Tag Archives: EY

Discovering new-found respect for philanthropy

I’ve always had a bit of a downer on corporate philanthropy, having tended to equate it with first generation sustainability strategy and practice – a model based on ‘giving something back’ that often pays little or no heed to what the corporation takes in the first place. In so doing, I’ve always felt, it tends to perpetuate the framing of sustainability as a discrete agenda, separate from core business.

Reflecting further on the latest Acumen Debate hosted by EY earlier this month, however, I’m thinking it’s maybe time to revise that view.

The spur for this reflection is a thought-provoking comment made by Sam Parker, director of the Shell Foundation, in speaking against the motion that, “This house believes that impact investors don’t need to compromise between financial and social returns.”

He was following on from – and directly responding to – the argument made in favour of the motion by Diana Noble of CDC, the British government’s development finance institution. Her experience, she said, proved there was no compromise. CDC has achieved an average 6% return on investments in its portfolio of ‘base of the pyramid’ (BoP) enterprises over the last 20 years; and on her regular visits to Africa and South East Asia, she could not go anywhere without seeing the benefit of businesses, “that simply wouldn’t exist without CDC.”

The essential thrust of Parker’s retort was that’s grand, but how did those businesses get to a place where they became an investible proposition for the likes of CDC? “Somebody somewhere had to do the heavy lifting,” he said. “Somebody somewhere paid for that.”

And you know what? I think he’s right.

If you think about it in terms of something like Ichak Adizes’ famous corporate life-cycle model, impact investors like CDC might only really enter the fray once an enterprise has reached ‘adolescence’ and the risk of ‘infant mortality’ has passed.

Work backwards through the ‘go-go’, ‘infancy’ and ‘courtship’ stages – where ultimately the business idea is but the proverbial twinkle in the parent’s eye – and, chances are, you’re going to be looking at investors with a very different profile.

Go back one step, and you might be looking at investors prepared to work at breakeven; go back two and they’re maybe willing to put up with a 50% loss; go right back to the outset, and you’re probably looking at pure philanthropy – the, “early-stage patient grant,” as Parker put it, without which, “there would be nothing to invest in.”

For me, that logic felt hard to refute and, whereas the show of hands at the end of the event appeared to show several of the audience metaphorically crossing the floor from the ‘opposed’ to ‘in favour’ camps, much to my surprise, I found myself moving in the opposite direction.

EY: Joining the battle on youth unemployment

You may remember I posted some time ago on the accession of Mark Weinberger as Chairman and CEO of EY, accompanied by a new brand identity and a clearly articulated purpose of ‘building a better working world’.

If you’re a regular reader, then you’ll also have guessed by now my penchant for – and belief in the superior value to be created by – putting purpose at the heart of profit; my belief that, in its broadest sense, ‘sustainability’ is nothing more or less than a perspective on brand and business strategy that inextricably links long-term success with serving a higher social purpose.

For me, that suggests three essential areas of focus in a business context – three preconditions for achieving enduring, sustainable growth:

  • People – In the end, it’s people who create and sustain businesses, and the societies and economies to which they contribute. Lasting, meaningful growth depends on the ideas and ingenuity of talented people in all their diversity.
  • Purpose – That ingenuity should be directed towards delivering social progress. Why does your business exist (beyond making money)? How does what you do, and how you do it, benefit the world? If you ceased to exist tomorrow, why should anyone care? While business models and strategies may come and go, this essential ‘reason for being’ should be constant, as it’s the only sustainable way to unite and motivate all the people a business touches.
  • Planet – If we continue to deplete natural resources, without consideration for their long-term sustainability, then no-one will prosper. Enduring growth also depends on innovating new business models that decouple that growth from environmental degradation.

With regard to the former – and particularly in the context of ‘building a better working world’ – tackling youth unemployment is about as material as it gets. After all, how can anyone claim to be doing so without recognising that this is (as EY’s EMEIA Managing Partner, Mark Otty, puts its) one of the most intractable economic and social challenges we face today?

It’s why youth unemployment justifiably sits atop the EU political agenda. It’s why improving the employment prospects for youth in the Middle East – where more than half the population is under the age of 25 – was a key pillar of the sustainability strategy I helped formulate for one of Saudi Arabia’s leading mobile phone operators a few years ago. It’s why ‘breaking barriers to work’ is similarly a pillar of other leading sustainability strategies like M&S’ Plan A.

It’s also why EY joined the battle on youth employment yesterday, joining the Alliance for YOUth, becoming a signatory to the European Alliance for Apprenticeships, and pledging to offer 55,000 traineeships and 35,000 paid internships for young people across Europe by 2020.

I think that’s a fabulous proof-point for the promise to help build a better working world, and one that makes me proud to be associated with EY.

Building a better working world

A lot has been written here and elsewhere about the concept of “thick”/shared value – the reconnection of business strategy to delivering social progress.

As I wrote on the Guardian’s Sustainable Business blog a few months back, business must now operate within a completely different set of frame conditions, encompassing the combined forces not only of climate change, population growth and diminishing natural resources, but also (among others) the ascent of Generation Y and increased public scrutiny in the wake of the financial crisis.

To achieve longevity, business needs to recognise these seismic shifts and re-imagine them, not as constraints on business as usual, but as the perfect opportunity to reconnect with disillusioned customers and employees by designing something better.

More than ever before, the business that wants to achieve long-term success must earth itself in a sure sense of why it exists, what it stands for, and why it matters (beyond making money). And that purpose should be self-evident in the very products and services it provides, how it organises itself, and how it conducts its daily business.

In short…

  • Purpose is the key to creating shared value – not some warm and woolly expression of values, but the ‘north star’ around which to build a strategy for enduring growth, based on improving people’s lives.
  • Purpose is the only sustainable way to recruit, unite and motivate all the people a business touches because – while business models may come and go – it’s that essential ‘reason for being’ that remains constant.
  • And it’s purpose (IMNSHO) that now represents the most powerful lever business leaders can pull to achieve competitive advantage – the single best way to demonstrate relevance in an ever changing world, and to build deeper, more lasting relationships with customers and employees who share your beliefs in their very bones.

On that last point, it’s worth drawing attention to the big news at EY last week – the formal accession of Mark Weinberger as Chairman and CEO, accompanied by a rejuvenated brand identity and, in particular, the clearly articulated purpose that forms the new tagline of “Building a better working world”.

Cards on the table, I’m an EY employee, so I’m hardly an impartial observer, but I’m massively excited by this.

An organisation I work for is really putting purpose front and centre – not in a superficial way, but based on deep thought about the essential function of a professional services firm in promoting long-term growth, through providing timely and transparent information that contributes to the critical functioning of the world’s capital markets, for example, and supporting and stimulating entrepreneurship as a key to local economic health.

I hope my colleagues and EY’s clients will feel the same intuitive resonance with this purpose as I do. In any event, I think it’s a bold move that deserves a lot of credit – especially in a heavily regulated industry that naturally tends to inspire a degree of risk aversion and conservatism.

As Simon Sinek hints at in one of my favourite TED talks, most organisations – indeed most people – are perfectly comfortable describing what they do; maybe (at a push) what it is about how they do it that sets them apart from all the rest. But very few nail their colours to the mast of why they do it 

Of course, that’s precisely why it’s such fertile territory for differentiation.