Corporate responsibility must be at the heart of a good business
The erosion of public trust in big business has changed the landscape for finance leaders. Once there used to be a trade off between making money in the short term or being a long-term force for good.
But now public expectations have rightly changed, and those companies which fail to contribute to society risk their business and their right to make a profit.
No more has that erosion of public trust been evident than in the energy industry, which has rarely been out of the political and media spotlight of late.
Earning back that trust, and by extension earning the right to be profitable is at the heart of what is characterised as the ‘CFO’s dilemma.’ It’s the centrepiece of a debate I spoke at in London last night (5 January) along with such companies as Jaguar Land Rover, Diageo and Bupa.
Of course that assumes that it’s not possible to earn profit and contribute to society. My argument is that we no longer have the public consent to do one – unless we do the other.
But businesses cannot do it alone and for SSE there have been two organisations that have recently helped guide us: The Living Wage Foundation and the Fair Tax Mark.
SSE became a Living Wage employer in September 2013. We were the biggest company at the time to achieve accreditation – and we are the only energy company to guarantee all its employees a Living Wage. But we can make a bigger difference too through our supply chain – worth around £2.5bn a year.
In October last year, we became the first FTSE 100 Company to be Fair Tax Accredited. This was a direct response to concern the public have over big businesses not paying their fair share of tax.
I also believe that the role of the FD or CFO is changing. That our finance world needs to understand not only financial and manufactured capital – but we need to understand, respect and account for social, human and natural capital too.
So at SSE we’ve started to calculate and publish our economic impacts on a regular basis. We calculated SSE supported £27bn of GDP in the last three years, and well over 100,000 jobs a year.
Within SSE we’ve worked with PwC to measure the impact of a major transmission line – creating a valuation for things like visual amenity, cultural heritage – as well as the more conventional things like jobs and GDP.
Almost all companies claim that their people are their greatest asset. Shortly, SSE will publish a report that will quantify the ‘value’ of SSE’s human capital. That report will demonstrate the enormous value of that asset – to the company and to society.
The CFO’s dilemma, in my mind, is not so much a binary choice: between the soft things that support society – as opposed to the hard things like shareholder return.
The dilemma is the choice of the actions you take to ensure you can achieve both. Then evidencing it to show clearly to shareholders and stakeholders what you are doing.
The CFO must be at the centre of this change, just as corporate social responsibility must be at the heart of a good business too.