While Wall Street may take Arturo di Modica’s “Charging Bull” as its mascot, it has had no more indelible cheerleader than Gordon Gekko, as played by Michael Douglas in Wall Street, the film. In 1987, junk bonds were king, Reagan was president, and when Gekko charismatically intoned “GREED IS GOOD,” one almost felt it was a bullish mantra, rather than Oliver Stone’s scathing critique of the markets. The strutting machismo associated with Wall Street in the 1980s insisted that the bottom line was all that mattered. To care for anything else was unseemly, even unmanly. (Gekko also quipped, “Lunch is for wimps.”)
Nearly 25 years later, the world is a different place. The upheavals of 2020 accelerated a good deal of social awareness– and calls for work-life balance have created space for lunch. Today we live in a marketplace largely dominated by Millenials and Zoomers. These consumers are now looking for companies with a purpose and social impact—an awareness that was largely driven by the advent of social media, which allowed them to see the world from a variety of perspectives. As prior generations didn’t have this vast, instantaneous access to instant global information—and disinformation—corporations never had to consider their larger narratives in such a holistic way before.
But this is a good thing.
Surely, companies have always had origin stories. Brands have always had “heritage.” But the idea of impact is larger than a company itself: it means a company must consider how it fits into the rest of the world. The 80s paradigm of bottom line has been replaced by the double-bottom line: not just measuring private business’ profit, but their positive social impact. This means that change begins in the boardroom—and CEOs have a larger responsibility than ever before.
Given both the new consumer landscape and the information economy, we need to see business as a force for good—especially as a number of corporations have more sway and power than most governments in this world do. The corporate line and the global reach of corporations have matters now more than ever and, as a result, CEOs must step up as thought leaders and wield their influence as a force for good.
We have begun to see a sea-change with respect to that bottom line. Certified B-Corps (a designation dreamed up by a number of transnational organs, including the United Nations), balance “purpose and profit.” Today there are 4,111 companies with this designation. And it’s not just altruistic or “nice”—it’s smart. Aside from a label that can draw in customers, this designation and the bloc of companies who have it wield political influence and clout.
These platforms allow CEOs of such companies a certain prominence. I believe they must use it to speak up about causes they’re passionate about. Much as companies can use the bottom line and their customer base to sway the market to awareness and to certain causes, CEOs have a chance to assert themselves in the marketplace by being mouthpieces to advance social good.
This is important for a number of reasons, firstly because of that aforementioned transnational power. From Google to Alibaba, massive corporations across the globe are more wealthy than most governments and need to hold themselves accountable as such. We’ve already seen the fallout from when they don’t—Facebook has been tied to everything from interfering in America’s democratic process to facilitating human trafficking. But using their influence for good This is especially salient post Covid, during which many CEOs stepped up to do right, such as Mary Barra, the CEO of General Motors, who, as Forbes reported, “was converting auto factories to ventilator production before most companies had even acknowledged what was about to land on their balance sheets.”
And it’s not just Western corporations. Chinese firms Alibaba and Pinduoduo have both demonstrated their commitment to ESG, and just this November, Citi raised a record-breaking US$40 billion for Asia Pacific sustainable financing. This is not a passing trend of virtue signaling– there is clearly a lot of money to be made by doing good.
Yet beyond the profit companies stand to gain by doing the right thing, business leaders must also prioritize forward thinking as we have the unique ability to create a path that governments can follow. As much as corporations are beholden to shareholders, they have considerably more flexibility to take action when compared to the slow-turning gears of bureaucracy that fetters most modern democracies. Time and again we’ve seen the private sector push forward progress before governments took action. In the United States, integration, women’s rights, and gay rights were championed in the private sector decades before the law caught up—if it has at all.
Indeed, nearly fifty years after it was first proposed in 1972, the Equal Rights Amendment still sits unratified. Additionally, urgently needed sustainability efforts—which should be a bipartisan issue, since we all inhabit the same planet—are stymied by polarized politicking, while a number of Fortune 500 companies have committed to green energy by partnering with the EPA. Arguably, businesses that are quick to respond to consumers’ moral and ethical concerns enact a more representative democracy than the gridlocked politicians they’ve elected. In today’s world, where consumers are more attuned to issues of racial and gender equity and the ethos a company supports, “voting with your dollars” is just as important as voting in elections.
In pushing forward progress, CEOs play a starring role. As the face of a corporation, the CEO sets the tone for company culture, and can forward the notion that change can come from the top. Leaders who set examples in their own behavior, in turn, encourage good corporate governance company-wide, and can pass on their passions to the larger economy of ideas in a meaningful, impactful way. To quote another movie franchise, “with great power comes great responsibility.” CEOs need to step up to keep up with the times.
Tags mentioned:ESG Leadership