The Growth of Values-Led Companies
The company “Mission Statement has existed for decades, with business and management press stressing the importance of having a mission since management guru Peter Drucker started writing extensively about it in the 1970s . He was also one of the first management writers to recognise the external responsibilities of an organisation beyond its own profit – towards the local community, wider society and the environment, and for staff as people as opposed to simple a cost of doing business.
How companies do business matters possibly more than ever before, partly due to the increasing evidence we have about anthropomorphic climate change, but also the sheer scale of the potential impact if not managed well – 25% of the world’s top 28 economic entities are companies, not countries . Democracy may be sometimes flawed, but it gives people a much greater say to how countries are run, than how Apple or Aramco impact the world’s oceans or fresh water supply.
Corporate Social Responsibility
Over the last decade many businesses have revisited their mission statements and behaviours to reflect the increasing importance of good business governance to consumers and their own employees. Corporate Social Responsibility has long been a buzzword that companies purport to follow, but sadly brings with it some accusations of “greenwashing” – where companies do not live up to the promises they have made.
From CSR to ESG
One interesting development is the development of CSR into the principles of Environmental, Social, and Governance (ESG) in the finance sector. Tellingly in January 2020 Larry Fink, the CEO of Blackrock Inc, the world’s largest asset manager sent a public letter to his clients and the investment world, warning about the reallocation of capital and that “sustainability should be our new standard for investing.” The increasing recognition is that ESG breaches could impact the financial and reputational value of the company, and lose investor money. This has gained even more traction in the face of the global COVID-19 pandemic, with companies increasingly recognising the need to “build back better and greener” .
Within an organisation it is increasingly popular to state “values” rather than a mission statement and behaviours, as these are more fundamental and can give all stakeholders a clear vision of what good behaviour looks like. A value is the “why”, behind the “what” of the behaviour. If there are ever questions, then it is more clear to a staff member how to act if a core value is “honesty” than a corporate behaviour of “accountability”.
Companies with strong stated values, that work hard to live them, have been proven to be more successful in many different ways.
- Customers overwhelmingly prefer to buy from companies that have a stated and authentic purpose – Forbes magazine reports that customers are many times more likely to buy from these companies but also to champion them to other people , which is incredibly important in influencing new customers.
- Employers certified with the UKs “Best Places to Work” scheme, which includes strong guidelines on employee wellbeing, diversity and inclusion report twice as many applications per vacancy than the average UK organisation.
- Billionaire investor Warren Buffet says
“We can afford to lose money — even a lot of money. But we can’t afford to lose reputation”.
His company Berkshire Hathaway has been the success it is, largely due to these strong core values
Hab Law was founded with these values at our core:
• Client centred
• Compassion
• Empathy
• Equality
• Innovation
• Trust
This has helped us to concentrate on the things that really matter to our clients, and how we want to do business, and interact with our partner organisations and stakeholders.