change has taken place. A few years ago, analysts were the ones who informed, at a high level, portfolio managers about a business’ ESG efforts. Now ESG questions are the first questions of the portfolio managers themselves, which they directly ask to businesses.” Additionally, Survey Participants are of the view that societies are demanding a change in priorities and that businesses do more than just the ‘bare minimum’. Marc-André Blanchard opines that the public is asking business leaders to meet a new threshold, “Compliance used to just be you acting legally. It is now morphing into are you acting legally and ethically?” Karen Sander adds, “The standards that society is expecting businesses to live up to are increasing with time. Things that businesses did 50 years ago would be deemed completely unacceptable today.” The majority of Survey Participants speculate the trend towards businesses being more engaged on societal matters will continue. Danny Murphy is of the opinion that pressure on business leaders has increased and there is more to come, stating, “Business is harder than it was thirty years ago. Disrupters are changing behaviours. Environmental concerns are a freight train coming at businesses.” No one can predict the future with certainty, but there are obvious trends, discussions, and movements that can provide us with a window into what is to come.
2) Increasing Focus on All Stakeholders “Board members need to be assessing the performance of a company beyond just shareholder value” – Lisa Kimmel, Chair and CEO of Edelman’s Canadian and Latin American operations There are currently strong movements to reject the Friedman doctrine which espouses the principle that the exclusive duty of corporate leaders is to maximize profits for shareholders (see ‘The Evolution of the Purpose of the Corporation’ above). Victor Thomas, President and CEO of the Canada-India Business Council, explains, “There’s a fundamental shift away from the old-school Friedman model, of shareholder value being the utmost and exclusive thing that companies are beholden to.” Nonetheless, a large part of Survey Participants views these movements as to not mean shareholders are unimportant, but that shareholders should now have other stakeholders on the same level of importance as them. A significant number of the Survey Participants believe this is the future purpose of the corporation. Robert Yalden offers an explanation, “Shareholders are very often the linchpin in a company’s financing strategy, and the rest of your capital providers are obviously also important. You’ve got to think about how to keep all of them happy if you expect to have access to capital on the best terms possible. But I think it’s integrating that reality into a bigger picture and accepting that there is a bigger picture that’s also legitimate. Ultimately, it is a good thing for shareholders for there to be a well-conceived and well-executed vision for long-term value creation.” Likewise, virtually none of the Survey Participants argue that a business should not put great importance on profit generation. As a matter of fact, many point out the immense pressure that exists to hit financial targets quarterly and to deliver profits. For instance, a Business Leader surveyed declares profits are essential to being able to continue the work a business leader is doing, “The bottom line: It’s all fine and dandy - you can have the best ESG programs, but if your share price isn’t performing, you’re in trouble.”
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