The Companies Act makes it clear that directors must make sure the businesses they oversee are behaving fairly and ethically towards all their stakeholders. While many organisations are facing huge challenges, there’s also an opportunity for them to rebuild trust by ‘doing the right thing’ and balancing the needs of customers, employees, shareholders and suppliers. We have taken a look at what businesses are doing to provide clarity and reassurance in difficult times and strengthen brand engagement.
Now that these principles have been translated into a set of new stakeholder engagement reporting requirements, companies across the UK have been getting to grips with them.
a) businesses and boards are engaging with employees, customers, suppliers, investors and regulators.
b) stakeholder interests are being taken into account in board decision making.
For many companies, I’d guess that drafting the stakeholder engagement content for the annual report was just another piece of routine reporting. While that content was a legitimate explanation of what stakeholder engagement may have looked like in a ‘business as usual’ world, much of it already feels out of date in an environment that’s now very different to anything most us have ever experienced.
And yet, those Section 172 principles of fairness and ethical behaviour towards all stakeholders feel even more relevant and more urgent now than they did a few months ago.
As the landscape changes almost daily, businesses are having to explain in real time to their stakeholders how they are responding, and how they are helping us to cope with the crisis.
Who imagined at the start of the year that we would see competing engineering firms working together to turn their production lines over to ventilators? Food businesses offering free food and drinks to overworked and exhausted healthcare workers?
Luxury cosmetics firms producing hand sanitisers for the health service? CEOs taking radical pay cuts to show solidarity with workers whose jobs have been put on hold?
We are seeing an unprecedented wave of businesses stepping up and demonstrating that their behaviour is addressing not only the letter but also, and much more importantly, the spirit of Section 172.
These attributes will matter more than ever to businesses and brands as they navigate the uncertainty of the coming weeks and months.
While businesses and institutions are facing huge challenges, there’s also a real opportunity for them to rebuild trust by ‘doing the right thing’ for their stakeholders. When things eventually begin to return to normal, businesses that have behaved ethically and shown thoughtfulness, generosity of spirit and a creative, collaborative approach – and that have done a good job of communicating it – may see their brands benefit from a halo effect. Consumers, employees and even investors are likely to repay them with a new-found loyalty. By redefining the terms of their stakeholder engagement, organisations could see themselves becoming meaningful to their audiences in ways they only dreamed of before.
With its rallying cry of ‘Helping to feed the nation’, and regular emails from CEO Mike Coupe to customers, Sainsbury’s sent a strong message of fairness: support for the elderly and vulnerable with priority home-delivery slots, for NHS workers with ring-fenced shopping hours and for all its shoppers by rationing essential items to make sure there was enough to go round. It’s a message that supported the company’s purpose of helping customers live well for less. The supermarket updated customers through its website and Facebook page and kept its feedback channels open, responding to customer suggestions, for example, to keep priority shopping times for the elderly separate from those forNHS workers.
Although events may have overtaken the airline industry, Delta Airlines CEO Ed Bastian’s email to his 20 million customers was a great example of good customer communications. Its objective was primarily one of reassurance, conveyed through four key messages:
And he finished by linking them to the airline’s purpose:
“I believe Delta’s mission of connecting the world and creating opportunities is never more important than at times like this.”
The first major supermarket to commit to immediate payment terms for small suppliers, Morrisons has reassured local producers, farmers and fishermen across the nation that it will ease pressure on their cashflow with a message that illustrates the fairness of its approach: it’s only by working together that we will be able to get through the coming weeks and months. In their own words: “We promise to play our part in feeding the nation – it’s more than our job.” Ella Mills, noted food blogger and influencer and founder of Deliciously Ella, shared her gratitude with her 1.7m Instagram followers, mentioning the personal call she received from Morrisons’ CEO Dave Potts and acknowledging the critical importance of goodness in such turbulent times.
The definition of key workers has broadened beyond teachers, medical and emergency workers to encompass a wide range of vital but often not high-paid staff including delivery and warehouse staff, cleaners and retail workers.
In an open letter, Tesco CEO Dave Lewis acknowledges that while his colleagues have ‘risen brilliantly to the challenge’ not everything will go exactly to plan. He talks about the pressure they are under, recognising that they are on the front line, and explains in detail what the business is doing to support them, Including a 10% bonus for its workers in stores, distribution centres and customer engagement centres across the country.
For the team at Conran Design Group, who are normally mostly office-based and used to collaborating closely in a studio environment, the switch to home working was a new experience.
We created an essential guide to home-working to help ourselves adapt not just to the technological realities of video calls and remote
file-sharing, but also as a way of supporting each other through the organisational, social and emotional challenges that can arise from being in different ‘offices’ to our colleagues every day.
As schools in countries across the world have had to close, a number of organisations are stepping in to help with the increased pressures on school children and their families. While there’s undoubtedly a longer-term commercial objective, Amazon and Pearson have shown how they can strengthen brand awareness and loyalty through engaging early and empathetically with their target audiences and offering something valuable when it’s most needed.
LVMH, whose portfolio of luxury cosmetics brands includes Christian Dior, Guerlain and Givenchy, has embraced its sustainability promises to “pass on expertise, be supportive and make a commitment” by making its biochemical knowledge and commercial resources available to support front-line medical staff. It has switched its cosmetics production lines over to manufacturing hand sanitiser gel for free to reduce the spread of disease In French hospitals andis also sourcing 40 million surgical masks through its global distribution network.
We have taken action to assist learners as the COVID-19 epidemic has taken hold in China. As schools across China have been closed down to prevent the further spread of the illness, Pearson has made dozens of online products and courses available for free to students unable to attend school. Both students and teachers have welcomed these resources. For example, there were over 60,000 applicants to International Connections Academy and almost 200,000 people are using free AI learning resources on the Longman English Plus WeChat Platform, known as ‘Longman Xiaoying.
While many companies’ investor communications focused initially on the financial impact of the crisis, Unilever, whose purpose is to make sustainable living commonplace, took a more rounded view. Its early communications to investors included an explanation of how its actions were designed to help protect the lives and livelihoods of its multiple stakeholders – including its consumers and communities, its customers and suppliers, and its workforce.
The effects of COVID-19 have forced many businesses to make difficult decisions, cancelling dividends and either laying off staff entirely or asking them to take unpaid leave as a way of cutting costs. The CEOs of several travel companies and airlines which suffered an immediate hit, including Marriott CEO Arne Sorensen, opted to reduce or suspend their pay altogether for several months, sending a strong message of solidarity to shareholders and employees who are also facing a significant financial impact as a result of the crisis.