past 12 months . While this number is not as high as it should be , we ’ re seeing progress . But some of the reasons why there ’ s a lag is that many of the current social issues are often polarising topics . That makes it tricky to take a hardline approach especially in a multi-stakeholder environment .
A specific stance may please one stakeholder group , but not another . Finding the right balance between diverging stakeholder interests and expectations may be difficult , but it is important . It ’ s also important to value diversity within boards , and acknowledge how each members ’ background and perspectives contribute to their voiced opinions and priorities .
Q . Why is it so important that these issues are discussed and embedded at board level ?
» It ’ s important because ultimately , a company ’ s stance on societal issues needs to be tied back to the overall vision of an organisation . What a company says and does needs to be aligned with its purpose and values . Boards play a key part in overseeing that alignment and making
“ During the pandemic , business became one of the most trusted institutions . With that increased trust , stakeholders began to look for companies to get involved in social issues in new ways ” sure there ’ s cohesion and connection . You want symmetry !
The consequences of taking a stand on an issue and not following through can be bad for a business ’ reputation and its bottom line . Stakeholders may lose trust and confidence in a business ’ ability to make commitments and see them through . That can mean consumers go elsewhere to buy a product and investors seek alternate investments that more closely align with their goals from a social impact perspective .
Q . How can boards balance these pressures alongside pressures on profit ?
» The pressure to balance societal issues with profit expectations is tough . It ’ s tough for businesses even when they ’ re not facing economic pressures and uncertainty . To balance the two , boards should continuously assess how their social impact strategy aligns with the organisation ' s profitability goals , in light of macroeconomic conditions .
Addressing social issues can directly correlate with profitability – the two are intertwined and the focus needs to be on decisions that will both create and preserve value all while not knowing exactly what comes next . It ’ s important to link profit strategy with larger social issues , including DEI initiatives and investments in employees , because the expectation to address these challenges will become even greater with increasing economic uncertainty .
It ’ s important to not let up in difficult times and instead consider profit strategy and social responsibility one and the same .
Q . What are the common pitfalls boards make in this regard ?
» One of the biggest challenges I see is that many boards want to focus just on the problem at hand . But today , you shouldn ’ t
22 January 2023