One might say that it is a bold Chief Executive indeed who is willing to stand up and declare that he does not drive his business by concentrating on the generation of shareholder value. But this is what Paul Polman, Chief Executive of Unilever, the multinational corporation behind some of the world’s most famous consumer brands, said to the Financial Times earlier this week. Instead, he discussed how by focusing on the long-term improvement of the lives of customers and consumers, shareholder value can follow as a consequence.
Some might speculate that it is relatively easy for the boss of a FTSE100 company with a market capitalisation of a shade over £25billion, with stock currently trading at around £20 per share, to make a statement that perhaps slightly dismisses the importance of shareholder value. But actually there is an even wider argument here which Paul Polman hinted at but didn’t quite explore in the FT article: that by demonstrating that an integral part of your business model is consideration of the interests of a wide range of stakeholders, it de facto indicates a robust approach towards the generation of long-term shareholder value.
This is where the CSR argument comes in. A company which adopts a comprehensive responsible approach towards a broad range of stakeholders (including customers, staff, local communities, governments, NGOs, and shareholders) and issues (environmental, social, health and safety, and so on) is more likely to be see to be “in it for the long haul”. People (and by people I mean consumers, staff and, yes, even shareholders) are more likely to value brands and companies more highly if they are clearly showing that they are aware of their impacts, risks and opportunities on a wide variety of levels, and that the business is being run accordingly.
