Marcario’s gutsiest move was to sue the Trump administration for its decision to reduce Utah’s Bears Ears National Monument by 85%. A company statement read: ‘This is not about politics; it’s about protecting the places we love and keeping the great promise of this country for our children and grandchildren. We won’t let President Trump tear down our heritage and sell it to the highest bidder’. When recently asked how the drawn-out legal proceedings have affected the company Marcario replied, “[The lawsuit] has been great for business. We’re going to have the best year ever.” Mark Parker – Nike Outgoing Nike chief Mark Parker is no stranger to divisive social issues. When Nike aired their Dream Crazy ad featuring Colin Kaepernick in 2018, both the media and the public were quick to react. Kaepernick had lost his job as a quarterback at the San Francisco 49’ers and had been deemed ‘unemployable’ by other NFL teams. He had deeply divided Americans by taking the knee during the national anthem to show his allegiance to the ‘Black Lives Matter’ movement. Nike’s decision to support Kaepernick ensured Americans clearly understood on which side of the divide the company stood. The ad ends with the line “Believe in something. Even if it means sacrificing everything”. And in creating the ad Nike was willing to walk the talk. The stock price initially took a hit, and the media fanned the flames of controversy by showing enraged conservatives burning their Nike shoes. But within days the stock climbed to an all-time high. By the end of the quarter, the sportswear giant reported a 10% jump in income , driven primarily by an increase in revenue. Nike’s results proved that taking a strong position can be very good for business. Parker, who approved the ad, defended the sportswear giant’s position. He commented, “There are values that are important to the brand and the company that we’re not going to shy away from. We support the views of our employees, our athletes. And yeah, we will put a stake in the ground and take a stand.” 3 Take-Outs For CEO’s who have embraced purpose and are exploring broader stakeholder advocacy, there are a host of considerations to ponder. Here are three they
CSR is Dead
Why Purpose is moving from the sideline to the core of business strategy When the Royal Commission into Banking, Superannuation and Financial Services published its final report in February 2019, the death knell sounded loudly for Corporate Social Responsibility (CSR). Kenneth Hayne’s report implicated Australia’s largest financial institutions as having engaged in conduct that fell well below community standards. It illustrated systemic issues of misconduct and serious lapses in moral judgement. Hayne was scathing in his assessment of our Big 4 banks, but he reserved his most damning comments for NAB’s since de-throned Chairman and CEO. In the same week they were due to testify to the commission, their staff had been pressuring brokers to sell 5 mortgages each before Christmas. Hayne stated, “My fear – that there may be a wide gap between the public face NAB seeks to show and what it does in practice – remains”. DISCONNECTED ACCOUNTABILITY And this is where the CSR problem lies – in the paradox between the cultivated public perception of societal commitment, and in the day-to-day behaviour in core business activity. This is further underscored by the fact that Australia’s biggest financial institutions are also some of the country’s most visible corporate philanthropists. For many organisations, Corporate Social Responsibility, has been used as a bolt-on – a well-intentioned but distinctly separate activity to core business. And not only in the financial services industry, which is just the easiest to pick on right now. When uncomfortable truths around ethical failings in core business come to light, CSR appears almost as a mea culpa. It comes across as a kind of atonement to help balance out the indiscretions committed. It’s clearer than ever that this disconnected model has serious flaws. The time has come for a new, more integrated approach – one that connects core business activity with commitment to a broader stakeholder framework. Corporate Social Responsibility is Being Replaced by Business Purpose A BRIEF HISTORY OF CSR So how did we get here? Company founders began to understand that stakeholders extended beyond the boardroom at the end of the 19th century. Wealthy philanthropists like Andrew Carnegie and John D Rockefeller believed that healthy, happy customers and communities were essential for business success. But it wasn’t until the 1940’s that laws were changed so that businesses, and not just their owners, could support charities, and with this shift corporate foundations were born. In 1953, Howard Bowen published The Social Responsibilities of the Businessman. He suggested that businesses have a social obligation “to follow those lines of action which are desirable in terms of the objectives and values of our society”. But it was Peter Drucker who took the concept further, and laid down the thinking that would lead CSR to becoming a formalised business principle. In 1974 he wrote, “The business enterprise is a creature of a society and an economy, and society or economy can put any business out of existence overnight…The enterprise exists on sufferance and exists only as long as the society and the economy believe that it does a necessary, useful, and productive job.” Drucker’s seminal thinking led organisations to consider their impact on society and by the 1980’s business and social interests were more linked than ever. At the 1992 Earth Summit in Rio heads of state committed to sustainable development that would not compromise the planet for future generations. This led to businesses developing environmental policies to flank their community initiatives. By the new millennium Corporate Social Responsibility became a strategic imperative for leading businesses. In 2010 the International Organisation for Standardisation (ISO) published a set of voluntary standards intended to help organisations implement CSR. Its aim was to assist them to enhance society and the environment instead of contributing negatively to them. And so, for a while, CSR served us well. SOCIETY EXPECTS MORE But what we are currently experiencing is a fundamental shift in societal demands. There are many converging forces driving the evolution towards broader stakeholder integration. There is the democratisation and accessibility of information driven by the digital revolution. Once voiceless stakeholders now command a new level of power – customers, employees, shareholders, community members and even suppliers can be activists or disruptors. There is the growing economic influence of millennials, who need to ‘believe in’ the organisations they work for and the brands they buy from. And there is the growing remorse of retiring baby-boomers who are looking back and realising that perhaps they’d been led astray by Milton Friedman’s narrow definition of the responsibility of the corporation. They are now thinking about their legacies and righting some wrongs. There are many more drivers of change, all pointing to one irrefutable truth – in 2019 we all expect much more of businesses than ever before. GOODBYE CSR, HELLO PURPOSE So what does it take to evolve towards a more holistic approach? The first step is to start with organisational purpose. In 2017, when Blackrock Capital’s CEO, Larry Fink, published his annual Letter to CEO’s, it had a seismic effect on the global business community. He wrote, “Without a purpose, no company can fulfil its full potential. It will ultimately lose the licence to operate from its key stakeholders.” This instigation to the leaders helming companies in Blackrock’s USD$6.3 trillion portfolio, was an unequivocal call to action. He challenged them to understand their stakeholders and articulate a broader societal purpose. He saw it as an imperative for long-term value creation. Fink in no way gave them a hall pass on required shareholder returns. He asked them to balance competing priorities whilst taking a longer-term view to value growth. Whilst organisations like Unilever and Patagonia had embraced purpose-led strategy long before Fink’s missive, the effect was to escalate Purpose to a much broader audience of business leaders. A bigger movement, to transition purpose from a sideline activity to the core of business strategy, had begun. STAKEHOLDER INTEGRATION SUPERCHARGES GROWTH One of the biggest differences between this contemporary approach where purpose is at the centre of business strategy and