What is responsible leadership?
That’s the big question that takes center stage at the recent annual conference hosted by Imperial College Business School. It is the first time I have spoken in my capacity as chair of the advisory board of Imperial’s new Leonardo Centre, a research facility for sustainable business, which will formally launch in June. With this cross-disciplinary, multi-faculty and stakeholder-oriented center of excellence, the Leonardo Centre is setting out to explore what defines the new logic of business enterprise and the new type of responsible business leadership the world needs in this Decade of Action.
I am stepping into this role in the hope that we can close the gap between rhetoric and action and promote a radical rethink of the role of board directors and C-suite leaders as drivers for sustainable change.
New challenges, new skills
No MBA degree or leadership toolbox alone can equip today’s leaders for the complex and interconnected changes we are facing. Five-year strategy cycles and annual business planning processes are no guarantee for staying relevant and future-fit in a fundamentally changing world. Responsible leadership is a dynamic and continuous exercise of seeing, understanding and addressing your organization’s role in society and in the market, tackling three mutually reinforcing sets of emergencies and their impact on stakeholders: The climate emergency, the biodiversity emergency and the growing socioeconomic divide.
How can we transform our business model to become net-zero, regenerative, fair and equitable?
Not from a perspective of "How can we do less harm?" but from the perspective of "How can we transform our business model to become net-zero, regenerative, fair and equitable?"
The new logic of enterprise is one that defies and rewrites the playbooks for modern capitalism. Economic growth can be generated without the irreparable erosion of planetary systems, and competitiveness can be achieved while also guaranteeing living wages and decent working conditions for all workers in the value chain. It’s about moving from a zero-sum logic to a net-positive logic, creating a circular economy.
Disruption paves the way
We have seen it before. Major disruptions such as the COVID-19 crisis generate upheaval and social pain, but they also can be a catalyst for change that, Phoenix-like, paves the way for new thinking and approaches to rise from the ashes. Leadership is about admitting where we went wrong in the past and learning from these mistakes as we move forward. The hard truth is that our failure to create a more socially just world before COVID-19 has significantly worsened the current crisis and will hamper our ability to recover faster.
An unprecedented 255 million jobs were lost during the pandemic, wiping out two decades of progress in eliminating extreme poverty. The worst-affected people are those working in the informal economy, many of them women. As we recover from the crisis, we also need to come to terms with the fact that many businesses that flourished during the pandemic did so on the precarity of their workers: low-income people who delivered our food and other goods when the world was in lockdown, loosely attached to the workforce in the so-called gig-economy, without social protection or rights.
A new social contract
As we come together to rebuild our economies from the ashes of COVID-19, we have a unique opportunity to create a more resilient, sustainable and fair world. And it will happen with a fundamentally changed understanding of leadership accountability and fiduciary duty.
We are already seeing signals of this. Financial flows are changing, with public and private funding gravitating towards net-zero, sustainable investments. Add to that the rise of shareholder activism large institutional investors, who are ready to punish companies that fail to deliver concrete proof of how they proactively manage their risks and opportunities in delivering on the Paris Climate Agreement, or that fail to set ESG targets as part of executive pay schemes.
While this agenda to a large degree has been shaped by environmental concerns, the COVID-19 crisis has created a new awareness of companies’ social accountability. Take Deliveroo, the Amazon-backed app-delivery service, which failed with its planned IPO when multiple fund managers decided not to back the business due to concerns over workers’ rights. Or the previous CEO of Rio Tinto who, despite strong business performance, had to step down after failing to take into account the rights of aboriginal peoples in Australia to protect their cultural heritage from the mining company’s activities.
Business accountability for human rights, including environmental and social justice beyond what is legally required, is the next chapter in the responsible leadership book.
A new type of humanism
Back to the Leonardo Centre and the legendary polymath and renaissance man for which it is named, Leonardo da Vinci. His credo was: "To develop a complete mind: Study the science of art; study the art of science. Learn how to see. Realize that everything connects to everything else."
My hope for the coming years is that we will see a renaissance for a new type of humanism that puts compassion for people and all things living at the heart of responsible leadership. And that understands that the health of people, nature and planet connects with everything else.
I look forward to exploring this new leadership ethos and logic of enterprise together with the Leonardo Centre’s comprehensive network of academic scholars and business leaders.