Last year, nearly 200 CEOs from the United States, collectively known as the Business Round Table, declared a change of what they consider the “purpose of a corporation.” No longer just to maximize profits for shareholders, they said, companies must also to be a force to better the lives of all stakeholders, including employees, customers, and citizens.
While no one group could ever hope to represent all of business, this statement in support of shifting the paradigm has only been part of a broader trend, one which the health and economic crises has only reinforced, and which has resonated with the public.
Not all businesses will adhere to this philosophy without some form of incentive or regulation and the proliferation of corporations with a conscience cannot replace good policy. Nevertheless, it would be a welcome sea change. An idyllic future in which companies by default act in the public interest will likely be the product of long-drawn-out discussions between public and private actors, leading to glacial cultural and policy change.
According Rebecca Fatima Sta Maria, executive director of the APEC Secretariat, the way we define the terms “corporate social responsibility” as well as “stakeholder” is evolving away from the Friedman doctrine of the 1970s, in which “the only social responsibility of a corporation was to maximize the value of shareholders’ equity, any concerns about justice, inclusion, and sustainability were left to the laws, courts and public policy.”
“Increasingly, corporations have begun to consider inclusion, sustainability and social responsibility in their operations,” she said, speaking to an online audience during a webinar to promote inclusive and responsible business for sustainable growth in a digital society organized in November by the APEC Committee on Trade and Investment.
“Inclusive and responsible business at a higher level involves good governance, and the impact on local and global social outcomes,” Dr Sta Maria said, setting the stage for public and private-sector discussions on the subject. “On a micro level, this has to do with the treatment of workers, especially migrant workers, employed throughout the supply chain of businesses.”
The webinar is just an example of steps taken by the APEC forum—a platform used often in bridging business and the public sector best policy practices—to make the promotion of inclusive and responsible business a part of its longer-term agenda. It also caps a long year which has served as the perfect staging ground for the idea of business stepping in to aid society at a time of great need.
As such, it featured examples of companies that stepped up to the plate, such as ride-hailing service provider Didi Chuxing Technology Co., which was there right when and where the pandemic began.
“The first thing that came to our mind was how to protect our own people, or drivers and passengers, how to make sure they're safe,” said Didi Chuxing President Jean Liu. “So, we did a few things.”
Early in 2020, the coronavirus was just starting its now global spread, prompting DiDi to suspend some of its services in a range of cities in China. According to Liu, however, they did just the opposite in the city of Wuhan, where the virus is said to have originated.
Like any creative young company faced with a crisis, DiDi proceeded to adapt and innovate. They distributed face masks to drivers and helped them disinfect and install protective dividers in their cars, deployed special fleets for medical staff and communities, and provided e-bike sharing service for front-line workers. In places where ride hailing was still available, they employed AI to ensure that passengers and drivers wore masks in transit. They also piloted new businesses like community group-buying and freight to support local SMEs and drivers during the pandemic.
“In Wuhan, when the service got locked down, there was no public transportation,” Liu said. “The nurses and doctors, after a whole day's work, they had to walk home, and it was hard to imagine.”
“We think, ‘You know, as a transportation service platform, the minimum thing we should do was to provide transportation for these people’,” she continued.
Liu said that at first, her team was afraid there would not be enough drivers. Instead, thousands responded to their shout-outs sent over social media and direct messaging channels. In the end, there were over 140,000 drivers in China who signed up, many of them non-professionals.
“Later, we expanded to a global program called DiDi Hero,” said Liu. “And DiDi Hero actually completed four million free and discounted rides for the health care givers.”
As the pandemic forced populations into physical distancing, much of the innovation that was poured into the COVID-19 effort came from digital startups.
According to Oliver Alexander Flogel, managing partner and founder of Chilean firm Scale Capital, which invests in digital businesses, digital technology is “an accelerator of social responsibility.” He notes that most of the companies they have invested in have engaged in concrete innovative responses in aid of their respective communities during the pandemic.
This is in part a result of how Scale Capital conducts its role as investor. “We look at people who are hardworking, but also we look at people who have a very strong sense of teamwork, a very strong sense of doing things for the right reason,” said Flogel. While all the startups he cited operate in the digital realm, their contributions varied, covering different needs, and were provided free of charge.
A startup called Inbenta, for example, which produces AI chatbots for customer service, used its expertise to help stem the spread of misinformation. “What they said was, ‘If we have all the technology in order to give the right answers to private companies, and this pandemic is really raising a lot of questions throughout the world, there's a lot of information, there's a lot of fake news, why don't we start an engine where we start curating and giving all the right answers?’”
Another company, U-Planner, produces software that helps universities optimize the number of pupils in the classroom, calculating the fixed assets such as facilities, against the number teachers and students.
“All of a sudden, all the pupils were spread out throughout their homes trying to study online,” said Flogel. “What the company actually did was shift all the algorithms that were focused on this physical presence and move it to a digital presence in order to organize all the academic workload in the online world.”
“Now students are slowly going back to the universities, but they need social distancing,” he continued. “They're helping the different universities to rearrange all the classrooms in order to have the correct social distance.”
This drive for inclusivity and responsibility in business will likely survive beyond this crisis and eventually enter the mainstream, further redefining corporate success moving forward.
“New generations of highly innovative companies that decide to go beyond the traditional frontiers and go beyond the legal compliance will be the very successful companies of the future,” said Luz María de la Mora, Undersecretary of Foreign Trade of Mexico. These companies, she said, will align their objectives and visions with different groups of people who will be pining for a more sustainable and inclusive society.
“The pursuit of more sustainable production processes and products is not only a responsibility of the private sector, or industry,” she continued. “It is a responsibility also of governments to generate public policies that encourage more conscious and more environmental practices.”
The age of the pandemic has only highlighted how important it is to promote responsible and inclusive business practices. According to Dr Sta Maria, the quality by which businesses conduct themselves can determine an economy's effectiveness to manage shocks, for example, and that expanding corporate responsibility to include other sectors of society can contribute to economic inclusivity in a broader sense.
“I hope that our discourse will give due consideration to women empowerment, gender mainstreaming youth development, quality of living in an ageing society, and conducive business environment for MSMEs, startups and social enterprises,” she said. “When we consider this in the context of digital businesses and the gig economy, the concept of stakeholders becomes even broader and more issues emerge for us as policymakers and business representatives to consider.”