Time to sit up and take notice

The world is changing and business is becoming a more dominant aspect of society. Business has moved towards globalisation.

Globalisation, downsizing of the importance of governments and the information explosion are all generating an increase in the influence of civil society over corporate strategy. Negative incidents in areas in which legal responsibilities are not clarified have acted as catalysts for calls for greater corporate responsibility.

Interestingly the value of a company will be seen as a function of its non-financial as well as financial performance. As organisations wrestle with such complexities a new approach is emerging.

This new model demands environmental, social, ethical and economic considerations be incorporated into business.

For too long businesses have ignored this treating it as a fluffy concept protesting it is too complex. But disagreements over the definition shouldn’t deter attempts to respond to expectations.

Sustainable development poses both threats and opportunities. Companies wanted to see some benefit from being an early adopter.

Some commentators have suggested Marks & Spencer took their eyes off the fundamentals – not listening to the customer – an expensive mistake.

I think there is enough evidence to convince the most hardened sceptic that sustainable development can’t be ignored.

For example the rating agencies; The Dow Jones Group has introduced a whole suite of indices, which are out performing the benchmarks. In banking, ABN Amro have teamed up with Innovest to launch a US$100 million fund.

The changes to the Pensions Act introduced last month will also stimulate change.

There is no trade-off required as sustainable development means sustainable success and sustainable success means higher capital values. It’s time we started to talk about sustainable development explicitly round the boardroom table rather than implicitly as at present.

  • Gerry Acher is senior partner at KPMG London office and member of ACBE.

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