This became an issue in the popular mind when we started talking about the 1%. Attention turned to the growing gap in personal incomes such as that between workers and CEOs. Now we see it in the growing populist movements around the world, and it is abundantly clear that the end result of these movements could be, and is likely to be, very ugly.
It also appears to be clear that we cannot rely on governments to resolve this issue. There is growing recognition that business helped to create the problem and needs to help to resolve it.
But what exactly should they do?
PWC recently released a report that offers some guidance on what business can do.
- Global connectivity and local initiative must go hand-in-hand
Increasingly corporate performance is measured globally. However, their work has major impacts on local communities. Overall objectives and initiatives need to be aligned between global objectives and local community objectives.
- Look beyond financial performance
Corporate performance has traditionally been measured on financial results only. It rings hollow to certain communities, however, when a company announces that it has achieved record profits but has closed several plants, some of which were the lifeblood of those communities. Over recent years, some change in corporate reporting has been made. Corporate performance has increasingly included sustainability reporting, that focuses on impact on the environment. That's great, and is starting to have a positive impact on corporate behaviour. Corporate reporting has also been expanded to include ESG (Environmental, Social and Governance) But it is questionable whether the change in behaviour has extended to the impact on society and communities. The reporting has in many cases, but there is much more to be done. Companies can't be totally responsible for those communities, but they can be held responsible for significant actions they take that impact on the communities.
- Technology doesn’t care. But we must.
Technology is people neutral. If people are harmed by the effect of technology in a corporation, only the management and other people in the corporation can help direct that effect to as positive a result as possible.
- Educate for the future
Education and retraining must be a responsibility of the companies involved. They are often the first to see the need for new skills and the opportunities for education to develop those skills. They need to play a role in meeting the needs of the future.
The changes needed in corporate reporting recognize that we are at a crossroads in our society and significant change is required to make it sustainable. Failure to do so will result in a governmental and environmental upheaval .
A better explanation of these guidelines is included in the PWC report.