Mike Ashley, Philip Green and Matthias Muller Are Only the Start - The Whole Corporate World Is Under Review
From tax evasion to emission scandals, to executive pay and working conditions, the last twelve months have been dominated by corporate scandal.
It is an issue that soared to the top of the agenda once again on Monday, when Theresa May announced her proposals to reform corporate governance and restore trust in business and politics alike.
The public scrutiny of Mike Ashley, Philip Green and Matthias Muller has been a catalyst for vital debates about corporate governance, employee treatment and corporate responsibility, marking the rise of the hyper-aware consumers forcing firms to rethink the way they do business.
The case of Mike Ashley, Founder and Deputy Chairman of Sports Direct, is perhaps the most striking example. Following a succession of negative headlines exposing legally questionable working practices, conditions and pay, the sports giant has seen vocal rejection and outrage from vast swathes of the general public. The scandal has had a devastating impact on the firm's shares, which have plummeted by over 400 points since the allegations began last December.
Philip Green, Sepp Blatter and Matthias Muller have faced a similar backlash for their respective involvement in the BHS, FIFA and Volkswagen corporate scandals, demonstrating that no industry is immune from consumer revolt.
Deloitte's 2016 Millennial Survey found that almost three-quarters of the millennial workforce, those that will drive the economy of the future, think that businesses should have a positive impact on wider society. Today's graduates and young professionals are turning their backs on the corporate giants that once attracted the UK's top talent, in favour of agile, socially responsible startups - businesses with a social conscience.
Similar trends are apparent across the finance industry, which is currently seeing financial advisors struggle to keep up with the demand for social impact investment opportunities.
Last week I was a panellist at the Robert F. Kennedy Compass 7th annual sustainable investing conference in Hyannis Port, Massachusetts. This conference gathers members of the investment community responsible for trillions of dollars of assets to discuss the impact of human rights on investment returns. It was clear that the 'impact investing' initiatives of private equity firms, hedge funds and investment banks like Goldman Sachs, who was a sponsor of the conference, are experiencing a meteoric rise in demand by clients searching for 'profit with purpose.'
But what does this actually mean? My own experience with Ella's Kitchen, the organic baby food company I founded in 2006, is proof that a socially conscious business model need not hinder profit making.
Earlier this year the business certified as a B Corporation, joining the likes of Patagonia as a leading business with a purpose beyond profit. This is testament to our long-term commitment to our founding mission of improving children's lives by helping them develop healthy relationships with food. It also marks a new era, and a new commitment for us, to address what it means to be a successful business today. Each B Corp certification is one step further on the road to a more responsible corporate world, and a better society for all of us.
Today's consumers demand greater levels of transparency and accountability than ever before. I truly believe that businesses have a bigger, more important and less self-serving role to play in modern society. By tackling the environment and social issues in their local community and focusing on an end goal that surpasses profit alone, businesses can make a meaningful contribution to society whilst keeping their shareholders happy.
The past twelve months have signified the dawn of a new era for business, and corporates must step up to the plate if they want to succeed.
Keep smiling,
Paul
