When the coronavirus is finally over, we should not forget how different companies reacted and make sure that we respond accordingly as a consumer.
Companies have recently been attempting to show that they care about more than short term profits: this is the time when we can put these claims to the test.
In August last year, a business roundtable in Washington DC issued Principles of Corporate Governance. The issuance of a document like this is not new and has happened periodically since 1978.
Most of these principles remain consistent in their emphasis on the primacy of providing value to shareholders, but this recent update instead focuses on the importance of delivering results for ‘stakeholders’.
This fairly nebulous term, beloved by business schools and journals, refers to almost everyone who isn’t in a position of corporate management or a shareholder and, therefore, includes ‘workers and communities’. Furthermore, the principles extend to the lofty ideal that corporations have an ‘essential role’ in ‘improving our society’.
In the light of contemporary corporate controversies from the tax avoidance of Google to the treatment of warehouse workers by Amazon, it’s understandable why many are cynical about the commitment of many corporations to improving society.
However, the issuance of this kind of statement surely signals an awareness, in the corporate world, that firms must adapt to increasing public scepticism at the beneficence of their role in the economy.
A 2019 poll from YouGov and the IPPR showed that 59 per cent of the UK public believe that the economy is currently running in the interests of the wealthiest people or big companies with 57 per cent believing that banks and financial companies ‘focus on short term profits over the interests of the economy as a whole’.
The doctrine, clearly enumerated in the business roundtable last year is known as Corporate Social Responsibility and it is, even in normal times, never very high up the political agenda. However, with coronavirus dominating most of the media output and the financial channels focusing on the possibility of severe financial collapse, CSR may seem an issue that can be put to one side but it is now more crucial than ever.
The reason is simple. As the Canadian clinical psychologist, Dr Paul TP Wong put it: ‘a person’s character is revealed in a time of crisis…’. This is especially true of companies as, in times of crisis, their institutional reaction is very telling of the culture that they have set up.
If you look at the sections of most corporate websites there will often be a whole section devoted to ‘values’ or something similar which includes commitments to things like ‘giving back’. As coronavirus creates economic dislocation and shortages, these values can be put to the test and, critically, the results laid bare for all to see.
The brewery BrewDog is an example of a company demonstrating a genuine commitment to the principles behind CSR which they have demonstrated in their reactions to the coronavirus pandemic. Specifically, BrewDog has promised to make, and give away free to those who need it, hand sanitiser.
Likewise, in an email to their customers, they highlighted their two priorities which are ‘Number 1: survive’ and ‘Number 2: preserve as many of the 2,000 jobs we have created at BrewDog as possible’.
This is not to say that if, as has been reported, BrewDog cuts pay and institutes voluntary redundancies for the workers at their firm’s Ellon headquarters that they should not be criticised at all.
To the contrary, people should applaud some of their actions and sentiments and encourage them to uphold their values- such as BrewDog’s declaration that ‘everything we do is for our team’.
Hopefully, they will add to their significant progressive bona fides, such as sharing 10 per cent of profits with ‘charities chosen by our staff’ and another 10 per cent ‘between our teams equally’. As a shareholder, through their popular equity scheme, and a fan of their beers, I sincerely hope they do and will be trying to support them by purchasing their products.
On the other hand, Virgin Atlantic, despite having a non-profit foundation with its section on their website, has demonstrated its unwillingness to ‘create positive change’ at this time. The company announced that ‘staff will be asked to take eight weeks unpaid leave over the next three months’, which they added was ‘with the cost spread over six months’ salary to drastically reduce costs without job losses’.
At the same time, it was reported that ‘Virgin Atlantic is calling on Boris Johnson’s British government to provide 500 million pounds of government-backed loans and credit guarantees so that credit card processors do not hold on to its cash’. This desire for government money is all the more distasteful when you consider the fact that Virgin Atlantic’s founder, and majority shareholder, Richard Branson could directly pay each of these employees £500 a week and only see his net worth fall from approximately £4.1 billion to £4.064 billion.
This would be 0.88 per cent of his total net worth, the equivalent of 17.6 pence from a £20 note. Whilst you could argue that an individual has no responsibility to personally help employees of a company he owns a majority stake in, such separation of interests did not seem to stop Gary Neville from both allowing NHS staff to stay at his hotels for free and having the staff at these hotels receive full pay and protection from being made redundant.
Regardless of what you think about CSR, the only way to hold companies accountable is with your cash. Shopping with the actions of different companies in mind, no matter how difficult it is to remember, is one of the only real ways to ensure that companies pay attention to their responsibilities to their workers and society in a tangible way, instead of just talking about it.
We do it for politicians at the ballot box, so why not for companies at the checkout?