To remain competitive and relevant in the current climate of woke culture and activism for social issues such as ethical business practice, human rights and democracy, corporate goal like profit at all cost and business strategies that worked well in the past will fail. In this new era, it is now critical for companies to have a social purpose while pursuing profit, especially in light of the rise of social awareness among the outspoken and idealistic millennials and Gen Z who are moving into the ranks of middle class with substantial spending power, and the fact that investors and fund managers are increasingly looking at a company’s values and culture rather than solely at the profit and loss statement.
The power of social media, citizen journalism and mainstream media is also increasingly bringing attention of the public to the social purpose or lack thereof of companies operating in today’s geopolitical hotspots where there are incidences of genocides, crimes against humanity, anti-democratic crackdowns, curtailing of media access and freedom of the press, among others. This has led to increased consumer awareness and more demands for public accountability.
The interdependency of social purpose and profit is clear and changing societal and investment expectations mean that businesses are increasingly expected to achieve both purpose and profits. CEOs cannot afford to ignore having a social purpose and the local community that they operate in. They must understand that integrating social purpose into business strategy and using it as a filter or lens for making strategic decisions, can contribute to better community relations and enhance economic and financial outcomes.
Therefore, a key challenge for CEOs is to identify a relevant social issue that is impacting the environment they are operating in, reimagine the company’s role in the wider community beyond just making money, strategize how to create value for all stakeholders including consumers and the general public, and embed this vision into the business model. Indeed, to survive and thrive now and into the future, having a social purpose may be leveraged on as a competitive advantage.
Altruism can change the world and make profit
With the global upheaval caused by the pandemic, political instability, human rights abuse and racial discrimination, millennials and Gen Z around the world are more determined now, using activism and their spending power, to hold businesses accountable on society’s most urgent issues as their presence in the local community can generate either positive or negative impact. They feel that MNCs and big businesses especially, have the clout and resources to lead the change for a better world and more importantly, as consumers they are willing to financially patronize brands that support their causes.
The millennials and Gen Z generations have long advocated for social change and the betterment of the world, but many now feel that the world is at a pivotal moment and they are willing to align their spending power and career choices to help push along for changes. They are demanding accountability of the private sector to drive changes that will result in a more equitable and sustainable world. They believe that businesses can and should do more to help society.
One area that the new generations care about is advocating for ethical business practice including compliance with sanctions on blacklisted countries, for example North Korea, Iran and Syria, for violations of human rights and financial crimes like money laundering and financing of terrorism. In the shipping industry, CEOs will do well to support international sanctions as they are a particularly important consideration because there is a high risk of illicit shipping and sanctions evasion given the tremendous amount of maritime trade, as approximately 90 percent of global trade involves maritime transportation, and it is relatively difficult to police each and every cargo shipment.
Additionally, maritime trade requires ships to move cargo through a series of different agents and global jurisdictions, and the complexity of this process gives rise to loopholes like ship-to-ship transfers of cargo and manipulation of the Automatic Identification System that can track a ship’s movements. Shipping’s complexity also affords criminals the possibility of concealing their identities, altering or disguising shipping information or exploiting administrative disparities between countries, in order to evade sanctions.
Therefore, the new generations appreciate and support shipping companies that appropriately assess their sanctions risk and, as necessary, implement compliance controls to address any identified gaps in their compliance programs. This is especially important when operating near or in areas that are determined to be high-risk, which may include areas frequently used for potentially sanctionable transportation-related activities.
Respecting human rights
The concept of universal human rights is one of the most important guiding business principles for CEOs because it is central to good corporate citizenship as well as a profitable bottom line. Respecting and supporting human rights within their sphere of influence and ensuring they are not complicit in human rights abuses makes business sense.
Taking a principled stance and having a good human rights record give the company a distinct advantage over competitors in the ability to develop an unblemished reputation and favorable branding, attract new businesses and consumers, and recruit good talents, while other companies that ignore human rights abuse, for example using cotton picked by forced labor, are facing fallouts and backlashes.
Moreover, protecting the human rights of employees, for example seafarers facing the crew change and mental health crisis during the pandemic, will lead to less employee turnover, higher work quality and increased productivity because staff who are treated fairly and with dignity and respect are more likely to be productive and motivated.
Having moral courage to stand up for what is right
Companies standing up for sanctions and human rights are consolidating the rule of law and upholding the international rules-based order, which is essential to the stable and smooth functioning of global trade. Adhering strictly to international sanctions and applying human rights principles thoroughly, consistently and impartially in a company’s global operations can contribute to the development of legal systems in which contracts are enforced fairly, bribery and corruption are less prevalent.
Therefore, by committing to this social purpose, CEOs are slowly but surely, bringing about a wind of change to the wider industry to ensure that all business entities will have equal access to the legal process and equal protection under the law, vital elements in a free, open and competitive economy. So, in the new enlightened era, embracing social responsibility is also paying dividends, literally.