Helena Wayth is the founder of A Bird’s Eye View Ltd, a strategic business and marketing consultancy working at the intersection of commercial, social and sustainable development. She works with multi-national organizations to help strengthen their purpose, build a more sustainable business model for greater resilience, and create a governance framework for accountability. Helena serves on the board of PATH, a public health nonprofit, and is chair of the governance committee.

We spoke with Helena about her recent research, a survey in partnership with the FT Board Director Programme. The purpose of the survey was to understand how global board directors think the coronavirus crisis will influence corporate governance, organizational risk and resilience, and the future of stakeholder capitalism.  

Why is stakeholder capitalism important to you?

I believe that “Stakeholder Capitalism”, a model where business works to balance the interests of all stakeholders—by that I mean employees, communities, suppliers, customers, investors—can benefit society and generate better returns for shareholders. I think it’s essential for the long-term success of a business. I’ve spent my career working across countries and cultures, trying to understand where there can be an alignment between stakeholders’ interests and values, and how unifying these shared priorities can be a catalyst for positive change. In the last decade I’ve done this with a focus on purpose, sustainability and social impact.

You often use the term “values-driven leadership.” What does that term mean to you?

Leaders create their corporate culture, led by a conscious commitment to a set of values, which shapes organizational behavior and influences the decisions that are made. When values are clear throughout the organization it can empower management and employees at all levels to make decisions when under pressure and operating with incomplete information. Board members in our study recognized how important strong values are to high quality communication and decision-making, but also helping an organization to be more agile and creating pivot points for positive change.

What do you see as the most significant shocks of COVID-19 that precipitated this large-scale reevaluation of Business’ role in society?

The crisis has revealed the economy’s overdependence on undervalued social, human and environmental capital. Survey respondents mentioned the economic and social dependence on crucial low-paid sectors and essential workers, such as those working in health, education, and food. They recognized an overdependence on debt and insufficient reserves; the effects of supply-chain rationalization, leading to an overreliance on just a few suppliers and countries; and the vulnerability these create. They also recognized the lack of oversight on extended supply chains and their footprint, which can pose a significant threat to businesses’ reputation, resilience, and sustainability.

In your research, you noted that board members identified six key areas where they feel the board can help executives build organizational resilience. What were those six themes?

1. ‍Creating co-ownership around purpose, values, and role in society. It’s not enough just to have a clearly-defined purpose. Leaders need to ensure that an organization’s purpose and values are clear, understood, and owned by all stakeholders. This alignment can build trust and enable rapid decision-making, taking all interests into account.‍
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2. Building critical agility as a core competence. An agile culture of continuous learning can help encourage executives and teams to embrace experimentation and uncertainty. They see the opportunity to use the crisis as a catalyst for change—in products, services, innovation, and new business models—but also as a way to better understand their stakeholders’ changing needs.
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3. Ensuring more robust strategy planning for long-term value protection. Boards think they should place greater emphasis on guiding strategic direction, with measurable objectives for long-term value creation. There’s a recognition that only driving efficiency (maximizing EBITDA for the short term, for example) can damage the long-term interests of the business.
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4. Prioritizing and investing in systematic management of risk and organizational impact. Leaders should be encouraged to widen their focus on risk—beyond immediate financial and operational risk. So, really identifying the economic, social, and environmental risks and externalities that are most relevant to an organization and its long-term sustainability. Board members also clearly noted that these varied widely by sector and organizational type.
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5. Improving business continuity planning, including testing interdependencies. Board members feel it’s really important to have more robust contingency and scenario planning. They also highlighted the need for regular reviews to stress-test the contingency plans to help mitigate risks to the business’s reputation, resilience, and sustainability. They also believe that this more robust type of process can reveal new opportunities for the organization.
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6. Leveraging board experience, both individually and as a collective group. Part of that includes reviewing board composition itself, in terms of experience and values. The other part involves leveraging this for greater engagement with management and with wider stakeholders.

In instituting changes towards long-termism and stakeholder capitalism, did survey respondents tend to see those changes as policies that they will actively participate in instituting, or more passively as societal trends that they will comply with?

I don’t think it will be passive or a matter of compliance. The research found that over 80% of respondents think that boards will require a better understanding of society’s needs and the changing environment. 2/3rds believe business has a growing responsibility to increase the wealth of society, not just shareholders.

Instituting the change will require a shift in mindset, behavior, and in some cases culture across the organizations, starting with the board. The study shows that board members are at different stages in the change journey themselves. So, I think there are some fundamental questions, such as: do boards have the capability and the empathy to make this change? What is the right composition of diverse skills, experience, representation, and values that will help accelerate this shift?

What role do you expect stakeholder capitalism to play in addressing social movements?

Society’s expectations for business are changing. A recent report by Blueprint for Business argues that because of the significant government and taxpayer support in response to the COVID crisis, society will feel that business has an even greater debt to society. The crisis has accentuated macro issues, and really put a spotlight on them, particularly around inequality and injustice and the renewed urgency to tackle climate change. Business absolutely has a key role to play in addressing those issues. I think there’s an opportunity for business to work more closely in partnership with government, regulators, investors, and with society to re-think business’ role, and to help take concrete action together at a more systemic level to help address the issues raised by many social movements.

Do you think that this is a transition that would have eventually happened anyway, and the coronavirus crisis is simply accelerating the timeline, or has the crisis precipitated a shift that might never have occurred without some kind of massive systemic shock?

The crisis is definitely a pivot-point for business. And I think it’s accelerating the change agenda timeline. Questions around stakeholder capitalism often feel like they’re expressed in a binary way, so: will it or won’t it happen? Which economic model is the right model? Do you either make profit or meet the wider societal needs? Is it economy versus environment? I think these issues are all intertwined and the economic impact of not addressing social and environmental issues is enormous.

There are examples by companies—from BP’s commitment to going “net zero,”  to Unilever’s water stewardship goals, to Tesco’s demand for a national food strategy in the UK—of not only responsible resource management to ensure their own long-term resilience and protect their future profitability, but actually taking an important stand. The changes that these companies are pursuing aren’t just commitments to counteract the impact of their products and operations, but actually to work with others to strengthen the whole system: in this case from field to consumer and beyond.

In the long term do you expect businesses to be able to thrive without embracing stakeholder capitalism, or will the stakeholder capitalism, to at least some extent, become necessary to survive as a large-scale business?

Overall, I think that businesses that don’t embrace the multi-stakeholder model may exist, but they may not thrive. I think it’s really hard to put a time frame on it. There’s a sense of urgency for sure, but there’s quite a difference across sectors and businesses. Our survey found that board members of publicly listed companies, family businesses, and micro companies with around 10 employees tended to be more supportive of accelerating the shift to stakeholder capitalism.

In terms of why and how these organizations might change: There’s the impact weighted accounts initiative, which Harvard Business School recently announced. They feel that greater transparency and accountability for both negative and positive impacts can catalyze change in corporate behavior. In addition to shifting stakeholder expectations, accounting standards, law, and policy are starting to intersect. Governments may soon mandate impact transparency. Boards will require a different mindset, style of leadership, and governance.  

For boards, objectively knowing their starting point is really important. It helps them understand how and where and why they need to adapt, and, crucially, the role they can and need to play in shaping the future of responsible business and a more inclusive economic model.

Click the link to read the full Bird’s Eye View Governance Report.

See Helena’s work in The Telegraph.