- Three-day virtual event draws preeminent business executives and scholars including Former Unilver CEO Paul Polman and Nobel laureate Bengt Holmström
November 2, 2020. IESE Business School´s Center for Corporate Governance’s recently organized one of Europe´s most important conferences on corporate purpose, drawing around 2000 attendees from across the global business community. The conference ended on Friday after three days of debate on the link between purpose and governance and the best practices for both.
A trio of business leaders concluded the event, which was co-hosted by the European Corporate Governance Institute, with a discussion on the need to reemphasize the importance of the individual within a corporation and an organization’s ethical responsibility to the society surrounding it. Some of the key topics discussed included:
Purpose as an existential need
“When we talk about purpose, we’re talking about something that’s existential,” said José Viñals (Chairman, Standard Chartered) in a final session that considered how boards of directors can define and instill purpose. “This is about making organizations more human.”
Baroness Denise Kingsmill (NED, Inditex and IAG) struck a similar chord. “It’s from the relationship with human capital that the upholding of corporate purpose takes place,” said Kingsmill, who’s also a member of the UK House of Lords.
“I think the next 10 years will be about acting, not about talking,” said Juvencio Maeztu (Deputy CEO and CFO of Ingka-IKEA).
Action is needed, he added, given the grave challenges currently facing the planet. “Building financial resilience is a precondition of creating sustainability.”
While the IESE CCG conference’s six sessions included lively debate between prominent academics and executives regarding purpose and how to authentically pursue it, there was a consensus that the coronavirus pandemic and climate change were the key catalysts behind the current drive to do good while also doing well.
“The overwhelming reason why we have to bring ethics back into the picture is climate change,” said Professor Patrick Bolton (Columbia). “This is the biggest challenge that awaits us in the 21st century. What climate change and the pandemic teach us is that nature matters. And we have to take it seriously.”
While the climate change crisis predates the pandemic, several speakers drew links between the two. “The COVID-19 crisis is just a symptom of our shortcomings. We cannot have healthy people on an unhealthy planet,” said Paul Polman (Founder, Imagine and Former CEO, Unilever).
The danger of inauthenticity
Despite agreement on the need for corporate purpose in the face of contemporary social and environmental crises, several speakers warned of the dangers of cheap talk, greenwashing and rushed, misguided action in response to public uproar amplified by social media.
“I’m worried about the court of public opinion being too extreme or too biased,” said Nobel Laureate Bengt Holmström (MIT), who also questioned how many companies would actually reduce shareholder benefits in order to do social good.
Professor Colin Mayer (Oxford) offered a franker appraisal of false purpose, beginning the conference by saying, “In many cases, corporate purpose statements are not just verbiage, but might also be described as twaddle.”
Yet his similarly blunt definition of authentic purpose as “not profiting by doing producing problems for the people of the planet” imagined an effective path forward.
Another recurring theme of the event was the connection between a fully formed purpose and better financial performance.
“It’s not an either/or between purpose and profits,” said Professor. Rebecca Henderson (Harvard Business School). “It’s a dynamic process.”
The conference, sponsored by the Social Trends Institute, featured panel moderators including journalist Henry Tricks (The Economist) and IESE Business School faculty members Mireia Giné, Joan Enric Ricart, Xavier Vives and CCG President Jordi Canals, who introduced and concluded each day of the conference with Marco Becht (Université libre de Bruxelles.) IESE CCG academic committee members John Almandoz and Fabrizio Ferraro moderated group discussions during the conference.