Acceleration asks effort by all parties
What should and could companies do now to have done 'the right thing' ten years from now? That is the question we discussed over the past year with companies, business leaders, shareholders, representatives of civil society and some 'out of the box’ thinkers. In this concluding essay, we would like to share some observations that formed a common thread in these conversations.
First and foremost, we can state that, overall, we formed a positive picture of how companies are positioning themselves now to make the right decisions towards the future. Companies and business leaders are fully cognizant of their social responsibility and their role in society, and they are intrinsically motivated to contribute. They think beyond shareholder profitability and consider the interests of all stakeholders in their decision-making. An inspirational element in this regard is the own employees. Different professional groups and positions have different ideas about ‘money’ and ‘prestige.’ However, practically everyone - and certainly the younger generations and thus the future of companies - attaches great value to purpose: to make an impact together with others in a team and to contribute to the social goal of a company. That purpose is also often the connecting factor within a company and now, for many, the most important reason to commit to an employer. To remain relevant and attractive in the tight labor market, organizations must therefore be able to formulate a clear purpose and actively involve their workforce in it.
Dilemmas and conflicting interests
What also stands out: entrepreneurs and business leaders on the one hand and civil society on the other are pretty much on the same page when it comes to the challenges of our time and the future, for example in the field of the environment, social cohesion and poverty reduction. However, entrepreneurs do call for less polarization and excessive legislation. It not only increases the risk of failure - who as an executive wants to be constantly under the magnifying glass? - it also ignores the often difficult dilemmas and conflicting interests that companies have to deal with in practice. For example, increasing sustainability in the chain or a better salary for employees almost inevitably lead to price increases, while consumers (sometimes forced by poverty) prefer cheap to the more costly (read sustainable). This is reflected, for example, in organizations' ESG goals. Entrepreneurs find it positive that the CSRD directive is creating a level playing field; at the same time, they call it remarkable, to say the least, that government and semi-government are exempt from the CSRD and that organizations such as the Directorate-General for Public Works and Water Management, Schiphol Airport or TenneT therefore do not have to adhere to the extensive reporting. All of them also criticize the level of detail required in those reports. It encourages companies to act according to the letter rather than the spirit of the law, whereas in the end it should be about intrinsic motivation. And apart from the laggards, most really do have the motivation.
Joint responsibility
Greater dialogue, patience and seeking connection rather than polarization seem to be key issues when it comes to stimulating the needed transition. A transition requires belief in progress, while cynicism and negative thinking undermine the necessary motivation and resilience needed for change. The challenges that businesses and society face require a sense of urgency in which the problems are seen as a shared responsibility now so that everyone will be better off in future. In addition to a polarizing climate, companies struggle with what they often see as insufficiently stable government policies. The government is not seen as the dependable partner they need for setting a clear long-term course. Companies want to know where they stand. Not just now, but also in ten years and with a different political constellation. By definition, the need to anticipate uncertain and volatile policies demands caution and thus puts a brake on the often large investments needed to move the transition forward.
Entrepreneurs also believe that citizens should take more responsibility in some situations. Individual and not always realistic objections to new building plans or the installation of wind turbines, for example, can sometimes lead to years of objection procedures and delays. This does not contribute to the solution of major societal challenges. In this sense, the balance between the individual interest and the interest of society has slipped, according to many of our discussion partners.
Chain responsibility
The benefits of taking shared responsibility are becoming increasingly evident, particularly in supply chains. Here, sustainability and labor issues are often so enormous that, ultimately, if each individual company attempts to solve it in its own way, there may well be no progress. Many leadership teams realize that in recent decades, in general, there has been too little focus on the (indirect) impact of doing business on people and the environment. Now, they wish to take the lead in making the chain more sustainable and fairer. ESG criteria and the CSRD Directive appear to be a catalyst for getting this joint chain responsibility off the ground, which is necessary because smaller companies in particular find it difficult to monitor this themselves. For this reason, it is to be welcomed that some larger companies are making their methods and knowledge for monitoring all aspects of the value chain available to competing colleagues via an open chain model - to accelerate the joint transition.
Positive influence
Access to capital is essential to achieve and accelerate the sustainable transition. An inhibiting factor in this, according to the discussions we had, is the investment culture in Europe, compared to America. The low speed of capital rotation, less competition among capital providers and the desire for control over capital are three factors that Dutch companies now experience as limiting in the transition to the company of the future. In short, there needs to be less complexity in investing in companies. That requires something from governments, but it also requires courage from investors and fortitude from entrepreneurs. As Kees Aarts of Protix pointed out, the mentality in America is one of 'play to win,' whereas in the Netherlands, 'play not to lose' seems to be the motto. Being ambitious and bold in investment helps to accelerate change.
Our discussions also revealed that institutional investors in particular are willing to use their influence for the good by investing in growth shares, precisely because of the expected results of new earning models in the long term. To win over more shareholders, companies that are not future-proof should have a lower value than those that already are.
Whether that is already (sufficiently) the case and sufficiently visible, is debatable. But, in time, the business model of that first group is finite, and this will eventually reflect in their value.
The right intentions
Entrepreneurship is a balancing act, and many and various people stand around the tightrope to give a nudge in one direction or another. To stay on course, executives need their own moral compass. That compass has already enabled important steps to be taken to make organizations more sustainable, more humane and thus more future-proof. Our discussion partners express the wish to have grown even further in ten years and remarkably often translate the challenges and problems on their way into opportunities. This means that there is already a solid basis for the ‘company of the future,’ and an acceleration and further expansion now seems necessary and desirable.
Given the rapidly changing world, the question of what companies must and can do now in order to have done 'the right thing' ten years from now cannot be answered unequivocally. Geopolitical tensions, climate change and technological breakthroughs can drastically change the rules of the game. With all this uncertainty, the key is to have the right intentions now and, with investments in sustainability, corporate social responsibility and ethical leadership, to keep striving for a better world, regardless of the circumstances.
This essay was published in Management Scope 01 2025.