Connected leadership

Monday, January 11, 2016

18:00 - 21:30

On January 11th we gave our stage to some of the most respected leaders in business today to explore the rift between business and society. With a growing recognition that most “CSR” strategies have failed, we ask if a new generation of connected leaders are starting to treat society as a critical stakeholder.

We began with a speech from Lord Browne, the former CEO of BP and author of “Connect”. With the help of McKinsey research, John argued that 30% of corporate value is now shaped by society, and that CSR has become a dangerous smokescreen. Volkswagen is the poster child for this risk.

John was joined by three leaders for a conversation with Axel Threlfall. Helena Morrissey is the CEO of a major UK fund manager, and believes the financial community is sleepwalking into an environmental crisis. Sacha Romanovitch is the new CEO of Grant Thornton UK, and is regarded by many as a next generation leader. Tommy Stadlen is a tech entrepreneur who is putting purpose at the heart of his business.

Issues covered such as;

  • What evidence is there of a growing rift between business and society?
  • Do short-term investors have undue influence over the system?
  • Who are the new connected leaders and what are they doing differently?
  • Should business leaders have a public position on societal issues?
  • Would we be better off if CSR teams were disbanded?
  • What does an effective “social intrapreneur” look like?

You might ask if this is all so obvious, why are there not more connected leaders? This is a great opportunity for executives in strategy, finance, operational and marketing roles to consider how they can help to integrate society into their decision-making.

Speakers

Axel Threlfall Reuters

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Helena Morrissey CBE Newton Investment Management

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John Browne L1 Energy

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Sacha Romanovitch Grant Thornton UK LLP

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Tommy Stadlen

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Round Tables

Connected leadership

Do you agree that CSR strategies are failing? Are any organisations getting it right? We’ll explore the emerging interventions that help organisations to connect with society - circular economy, measuring social impact, partnerships, long term thinking, radical transparency and more. Does anything stand out as a game changer?

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Table1a
Current State of CSR
- There are quite a few case studies in the public domain that show authenticity and connectivity in regards to CSR efforts, however the problem of companywide integration, embedding CSR principles into every-day decision making, seems to still remain.
- The VW scandal was mentioned as an example of a company that had public facing CSR credentials, however initiatives seem to have been driven by individual pockets in the organisation. CSR was not wholly embedded in the culture and leadership.
- Representatives of the real estate/property sector at the table shared that their sector is already active and advanced, in particular on the environmental aspect (understanding the footprint of its building) but this seems to not be communicated well enough to the wider public. This may require industry collaboration to increase the public’s awareness of this sectors CSR activities and credentials.
- Labels have been mentioned as a potential problem: they can help companies to raise their public CSR credentials, however they do not necessarily reflect real integration in the business.

What can leadership do to move from a case study to integrated value?
- Change the language: CSR nowadays tends to have a negative connotation and is often associated with a PR exercise. Any efforts to create and embed a CSR strategy have to be genuine and should not be driven by the PR department. Changing the language should reflect the change in the understanding of CSR as an embedded concept and decision making framework.
- Be transparent: transparency should occur internally as well as externally. Essentially, transparency transcends to trust. In the light of social media, a company cannot hide any more. In order to gain the trust of current and future customers, a company needs to be transparent – on success as well as failure.
- Measure CSR: Companies spend money on CSR activities, but it remains difficult to measure them. There are currently no recognised measures that can be reported. However, it was acknowledged that the number of companies reporting on its SCR activities is increasing.
- Embed CSR: The aim is to change a company’s culture to embed the CSR concept into everyone’s job description. Only when truly integrated, will it last beyond the time of a CEO and/or leader. However, such a cultural change can take 5-10 years.
- Companies are already expected to adhere to CSR concepts and it was argued that a new generation of employees and leaders will further embed and operationalise the CSR concept. Employees as well the CEO and chairman are responsible for the integration. It’s the employees who are the closest to suppliers and customers and who can identify opportunities to strengthen a company’s CSR strategy.
- It is important that leaders are personal and authentic. They should have the same values and act accordingly in- as well as outside of the organisation. It was also recognised that there is a sense of bravery required to go against the status quo, which may only be achieved if leaders are authentic.
- The CSR agenda needs to remain flexible in order to remain relevant and meaningful.

Table 1(b)
- The phrase is simply polemic, highly rhetorical and lacking in substance. CSR has been redefined in terms of purpose. It could be argued that CSR is not dead, but it simply evolving. It has undergone a rebranding and re-definition due to the changing nature of business in general. Skill sets of individuals throughout organisations are getting broader. Different organisations are also at different stages in terms of CSR strategy, and those ahead of the curve might argue that CSR is indeed dead.
- There is a general consensus that CR is not well understood at every level within an organisation. It is presumably seen as not being “hardline business” and a very fluffy subject.
Generic purpose statements from organisations can be unhelpful. Although public opinion is paramount, does a purpose statement really make a firm any better off? There is some doubt as to whether purpose is useful in itself, as it has become a bland, almost useless marketing tool. Although it can be effective at starting a dialogue and creating a set of values which can be seen clearly by society. In short, purpose statements have to match company values otherwise they become meaningless. Firms that fail to live up to their purpose statements will be negatively impacted. It is also vitally important that sustainability strategy come from the very top of businesses, and work life balance plays a huge part in this.
- Personal connection amongst all employees is even more important in business in the present day, although it can take time for CR to be embedded within an organisation. Business leadership is not what it used to be, it is far less rigid and increasingly engaging and democratic, with an aim to win the hearts and minds of company individuals.
- Business leaders have to be hard nosed about sustainability strategy, with an emphasis on pragmatism and logic. Sustainability needs the right person to be able to sell it effectively and embed it throughout an organisation. There is great uncertainty about what the next sustainability driver will be, especially in oil and gas, where CSR is very low down in overall priorities. At some stage there will need to be a push factor to get everyone on board. As it stands, there are many individuals within businesses who are not convinced by CR who will need to be converted in order for strategies to be effective.
- Summarily this can all be retraced to purpose and values, and can be improved by engaging and learning. Industries and public perception are constantly evolving, with CSR values which were seen as good 20 years ago now seen as outdated and damaging.

The purpose of purpose?

As many organisations reconsider their reason to exist, what do we mean by 'purpose' in a business context and how can it help in addressing sustainability issues? How can you differentiate between real purpose and hot air? We’ll be joined by Charles Wookey, CEO of The Blueprint Trust, who will share the principles emerging from his work with Unilever, Vodafone & others.

Leading the charge

Do we need less talk and more action – if so how do we lead it? Changing colleague behaviour is consistently one of the biggest challenges faced by leadership in connecting their organisations with society. We’ll share experience on the different mechanisms, from covert nudging to employee-led innovation. Art or science?

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The roundtable discussion was initiated through asking whether anybody had any stand-out examples of CSR strategies that are in place in organisations and how they’re approach has been successful.
Barclays held a publicised debate with some high calibre professionals from the space to tackle the theme of whether, ‘ CSR is Dead?’, the traditional CSR function within industry does seem slightly outdated as an approach, reigning from the need for serious change to be successfully instigated from the heart or head of a company.

Further, the mechanism of designing and implementing CSR programs is great for business image as it can be well publicised, but there is a concern over how deep and influential these programs can be for the overall business as there is often a disconnect between these programs and the influential driving force of an organisation subsequently leaving programs as a ’30 minute discussion on a Friday afternoon’.

A successful CR concept that was present around the table is a collaborative approach towards office space. When designing new office space, rather than hiring an interior designer, the ideas were plucked from employees of the organisation as they would be using the space most. Further, the idea of donating the office space out of core work hours to start-ups and charities that were struggling to rent office space and access to multiple technologies could use the space while vacant in the evenings and weekends.

Fisher Productions indulged into one of their successful CR programmes in place that they run alongside their CR/Sustainability KPI’s. One of their community schemes uses the old and excess off cuts of materials to create beehives, these are sent to Wandsworth Prison, (situated just around the corner from their main offices), and a bee keeping activity plays a part in the prisoners rehabilitation; further more the jarred honey is sold back to Fisher productions and used for corporate gifts, a real full circle sustainable/feel good CR programme.

On the other end of the spectrum, certain disconnect from the CSR agenda resonates negatively throughout an organisation’s employees; this was apparent from National Rail who’s CR agenda is designed by the government and the absence of shareholders means there is less demand to have a reactive CR strategy. The focus of their public perception is to remain out of the news and keep trains running on time. Employees are disengaged from the top decision makers, where all the action takes place.
Is it possible that some great CSR stories are hidden from the press/media as organisations don’t understand that customers are interested?

The overall consensus from this roundtable discussion was that the examples given, show that CSR certainly isn’t dead as some organisations still thrive to run programmes and have effective strategies in place, however where there is a disconnect from the Key Decision makers at board level, a CSR presence dwindles and isn’t even clearly present. Whether there is enough drive and publicised requirement for a full CSR drive really will depend on an organisation’s culture and whether or not their existing CSR strategy is simply a ’30 minute conversation on a Friday afternoon’ or is a priority in the full working as a business.

The Natural Capital Protocol

37 global organisations developed the draft Protocol and Sector Guides that were launched in November, with the aim of standardizing a framework for including nature in decision-making. Joined by its collaborator-in-chief, Mark Gough, we’ll discuss how and if this framework could change the way business connects with nature.

The power of carbon data

Knowing how to present carbon data and to whom can be the difference between a dry specialist subject and one that engages decision-makers. With a new generation of analytics coming onto the market, we’ll discuss what data has maximum impact, and the skill sets that are increasingly associated with carbon leadership.

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Current focus
Companies are making efforts to measure carbon data, often producing an aggregate number that may carry little meaning. In particular, lots of data points are being produced but it may be difficult to compare them. Currently, ESOS comes about as an attempt to give incentives for compliance. Ultimately, firms differ widely, depending on their specific qualities and previous strategic decisions. There exists a growing need of standards that would guide measurement and provide comparable datasets that could further inform business cases.

Challenges
1. Simplicity vs. complexity. Presenting the simplicity beyond complexity is an important issue that, if unsolved, delays transition to more environmentally friendly solutions. There should be less focus on the numbers and more emphasis on how to persuade someone to take action. Often, firms may not be aware of the underlying carbon emission drivers in their own firms.
2. Engagement. The ability to engage business leaders in a conversation around carbon emissions is a crucial step. Speaking the language of the CEO and the rest of top management, addressing their purpose and capturing attention are needed in order to change course.
3. Long-term orientation. Investors focusing on impact care about the carbon outlook of firms they invest in. Consistent reporting is key in order to attract such investment.

Examples
The Curve: administering a survey on implementation of energy investments, allowing firms to position themselves and analyse progress. It enables developing an understanding of the ongoing initiatives or technology implementation projects. Eventually, these quantitative metrics can drive creation of business.

Carbon Credentials: in CC’s experience, showing firms their current carbon emission sources often takes management by surprise – there is a gap between assumptions and actual drivers of emissions.

Technology & connected leadership

How credible is it that new technologies could fundamentally change the way business connects with society’s challenges? Which technologies offer the best potential – the Internet of Things, big data, knowledge sharing platforms & more – and are today’s sustainability teams suitably equipped for taking advantage of them?

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Collaborative Working
- Recurring theme around the challenges of encouraging collaboration in the face of increased remote working – has the technology that allows us to be ‘connected’ from afar actually left us more disconnected than ever? Do we need to get back to old-fashioned face-to-face communication?
- Key challenge for big companies is that start-ups no longer need to have major capital backing, so it’s easy for talent to leave and start their own enterprises. How then can big companies retain and stimulate talent? Should they think more like a ‘club’?
- For example, Apple and Google operate almost like a university campus, with employees sharing physical workspace. They’re developing technological innovations but doing it in with very traditional working methods.
- Is this opportunity for knowledge sharing and information capture missing from modern / remote working practices?
- How can leaders ensure they connect with the right people with the knowledge to solve problems, if they are not the technical experts themselves?
- Example given of multi-disciplinary department at MIT that has created more patents than any other. Is it about purposefully ‘engineering innovation’ by bringing people together physically?

Artificial Intelligence
- Technology is a constant evolution; its development is about having the right values and mentality towards continuing innovation.
- Development of AI will be defined by the values of the companies that have the power to commission it – but is this really what communities want?
- General population is voiceless in this debate, which has the potential to be completely transformational for society.
- Is there still a role for the emotive ‘human interpretation’ amongst all this data generation?

Corporate Motivation
- What is it that drives businesses to implement technology and deliver social benefits? If there is no business motivation, there’s a risk that social innovation will stall. Does it boil down to financial success?
- Eventually it may simply become survival of the fittest; those companies that don’t adapt will fall by the wayside.
- However, this can happen simultaneously – example of Skanska delivering infrastructure improvements. Motivated by financial gain but also creates social benefits in the communities where it works.
- Example given of hospital in India where the healthcare provision was average but pharmaceutical laboratory was state-of-the-art. Hospital will only be able to improve healthcare delivery by generating capital through the high-margin, profit-driven pharmaceutical development work.

Sustainable Development Goals

Many believe the SDG’s are an opportunity to reset corporate sustainability strategies. A small number of companies have already linked their sustainability targets to the 17 goals, whilst others expect them to trigger new forms of business / NGO partnerships. Does the table agree?

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· If organisations map out the activities that they are already undertaking and compare these to the SDGs it is a good starting point to understand where the quick wins are as well as where there are any material shortfalls.
· It is the responsibility of the Corporate Responsibility team to link the SDG strategy back to the business strategy to enable buy in across the organisation
· When implementing the SDGs, it is important that organisations start from what they know and use this as a platform to build upon.
· There is a need for business leaders at the front to form peer to peer partnerships as this will help to form relationships and to fast track other organisations
· There needs to be an increased to place purpose at the core and that companies are small alone and can achieve more if they partner with the right people and work together. The SDGs allow for a common language which can lead to closer participation.
· SDGs give more authority and credibility to be able to defend the strategy against CEOS
· The table felt that it was time to start sharing common ideas to make more of a difference as a group
· There is a good opportunity to use the SDGs to engage employees and to make them understand how they can contribute towards overcoming the global challenges which the SDGs seek to mitigate

Monetising sustainability

External reporting on non-financial performance is improving, but still often fails to connect with stakeholders. The finance community in particular struggles to relate this information to traditional business indicators.  Do businesses need to monetize their sustainability performance, and how can they go about doing this?

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- Monetising might be the wrong word to be using. It can give the wrong impression of what sustainability monitoring is trying to achieve. Instead we should focus on using the term valuing; this can refer to monetised or non-monetised metrics.
- Monetisation can create problems. For example the same asset or function that is being measured can have a vastly different value in different countries or to different groups of people. Thus a monetised value can become meaningless or even confusing at certain scales or in certain situations; this limits its utility.
- Monetising sustainability can only have meaning if it connects stakeholders to the organisation’s values and purpose.
- The actions/drivers which lead to an increase in monetary indicators can often occur a period of time before the increase is seen. This must be considered to ensure a focus on monetisation doesn’t constrain the sustainability discussion and miss the actions/drivers which lead to improvements.
- Monetisation’s can be core to making the business case for improvements and benefits. However, monetisation is often only useful here if there is an actual monetary value to be placed directly on the benefit and less useful when proxies are used.
- Keeping stakeholders engaged requires adapting the organisation’s purpose and values to remain relevant and to meet stakeholder expectations.
- Younger employees are often already engaged with sustainability and boards/execs in many cases are well receiving of it. However, one of the biggest blocks to progressing the sustainability agenda and developing innovation is senior management. They have often been in their respective organisations for a long time and resist change and stifle innovation.
- Clients and investors often want a ‘one size fits all’ approach to sustainability. They want a readymade set of metrics applicable to all organisations. We need to show them that this is not the way to get value out of CSR.
- Data can always be found/adapted to show the story the organisation wants to show. Transparency is showing what’s behind the numbers. So does it matter if these numbers are monetised or not, it’s transparency of what lies behind the numbers that matters?
- Organisations are demanding endless reporting and number crunching on sustainability, but does it lead to action? Sustainability is becoming confused in its definition. There needs to be a focus on long term value rather than short term metrics and reporting.
- Reporting of metrics shows just a snapshot of sustainability using numbers often months out of date before they are even published. Perhaps organisations need to use websites more to convey more real time data?
- Does the sustainability reporting industry deliver real action on the ground? It can make people both internally and externally start to think about what really matters and help improve brand image. It can also draw in talent and engage the organisation in networks that then facilitate the real change.

The social impact debate

There is no doubt that that organisations increasingly want to improve their social impact, but there is less agreement when it comes to measurement. We’ll discuss the emerging tools for measuring impact, and ask if social is just at a more embryonic stage than its cousin, natural capital. Is measurement the future?

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Themes
- Lack of clarity over definition of social impact
- Availability of data for and reporting of social impact lags behind other areas like environment, energy, water, waste etc.
- Few examples of fully implemented programmes or projects
- Client pressure is often the primary driver for the implementation and/or monitoring of social impact
- More demand for social impact monitoring from public sector organisations than private sector firms
- Must social impact projects have a clearly defined ROI or should their intrinsic value be enough to justify implementation?
- Social impact projects can be used to strengthen supply chains: for example, training farmers to produce crops more efficiently can keep their supply secure

Challenges
- Difficulty in measuring social impact
- Difficulty in demonstrating ROI of projects
- Lack of data covering long periods makes it difficult to measure the impact of projects
- Management often require substantial demonstrable impact in order to sign off budget for projects
- Over-statement of impacts and unsubstantiated claims reduce trust
- Accreditations often aren’t rigorous

Examples
- Total Contribution – The Crown Estate
- Monitoring apprenticeships and progress of apprentices in their careers
- Monitoring of diversity within organisations

Solutions
- Standardisation of metrics and reporting methodologies/frameworks will accelerate uptake
- Using proxies to measure social impact can help monitoring
- Monitoring of social impact should be integrated within standard business processes
- Social impact considerations will only become core if they are included in decision-making processes
- Comparison of similar projects will help to benchmark impact
- Qualitative, as well as quantitative, data should be used

2016: the energy revolution?

A combination of falling prices and new technologies point to 2016 being an exciting year for energy strategies. Energy storage, demand response, smart sensors and new data platforms will be increasingly adopted by leading organisations. We’ll discuss what innovations to watch, and how to stay abreast of a fast-moving market.

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Greater awareness of residential energy use and connected information – e.g smart meters
- If we have more granular knowledge of people’s habits then we must make targeted efforts to reduce energy usage
- Obvious that the technology is available but not widely adopted
- Is it because of the dangers of having that kind of data on people’s energy use and the small impact on change?
- We must manage the relationship at a trust level
- There is also new technology in energy storage solutions – taking pressure off the grid.
- For example, battery powered appliances or TVs, Upside Energy
- What about the corporate sector? Their biggest energy costs lie in distribution
- What about seasonal storage? Could there be a smart grid?
- The more connected we are the more we can manage the grid.
- How fast will the transition happen? For example electric cars, seems like the future but we still don’t have enough charging stations and it still relies on power from fossil fuels
- Who are going to be the major disruptors? All the companies that own all the debt are the ones going to be disrupted.

Conclusion: The technology is available but implementation is still slow. This may due to big players such as oil and gas industry which still holds most of the world’s energy resources.

Building on COP21

With the dust settled, how should we feel about COP21? Was it all about political agreements, or are the initiatives emerging from the supporting events more important? We’ll discuss Mission Innovation, The Apollo Project, the Breakthrough Energy Coalition, the RE100 and more. How can business build on this momentum?

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First question – was it all about the political agreement or was there more to it?
- In a way it was all political because if the lack of anything in Copenhagen, there had to be something solid this time. The political momentum acted like a catalyst for the rest of the event.
- No actor can achieve a movement by themselves. There needed to be gov power and civil power and business and stakeholder pressure.
- We’ve come to the end of this 20 yr agreement. Everyone is used to the fact there is wasn’t a deal and we have to work towards it, now lots of climate experts don’t know what to do.
- There was a great deal of work from non-state actors and IMPORTANTLY national scale became less important and we turned to cities and regions and links between countries. Rather than individual nations.

Second question – how important was the private sector?
- The private sector is very important because they will be footing the bill.
- Development of the SDGs is relevant because there was massive recognition that the private sector needed to be involved.
- So there has been an ideological shift that the private sector is very different now. it can now be incorporated into leadership. Unfccc system has changed to include that.
- RE100 lots of companies getting 100% renewable.
- Companies sometimes find it difficult to move on these issues when subsidiary parts of a company want to move but they want the parent company in other parts of the world are not as supportive.
- It is hopeful that The refreshing of the SDGS and COP will enable people to have a frame through which to make decisions now.

This question – where do we go from here? POST COP21
- It is definitely too early to know the real outcomes of it get or to know the impact yet. We can’t tell how businesses are going to react. But they wouldn’t have signed up if it wasn’t good for business.
- CSR now has the legitimacy it didn’t have before.
- It gives London the opportunity as a financial center to take leadership. The city of London corporation will be able to move forward on this.
- Getting companies to change their business models. There was a lot of companies signing up before COP21 the momentum was huge. Putting their cards on the table and signing up to things like this proves to the government that it can happen.
- Is green tech a bubble?! former Goldman Sacks banker – he says it will be the same as the housing bubble.
- There isn’t a green/silver bullet like bill gates says wants to invest in. How can he be so ill advised? There needs to be fundamental shifts everyone in business. Not one thing that will be invented.

Venue Detail

Bank of America Merrill Lynch: King Edward Hall

King Edward Hall | 2 King Edward Street | London | EC1A 1HQ

Directions

Bank of America's offices are a very short walk from St Paul's tube station (Central Line). Exit the station at Cheapside/Newgate Street. Go past the BT centre, with it on your right-hand side and take the first available right down Edward Street. Continue down this road for 80m and the entrance to the venue is on your left-hand side.

Do not go to the main reception desk at their offices when you arrive. You are looking for an entrance that leads you directly into the King Edward Hall.
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