Millennials and Gen Z make up a majority of the US population. By 2024 they also will account for 40 percent of all consumer spending. For all the negatives we hear about these groups, one thing is abundantly clear: They look for companies that demonstrate values, align their principles with performance, and ultimately consider the impact brands make on society to be as important as the company’s bottom line. Forming connections with them is much different from their predecessors. They want action and substance. They completely object to business as usual. This is a reality that 181 companies could face soon.
Today is the anniversary of the Business Roundtable Statement on Corporate Purpose. The document's 181 company signatories included well-known brands. They pledged that the new role of a company includes being a force for good in society. It's come to be known as stakeholder capitalism.
Companies often are very good at signing a statement, drinking up the media kudos that follow, then returning to business as usual. Of course, months after the statement was signed, the world experienced a significant transformation: socially as the shortcomings of society have been revealed, and economically with the effects of the pandemic. Many eyes are on business to be a part of the transformation or get out of the way. Younger generations, including those taking to the streets, won’t let the pandemic serve as an excuse for inaction.
Roundtable's Limits
The Business Roundtable is a lobbying organization. Its public is small and focused inside the Beltway. It’s not in a position to provide signatory-members with means to influence real change internally or externally.
At the statement's core was a move from traditional shareholder-focused capitalism to a new focus on stakeholders. This group includes shareholders, employees, suppliers, customers and the communities where companies do business. Making this bold change takes years, not months. Moreover, the Business Roundtable Statement did not say explicitly what the companies should do.
Despite Business Roundtable chief Joshua Bolton declaring that 2020 was a good year for stakeholder capitalism, not much progress has been made against the points detailed in the statement.
A PR Dream
On August 19, 2019, publicizing the statement was a PR priority, right in the wheelhouse of communication teams. Still, the reality is that the changes it suggested fall well outside of the communication team’s purview. Instead, they require significant work from Investor Relations, CFOs, corporate strategists and, ultimately the CEO.
However, it’s the 1-year anniversary of something, and it is public. Journalists and community groups will ask what’s been done in the last year. Communicators, at best, have a set of talking points or stats that show a commitment to diversity or 20+ year sustainability goals. Those standard points won’t fly with journalists. More important, they won’t convince a critically important audience, Millennials, and Gen Z.
Despite these problems, there are real solutions available, but they require new partnerships within companies. If one thing is clear from my 20+ years in the corporate world, companies move slowly. Any expectation that a global company would transform within a year needs to be managed. To do so, companies need to be transparent about business realities and the challenges of wholesale organizational change. Instead, they should focus on showing progress against essential issues over a long-term horizon. Here are three key ways we as communications can help lead our companies forward.
Three Ways to Avoid a PR Crisis
Each quarter, companies report earnings and set goals for the next three months. At the same time, the earnings call is an external communication channel, yet corporate communication teams rarely own it. It’s time we have input.
Many companies have released their ESG and D&I plans, and received positive press, yet most don’t talk about these issues when investors are listening. In a recent study, “ESG and The Earnings Call,” the authors suggest, “ESG strategy and performance have been systematically undervalued.” Interactions with investors through channels like earnings calls are the perfect place to share this information.
The study's authors learned that lately, major institutional investors have begun placing greater emphasis on core issues like ESG and corporate citizenship. They realize that the next generation of investors are millennials and Gen Z, so now they’re prioritizing much of what these groups care about. Communication teams can stress the value of the company’s plans to address these priorities and make them a part of the conversation around earnings.
Create A Long-Term Plan
Given that change doesn’t happen overnight in large corporations, it wouldn’t hurt companies to come out and admit this reality. Instead of hiding behind simple stats, why not have the CEO publicly share a long-term plan that shows how the company will deliver on the promises made in the Business Roundtable Statement?
Organizations like The CEO Investor Forum (one of the authors of the ESG and The Earnings Call Study) work with companies to create long-term plans that detail strategies to address several progressive policies and issues.
Other organizations like FCLT and even the major investor BlackRock support this approach. A long-term plan would let companies change the conversation from short-term metrics to important societal goals. Moreover, by its nature, a long-term plan is transparent. At a minimum, it could help calm objections or protests from skeptical younger audiences.
The Case of DTE Energy: Demonstrate Purpose & Culture
Employees of all ages want to believe that their employer has their back. Gerry Anderson became president of DTE Energy, the Detroit public utility. Two years later, in 2008, the economy tanked. Anderson now led a company in one of the hardest-hit regions.
To make it through the crisis, he looked to the company's core value, Continuous Improvement, and used it to transform the business and set a new standard. When the effects of the crisis began to hit DTE, Anderson was transparent. He told employees that he couldn't promise zero layoffs, but that layoffs would be his last resort.
In addition, he made it clear that employees were stakeholders in the company's survival. Anderson believed that if all 10,000 employees shared this collective focus, that they could fix the company's problems together and be proud of their achievement. He was right. By fall 2009, DTE raised its earnings guidance 15 percent.
Use the DTE Approach
Anderson’s approach perfectly articulates the type of meaningful change needed from the Business Roundtable Statement signatories. Transparency and purpose are its roots. This approach will go a long way with any public audience and provide a story that journalists will happily report.
So, on the 1st anniversary of the Business Roundtable statement, a communication team’s remit is complicated, but not impossible. Our overarching focus must be on demonstrating the company’s progress. In places where progress has not been made, show how the company plans to transform over time.
ESG, Gender Equality and Human Capital are no longer ethereal policies meant to fill pages in CSR reports. Companies need to use them to show how they conduct everyday business. As communicators, we need to hold our companies accountable to a higher force: Purpose. We must form partnerships internally and realize a truth we’ve known for a long time: Any external communication can reach any audience. So our peers in IR and Corporate Finance must become our partners. We should all work toward a common goal, and do now what the next generation will ultimately demand: Grade performance against the principles that impact our company’s reputations now and in the future.
Adam L. Snyder is managing partner, ALS Impact LLC Follow him @snyderstrategy