Reconnecting ESG to Ethics: A Conversation on Business and Social Responsibility with Alison Taylor — CONVERSATIONS ON CLIMATE

Hi, I'm Chris Caldwell, and welcome to Season 3 of Conversations on Climate. We sit down with the experts who are trying to solve the biggest challenge of our time before time runs out. Today we're sailing into the choppy waters of corporate responsibility. Over recent years, there's been a massive shift in the way organizations are expected to respond to current events. Increasingly, employees and customers want and expect organisations to speak out and to take action on a host of social, political, and environmental issues. In a world of protests over wars, heated debates over transgender rights, and urgent calls for action on climate change, increasingly silence is no longer an option for businesses. But how do they navigate these conditions without capsizing? Well, Professor Alison Taylor is our navigator through this storm. Alison is clinical associate professor at New York University, whose book, Higher Ground: Business Can Do the Right Thing in a Turbulent World, is a guide through the real-world messiness of running a business in polarized times. Her solutions? Grounded, practical, and infused with a humanity that's all too rare in today's debates. So whether you're a corporate leader, an employee with strongly held beliefs, or just someone who cares deeply about the future of our planet and society, this is an episode that you won't want to miss. Around 80% of people who listen to this podcast haven't hit the follow button. If I could ask you for a small favor, if you do enjoy our conversations, please do hit that follow button on your app. It would help us and the show more than I could possibly say. Thank you and enjoy the conversation. Professor Taylor, thank you so much for taking the time to talk to us today. It's a massive pleasure.

Thank you so much for having me. It's a pleasure to be here.

Great. So your new book, Higher Ground, has really been breaking through a lot of barriers, been getting an awful lot of attention. I see it's all over my LinkedIn. So that must feel really good. But it's really important because it's a snapshot of the moment that we live in today. And it's not an easy time to be in business, as all the people that you talk to just described this. So we're just going to start this in the broadest possible sense. What does it feel to be be a business leader in 2024?

Yeah, so what a good question. So I think clearly running a business has never been easy, but I think there are a lot of good reasons why we can say running a business has got harder than ever. One succinct way to put this is that back in the 20th century, how you generated value was based on tangible physical things that you can see and touch. So you could make an investment, build a factory, ship a product. Realize the returns in a much more predictable way. Now we're in what I would describe as an era of intangible value, where the majority of most corporate earnings comes from intangible factors. So things like intellectual property, brand value, stakeholder trust, networks, software, that kind of thing. So we have seen this shift in how value is created. We have seen that the importance of environmental, social governance, political factors has become higher. And it has just become harder, I think, for business leaders to be successful by following the old rules. So what I've tried to do with Higher Ground is to say, here's a guide to what it means to being a good business in the 2020s. One thing I would also say is I think we've lost sight of that question to the degree we don't even know what words to use to talk about the kind of problems we're having.

But before we kind of dig into the book properly, if we could kind of frame the conversation a little bit by talking about your career, like the two phases 2 major phases of your career. So starting off, phase 1, where you were in kind of investigation and anti-corruption, really interesting world with some fantastic stories, from private security to government surveillance to corrupt oligarchs. Could you give us like a story or 2 from that phase and tell us a little bit about what you learnt about traditional corporate attitudes towards ethics in that time?

Sure. So I spent about 12 years working in investigations for corporations, first in the Middle East and Africa and then in the Americas. So this was also a phase where there was a huge ramp-up in corporate action on anti-corruption. So I spent a lot of time advising companies on operating in what we used to call back in the day high-risk emerging markets. Lots of time doing diligence for companies, lots of time evaluating political and social risk. Lots of time investigating corruption. And my clients in that world were bankers and lawyers, often oil and gas companies, mining companies. It was all about risk and risk appetites and trying to keep the regulator off your back. There's lots of stories in the book. There's stories about a corrupt offshore oil deal in Angola. There's stories about me investigating corruption in West Africa. Looking at work in, in a variety of very high-risk places. And I think that taught me a lot about the limits of gathering the facts. It taught me a lot about the evolution of transparency and media scrutiny and the rise of social media. And it also taught me ultimately then that culture and leadership are what matters the most.

And you had an Alice Through the Looking Glass moment, as you describe it, and moved from this world into the world of what was termed at the time of CSR. Could you give us a little bit of description on that? And there was actually a really nice quote that you had, which was where you moved into the world as an outsider, a world you described as where inspiring terms meet the disorder of real life. Wonderful phrase. Could you tell us a little bit about the transition?

Yeah, sure. So in my, in my role in investigations, I was working usually with departments called ethics and compliance. And so I got interested in these questions of ethical business. And I had this certain frame that was all about legal risk and all about not getting prosecuted and all about corruption. And then in 2015, I moved into this new world. It was called sustainability. The word, the term ESG was just getting some traction. And I just thought this was remarkable because it was like an entirely new field, an entirely new landscape, completely different terms, completely different ideas about what it meant to be an ethical business. So this was more about climate change and human rights and inequality and corporate citizenship and all these kind of ideas about going beyond compliance to do the right thing. So first, the first thing was that I was in this new world and I realized that the ideas from the old world didn't really translate. And then the terms and the language didn't translate. And then I became very interested that many corporations seem to have these two separate departments dealing with questions that seem very related to me, but that were kept very siloed and treated in very, very specific ways. So really the origin of the book is that I started asking questions about how this came to be, how corporations came to set up their structures in this way. And I found that there were such limited connections between these worlds that people weren't even joining the dots. And they also weren't joining the dots with questions of culture and people and HR. So I became fascinated by how siloed and confusing and jargon-heavy this world was and gradually came to the idea that I ought to try and clear this up.

But as you absolutely correctly say, these are not new ideas. Like, these ideas have been around for an awful, awful long time. But what has really changed is the increased expectations associated with them. So just to cut to the chase, why do we expect business to solve the world's problems today?

Yes, so what a great question. And first of all, you're right. People have been debating the topic of what the role of business in society should be since at least Roman times. And I don't think we're going to stop debating it anytime soon. But I think when we tell the story of the last, let's say, 50, 60 years, there's a very, very clear narrative. So we all collectively in the late 20th century landed on this idea that comes from Milton Friedman, very, very famous, that what it takes to be a good business is that you focus on shareholder value and you don't break the law. And that worked for a little while. But gradually, I think those ideas, that consensus started to break down in the early 21st century. And I think there are 3 main reasons for this. One, which is quite obvious, is the rise of social media. So there's much more transparency than there used to be. If you were a business in the 20th century, you could, to a much greater extent than you can today, control what is being said about you in the public domain. Limited number of TV stations, limited number of newspapers, everybody needed the advertising. And so what you said, very often the public did not have a way to sense check or confirm what you were saying. Now, very obviously, if you've got a smartphone, you can go out there, you can record what is happening in real time, you can put it on social media. We do not tend to decide what to buy, where to work, where we're going on holiday based on what the corporation says. We look at other information from other stakeholders to confirm that. Along with that, we've seen this rise of employee activism and strategic leaking. So now very often a company will be saying something about here are all the wonderful things we're doing and what a wonderful place this is to work, and then find that employees are undercutting that message with leaks onto social media. What's been happening very recently is employees sharing videos of them being fired on TikTok. So that, you know, obviously undercuts the corporate narrative that this is really, really nice place to work. The second thing that's happened is business has got much more drawn into political questions. This is very much an American story. This started around 2015. It really escalated during the Trump administration for all sorts of reasons. Probably people watching this can think of. But there's been a really dramatic shift in the willingness of corporate leaders to stand up and put their opinions out there on, on questions that were previously considered far too controversial to business. And then I think even more broadly, the idea that the public, we no longer really trust government to solve our problems. And so there's this idea, well, governments aren't going to do anything. They're national regulations. They don't have the global reach. They don't have the scale. So we've sort of turned to business to solve problems we used to rely on the policy process to solve. And then finally, I think huge shifts in values from young people. So I see here in the classroom every day that my students want to work in jobs where they have impact. They want to work for companies aligned with their values. So I think our expectations of work and our expectations of the role that corporations should have have evolved as well. So all these factors, we might say they're positive, we might say they're negative, but they certainly complicate running a business.

You mentioned, like, touched on some fantastic points there. We'll try and dig into, I think, all of them. But taking first off the idea of kind of Milton Friedman, where another part of that philosophy was, well, anything on the social side, we leave to government. And that has kind of fallen down because, again, you quote a Chicago professor, Luigi Zingales, who say, with the politicization of the corporate world, because we have corporatized the political world. Another really, really nice phrase. So the question that falls from that is, is big business just reaping what they've sowed for all of the years where they have been involved in corporate activities where they've been greenwashing, they've been lobbying, they've been involving themselves in politics. Isn't this just now the natural backlash to all of that previous work?

Yeah, I mean, I think it depends who you are. I personally think that's quite a powerful narrative. So Milton Friedman envisaged businesses over here, the government's over here, there's a sharp, bright line between them and they don't mix. They've mixed for a very, very long time, and that involvement has become closer and closer. So arguably you wouldn't need all these ideas of ESG and corporate responsibility if the political process was working better. But what we have seen is business putting its thumb on the scale for decades and usually trying to undermine regulation designed to protect the public. So I think there is this rather ironic narrative arc where businesses lobbied like crazy to make the markets as free as possible and to have laws to be as advantageous to business as possible, with the result we've undermined protections for everybody else. And so this has had the consequence of dumping those problems back in corporations' laps. So yeah, I think this is an interesting and very systemic way actually to understand the rise of ESG.

Interesting, yeah. And there's one message that a lot of both business people and practitioners are trying to get out there as a way of getting through this. Is the idea of, it's a kind of an offshoot of kind of green growth and kind of the doing well by doing good idea and concept. But you've been pushing back very hard against that. It's like you call it a meme, you call it a trap. Why do you react so strongly to that particular set of messaging?

Well, I mean, you know, I'm not saying that there aren't many, many examples of how business can do well by doing good. So again, we can tell a story here, right? In the 20th century, we had the idea you can do the right thing, it has to come at the expense of profit. So back then we're saying we can think about the planet, we can think about society, or we can think about the profit motive. There are trade-offs. What happens in the early 21st century, especially around 2004, the term ESG is coined. We have this very, very influential article called Creating Shared Value in 2006. Is a lot of people start to say, well, maybe that's not true. Maybe there are lots of ways we can do the right thing for the planet and make more money and make more profit. And there are arguments in there, there are reasons to think that might be true some of the time. My problem is that that sort of morphed to become this kind of very broad win-win argument that if you've got any challenges, if you want to query this idea that you do well by doing good, people sort of yell at you. So it's become this very simplistic blanket argument that plays out in the public domain with this debate about whether ESG drives alpha or does it drive alpha. So there's this kind of also interesting trajectory here where something that was originally supposed to get us beyond short-term shareholder returns, we're now evaluating the success of those ideas based on short-term shareholder returns. So I think it's It's not so much that you can't make the case, but I think if you're running a business, certainly some things will provide you profit upside or a better reputation or better retention or something like that. There are lots of other examples where doing the right thing might cost more and take you longer and the returns are uncertain. So I suppose my argument is that if we're just making these very broad brush— it's always a win-win, you always do well by doing good. You don't get the nuance that you need to run a business. You don't understand which of these possible initiatives I might go for, which are those that might be innovation that drive profit, which are the ones that help us manage risk, which are the initiatives we need to take to measure our negative and reduce our negative impacts, even if we don't know that it's going to produce profit. So if we make these very broad brush arguments, I think we flatten a lot of the complexity that business leaders need And then we make such unconvincing arguments that arguably we drive the backlash as well.

A big part of that problem, as far as I can see it, is the binary attitude to society at the minute. It is enormously polarised. You've got culture wars, which demands a certain form of idealistic purity. And within idealistic purity, it's very difficult to find nuance. How do we square that circle? How can we— reconnect ESG to ethics in the face of that type of polarization?

Yeah, so what a good question. So I think, I think this polarization is something that has really pulled companies in. So part of the problem and the vast majority of what you read and listen to out there is saying one of two things. There is a camp on the right that says all this ESG stuff is just woke. It's just self-socialism. We need to go back to Milton Friedman. We need to go back to basics. We need to forget about all this staff and start thinking about shareholder value. But really, good luck hiring or retaining anyone under 30 if you're going to make those kind of arguments. That is not really feasible. On the other side, and I think this is just as problematic, you've got a chorus of people saying if any one of your stakeholders care about this thing, you've got to solve this problem. You've got to think about all your stakeholders. You've got to prioritize everybody. That's impractical. That doesn't work. And then there's this real gotcha mindset. So if you do do your best, you'll probably get more pressure and more flak and more activism than if you didn't bother. So I think the path forward, or I argue the path forward, is to be much more focused and limited and restrained and honest about the problems you suggest you can take on, to be much clearer about where you have leverage and where you don't have leverage, to get out of the political process and allow that to work a little bit better so you don't have all of this pressure from stakeholders. And to really, you know, focus on treating human beings with dignity and respect and cleaning up your own mess before you go out there yodeling about saving the world. And I would argue that's not actually that partisan. This is a way to possibly navigate out of some of this partisanship. There are lots of examples I could give of behavior by corporations that pretty much everyone agrees is totally unethical. We can think about Amazon warehouse workers being forced to work next to a dead body all day. No one thinks that's acceptable on the right or left of the political spectrum. So I find it very interesting that we love to avoid the term ethics. We love to say doing the right thing is just a win-win. No matter who you are, you're saying, I'm the smart capitalist, the other side is the ideological hack. And I think our reluctance to say or ask the question of what it means to actually be a good business is part of the problem because it's rendering these topics taboo and disguising the fact that actually most of us agree on what business should and shouldn't be doing.

Absolutely. And that leads us very naturally to the whole subject of language and how we discuss things. So as you put it, jargon is a feature, not a bug, of the whole ESG system, where we talk in platitudes and buzzwords. But when you start to talk about more traditional terms like ethics, there seems to be a pushback against that as well. What's the way through here? How can we be discussing these these very important issues in a way that people are happy to talk about them?

Yeah, there's a weird phenomenon where I think if you say ethics, lots of people have a negative reaction to it. I interviewed a lot of ethics experts for my book and was quite astonished how many of them came on the line with me, and one of the first things they would say is, I try at all costs to avoid using that word. So we've got euphemisms like purpose and meaning and impact and so on. So we are very, very keen to avoid the topic. We're very keen to say, I am the smart capitalist. It's just the other side that is ideological. And everyone seems to think this is an incredibly good idea to avoid these subjects. But I think we just need to get them on the table. We are actually having a conversation about what it means to be an ethical business. We're just using a lot of jargon and we're We're not admitting that that is the conversation that we're having. And so I think part of the problem here is this causes more confusion. It turns people off. It is not getting us to the point. And we just need to bring that conversation to the surface and have that debate because at the moment we're having that debate via proxy battles about whether ESG creates shareholder value or not. And I think, you know, I think it is not helping anybody as much as we think it is. To avoid talking about these topics.

As we talk and as I kind of went through the book, was trying to find the overarching philosophy behind the book. So there's a measure of realism, there's respect for wisdom, there's a call for kind of humility. And the phrase that kind of came to me was the middle way, you know, just trying to find a path between extremes. How would you characterize the overall philosophy in the book yourself?

So I would say that the best guide in the 2020s for how to be an ethical business is to base your ethical commitments on the impact your business has on human beings. So that is the core of my argument. So I base my argument on business and human rights frameworks. Which one, have the advantage that they very carefully consider the role of the business versus the role of the government. And two, they consider that you should not impose your ideology on someone that might not share it. So they allow for individual rights and individual freedoms. Coming along with that, I think, is the idea that you don't overpromise. You don't try to solve problems that you are not built to solve. And you give your employees, you give your stakeholders the freedom to use their own voices and reengage with the political process. Along with that comes with being much more kind of focused, much more restrained, and then really stopping what I think is the dominant approach out there, is that what we call business ethics or corporate responsibility is really this idea of deflecting scrutiny. So deflecting reputation, deflecting regulatory risk That's not working anymore. So I think we need to try something different. We need to adapt how we run businesses. We need to adapt how we structure them. We need to adapt how we talk to the public for this very hyper-transparent gotcha era where everyone's really obsessed with hypocrisy. So I don't know if it's so much a middle ground as a, as a restraint about the level of problems corporations can take on. And then the idea that you seek to do no harm first first before you go out there taking controversial positions, which is where I think a lot of companies in the US in particular have got it wrong.

Okay. And do you think that the soil is ready for the seed you're trying to sow?

Gosh, well, I mean, I think that my ideas are resonating with people that already work in responsible business and have been wrestling with these topics for a long time. People have told me that my arguments are a relief and somebody needed to make them. I don't know that everybody is going to agree. But part of the goal of the book is to try to lay out some ideas, challenge a few clichés, and see if other people can come up with better ideas. I wouldn't suggest I have all the answers. The main argument I'm making is that we've really been asking the wrong questions.

And one of the things you do push it back on very strongly, which is a bit of a sacred cow in this world, is the whole idea of transparency. Could you explain what the risks are with transparency?

Yeah, so I don't want to be, I wouldn't want to be characterized as being against transparency. Transparency is a very powerful thing. It has had a huge impact. If you go back to corporate disclosures in the '90s, you couldn't find out anything. There's far more consistency. The vast majority of public companies disclose what they're doing on these efforts. That said, I think we've fallen into the trap as a society of treating disclosure as an end in itself. We tend to talk about transparency and accountability as if they're sort of hyphenated and transparency will lead inevitably to accountability. So there is Climate Disclosure Project is an NGO that was founded in 2000 to try to get corporations to disclose more about their carbon emissions. If you look at those founding documents, they sort of say we've got all these investors backing us. Companies are going to disclose their emissions and then we're going to move to action and then we're going to solve the climate crisis. It's now 24 years later and we're still arguing about what exactly companies should have to disclose. And now there's an enormous army of consultants, analysts, accountants, standard setters, rating agencies, and people arguing about this. So it's not so much that I'm saying transparency is bad, but I've worked with a lot of sustainability teams, that's all they spend all their time on is the reporting, the disclosure, leads to a certain level of legalistic neurosis. I think we're in danger of turning all this into a compliance exercise. We never seem to get any closer to the point, which is what do we actually need to do about all these problems?

And you wrote a really great article recently about— which drew the parallels between calories and carbon. And so counting calories and counting carbon. What lessons can we learn from the unintended consequences of counting calories for us in the climate space?

Well, I mean, it was a bit of a silly analogy, but you've probably seen lots of menus in restaurants now. You have to disclose the calorie counts on the menu. There's interesting research showing that the effect of that is to the tune of about 7 calories a day, because you look at the menu and you're like, wow, that salad's got more calories than I realized. I guess I'll have a burger or another side salad. And it doesn't have the impact that people say it has. And I thought it was funny. I thought it was similar because also disclosing calories is a bit like disclosing carbon. It doesn't necessarily tell you the nutritional value of the effort. And it also seems to— it's a sort of disclosure effort that then gets the company off the hook. We have disclosed. We will leave it up to investors and the public to account and rate us and withdraw capital. And then we don't need to go any further. We've also probably all seen and been frustrated by this tendency to set net-zero goals for way out there in the future. And very often there's evidence that the company doesn't really have any idea how it's going to get there, partly because the technology isn't even in place. So we also have defaulted to this kind of PR-led yodeling about what our goals should be. And we're not really, I think, getting to the point about how difficult and messy and bumpy this is really going to be. Or having an honest conversation about what the corporate sector needs to do, what the government needs to do, and then what civil society and the general public need to do. There's a lot of passing of the blame around.

And one of the solutions that you put forward for this is building up trust. So the work of building up trust with key groups of people. Now, trust does require a certain amount, certain level of vulnerability and a certain level of opening up, which is quite difficult to do, as you were saying, in the gotcha society, in the worlds of cancel culture. Why do you think we should be focusing on trust and how can we find the space to be building that trust in this world?

Yeah, so one of the really interesting things about trust is that what we call trust, whether we're talking about the Edelman Trust Barometer or trust in general, the latest Davos meeting was about rebuilding trust. But what the tendency is in the corporate world is to equate trust with reputational risk management. So we've done a good job suggesting that trust and reputational risk management or PR storytelling are the same thing. They're not the same thing. You've just said yourself trust involves reciprocity. It involves vulnerability. And so what companies are calling trust is really an effort by PR teams to say, look at the wonderful things we're doing. Look at all our glossy reports. Let's tick the box on these things. And we hope if we tell you this nice story, we have a better reputation. The problem with that is it's not working anymore. We all roll our eyes at these glossy reports with these smiling children and smiling women in hard hats. We don't believe it. And so I share a lot of examples in the book of companies that have been more vulnerable, have said this is hard, have admitted to mistakes, have admitted to missing goals or imperfections or said, here's how far we can get and here are the other things we need to do to be successful. And that has not been as dangerous as people think it is. And so I think in this environment where we're all exhausted by these kind of empty stories, actually being authentic is now a really good way to stand out and I think less dangerous than people are being told.

Interesting. So one of the key kind of trust relationships is between kind of the employee and the leaders and the management. Today, everything personal becomes political. And as you phrased yourself, employees become the cultural auditors of their employers. Now, I understand that leaders should listen to their employees, and absolutely should be listening and trying to embrace and trying to take on ideas. But there's no such thing as perfect alignment between any individual employee be a point of view, and the overall organization. You can't possibly achieve that. What's the middle way for leaders to recognize the value of employees' ethical voices without losing the focus on what's really material for the business itself?

Yeah, I mean, what a good question. So I think, you know, we've tended to treat a lot of ethics, sustainability, ESG efforts as top-down organizational change efforts we treat in any way. So we set orders from the top, we set goals, we announce the goals, That is not going so well. We, I think, do need to treat all this stuff as more of a collective decision-making effort. I share examples in my book of Salesforce, the tech company, also of a number of Dutch banks that have ethics committees where they're allowing employees to bring challenges. They're considering the social impact of new products in a collective way before they launch them. We're really kind of building on the wisdom of the collective before we make decisions. That said, it's very dangerous to suggest that a corporation is a democracy or that senior leaders can represent employee interests or properly reflect them. So I think that's another kind of— that is a way to go too far on this point. And many organizations have ended up in hot water in a different way, which is that now Everything's a subject of endless turmoil and debate and conflict. We've seen a lot of coverage more recently, for example, about companies being drawn into the conflict in the Middle East and struggling to figure out what to say because this is obviously an issue that people feel extremely strongly about. So I think there's a line to walk again, a middle way through this very hazardous path where you do consult employees, you do ask them their opinions, you do have some mechanisms so that they can speak up, they can share their views, and you're listening to them. To create your commitments. But that's not the same thing as saying, I as a corporate leader, I'm like a government, my employees are like the electorate, and I can somehow represent those employees politically or socially or anything else. So I think the other thing you need to do is maybe draw back on employee surveillance, interfering in their personal lives, give people a chance to leave the office at 5 every day and not have to think about work till the next morning. I think we kind of It's a very old-fashioned sounding idea, but I think we need to revive it.

Yeah, that would be wonderful. Wouldn't it be nice? It really would. So one of the themes we've been running through on the series so far is the need for dramatic change within society, that the way that we're living now is, in the medium term, long term, unsustainable. But if we're saying that ultimately, well, it won't be companies, it won't be corporates that will be leading the charge, like they'll be working through a middle ground, which is doing what they can, but not being transformative. I'm also seeing that politicians will not be leading the charge either because they've got their own agendas. And people will have some sort of influence as voters, as consumers. But ultimately, can they really make a massive change themselves? Like, where do you see— well, first up, do you think that we do need to be making dramatic changes in the realm of sustainability going forward? And if we do, what will be the catalyst for that growth?

Well, I mean, I think we have a tendency, right, not to want to think systemically. So we're trying to find the leader, we're trying to find the group of institutions responsible. We're trying to put the blame there and mean that we don't have it with us. Everything is a collective responsibility. We need to solve these issues collectively. We need to understand what corporations can contribute, which might be transformative on some of their particular issues. But let's also be realistic. These are profit-making entities structured in a certain way. And if we are sitting there expecting them to solve some of our more intractable societal challenges, we will be waiting a long time. You've pointed out quite rightly politicians have their own agendas. The political system is not going well anywhere I can think of in the world. But part of that problem is corporations putting their thumb on the scale. So let's re-engage with the political process. Let's re-engage with civil society. Let's understand that civics is something we need to understand. Let's try to understand that as a society We need to have a conversation about what is to the benefit of everybody. And then consumers need to take their own responsibilities for their own choices, for what they're thinking about, for the kind of leaders that they want to be. But equally, we can't be dumped with responsibility for solving the climate, climate crisis on our own. So what I'm really asking for is a more realistic conversation about what each set of institutions can and can't achieve. We haven't even talked about investors who also are tied to notions of fiduciary duty, but can provide influence and capital and ideas and thinking that can help corporations and can help governments. So I suppose I would say everybody has a role. One of my favorite books is called The Honor Code, which is about how moral revolutions happen. And you see these tipping points in society, you see these shifts. Things can feel impossible until they change. I just think what we need to do is to have a simplistic conversation and a more realistic conversation that isn't kind of clouded by all these myths and finger-pointing and see if we can create something that is a bit more constructive going forward.

And one of the big themes of your book is human rights as a lens to focus leaders on what's material. So what's the impact of something rather than the risk attached? And we know it has worked in in certain circumstances in the past. It's been, for example, very successful in creating anti-corruption practices and procedures across businesses. You can now no longer go and— even over 20 years, like, the idea of taking bribes or giving bribes to make business work is no longer acceptable. You know, it's been a big change. What lessons can we take from the climate world, from the human rights experience?

So, I mean, the human rights— business and human rights framework, the UN Guiding Principles, was only created in 2011. So we're still at a relatively early stage in this journey. Some companies are very, very ambitious here. This is perceived to be very, very challenging to think in terms of impact. There's a big debate on single and double materiality at the moment. I'm arguing that this is the best basis for ethical commitments. So at the moment, there's this idea that we think about ethics in terms of the law, which is internationally inconsistent and no longer a good guide. Or we think in terms of ideology, and then people say, well, business can't have ethics because different people have different values and we disagree and we're in this multipolar world, and so there can't be any such thing as business ethics. So all I'm really saying is a good way to ground your ethical commitments is is your impact on human beings. We tend to try to strip that out and we talk about reputational risk. But I think your impact on human beings, the fact that the population is angry if you dump pollution into the river or underpay your workers to the extent they have to claim Social Security because they can't afford to live on what you're paying them. I think those are situations that are grounded in impact that eventually will kick back and become risk to you. So I'm saying this is an anchor. I'm not saying it's easy, but it has the benefit of having clarity on here are the limits of what we can do in the absence of supportive government. And it has clarity in the idea that you do not impose your values or impose your beliefs on people that don't share them. So I would argue very strongly that it is not up to a corporation to take a very controversial position that its employees may not agree with and to effectively impose that on the workforce and create a silent resentful minority. You leave it to people to have their private lives. They can work where they like, they can vote how they like, they can use their private lives to do whatever they would like to do within reason. I think we need to get back to that idea rather than suggesting, you know, this brand, this corporation is going to solve reproductive rights or gun control or climate change or any of the other things people are upset about.

Interesting. And if we're saying that businesses should not be involved in the work of solving the world's problems, in this case, where do universities sit with this? Business schools seem to have a responsibility in the world of trying to make better leaders and put them out there with almost a kind of do-no-harm type of type of philosophy out there. Like, that's, that's, that I think is something that's been wrapped up into ESG and CSR courses, of course, for many years. But do you think that universities should instead be looking at more of these issues of ethics rather than ESG?

Well, I mean, I think, I think it all is a new skill set, it's a new management approach, it's a new set of philosophies. We just— I'm not sure universities get very far doing what many of them are doing, which is you have a lot of old a lot of school finance professors teaching Milton Friedman, and then a lot of people like me saying that this is how we need to lead differently, and students end up with a very kind of mixed message. I think we need to teach these topics. I think we need to introduce people to sustainability and materiality and environmental and social risk and think about these things, but not in a simplistic blanket way. We need to train people to apply these tools. We also need to train people to understand and counter the arguments And so I think there is a risk in treating this as in a cheerleading way and not having the kind of nuance and honesty to acknowledge how complex this is. So I certainly see there being a huge role for universities. Certainly credible research would really help. Certainly credible real-world research would really help. There's a replication crisis with a lot of university research at the moment. And then very strong incentives to publish. So I think very often academics are not really trained or encouraged to engage with, with the real world of business. And I think that's a big breakdown. So a lot of the jobs I've had in recent years have been trying to take ideas from academia and translate them into practical tools for the business world. Not easy, but we're really losing a trick because a lot of amazing ideas sit and kind of die in academia. And in business, we keep doing the same thing over and over again and not coming up with any better ideas. So loosening up that conversation would be really helpful.

And I get the sense you're very interested in Gen Z and like that, you know, the next generation. You mentioned earlier on about, you know, the people come through your classrooms.

Yeah.

What's genuinely different about their experiences and values of Gen Z over, like, my generation, say?

I mean, the most obvious is social media. We did not grow up on social media. We had privacy. People could not get hold of us. If you are in my undergrad classroom now, you grew up online. You do not remember this time. You are very, very attuned to authenticity. You're very, very attuned to your reputation. You're very savvy about these questions. There's also quite a lot of evidence this has had extremely negative impacts on mental health for young people. The other thing is, if you're under about 26 and you're a graduate, you no longer remember, or you did not work in offices before the pandemic. You don't remember office culture before the pandemic. And so I think we're really recreating office culture. We're having all of these high-stakes debates about mental health and burnout and remote work and so on. And so, you know, I think it's important to remember that this generation doesn't remember what office life used to be like and doesn't remember this time when business at least claimed to be neutral and then has different expectations of the world of work because of the era that they grew up in. I mean, they grew up in the era of the climate crisis, in the aftermath of the financial crisis. I'm not necessarily saying that Gen Z are a certain sort of person, but we're all shaped by our historic experiences. And there have been very particular historic experiences that have shaped this generation and that I hope are going to lead to a new sort of corporate leadership over the long run. I mean, now millennials are in their early 40s and are starting to take over corporations. So we start to see them the majority of workers in many companies are millennials or Gen Z, I do think that's going to make a difference. Lots of people tell me that when all these people need to get mortgages, they'll turn into boomers. I'm not so sure. I think the world has changed.

Yeah, one interest, like in part of these conversations, when you do talk to Gen Zs, millennials, they would see there's been an understanding of the natural world who've been framed by COVID. There's more of a sensitivity that they tend to understand the world out there is not necessarily your friend, and we need to be a bit more sympathetic towards it. And I'm hoping that that endures. It sounds like that you feel that that will endure beyond once you get into mortgages and more practical considerations. What gives you that sense of belief? Because I hope so too.

Well, there's, you know, there's contradictory evidence. Fast fashion is booming. Gen Z spends more on fast fashion than previous generations. But I hear and see a different attitude to the world, a different attitude to leadership, a different idea of what kind of leadership we should have that is more empathetic, that is more stakeholder-led, that does have more social skills, that doesn't say it's enough to bark orders from the top and incentivize young people to perform. So If we have a more interactive and compassionate relationship with younger generations, I think we'll make better decisions about how we run our corporations. So I find spending time in the classroom cheers me up, not to say that there aren't lots and lots of problems, but I do think we're gonna see some very profound shifts when the next generation of leaders starts to come through.

Okay, fingers crossed. But there's plenty of stories out there which suggest that being an academic, is every bit as difficult as being a CEO today. Like, you are in the public eye, you're taking shots from left and right. And with the growing sense of expectation that businesses should be solving all of the world's problems, do you think that there's now pressure mounting on academics to essentially kind of pick a side and go down the same path of succumbing to the pressures to take on the wider issues and solve problems beyond education?

I mean, to some extent. I think something else that's happened is we're very, very at the beck of government. Back and call of student reviews and student evaluations. So we've, we've started to, I think, drive who's a good or bad teacher along those kind of metrics. We certainly have seen lots of very high-stakes debates playing out with a lot of pressure on academic leaders. So I think these pressures on academia are the same pressures on any other institution. There are real concerns about the level of independence of academia. There are concerns about corruption in academia. There are concerns about liberal-leaning bias, at least in the US. So yeah, I think many of these societal pressures are certainly playing out in universities because universities, like everybody else, are not isolated from society.

We always ask for a little bit of advice at the end of our sessions. And as we finish out, I really want to highlight how much I appreciate the humanism and the humanity that motivates your work. And one of the subtle threads of humanism is your call for us to find better metaphors to solve these problems. Could you leave us with one new metaphor for us to think about and take home?

Yeah, so it's sort of a wonky point, but the underlying philosophy behind the whole book is that we have, our metaphor for the corporation has been that it's like a self-interested, profit-maximizing black box. People often say if a corporation was a person, they'd be a psychopath. But we treat them like an individual, a self-interested individual that can be walled off from society, walled off from the environment, that doesn't need to consider any of these things. But the reality, it's not even a better metaphor, it's the reality, is that organizations are open systems. An organization isn't a person, it's a social system. It sits in other environmental, social, and political systems, which means it can't take on the role of all those other systems, nor can it wall itself off. So I think if we start to think of a corporation as a system and not a self-interested person, we can start to ask better questions and maybe even come up with some better answers. I I certainly don't think I've got all the answers. My whole goal for this book and this conversation is just that we ask better questions.

Perfect way to end it. Thank you so much, Alison. It's been a great conversation. And one more time, thank you so much for all of the time, energy you've put into this.

It was such a fun to talk to you and absolutely wonderful conversation. So thank you so much for having me.

Thank you very much. Thank you so much for joining us on that conversation. We hope that you enjoyed it. We hope that you learned something. If you did enjoy it, please feel free to leave a 5-star review and to subscribe to any of our channels, and we'll be sure to keep you updated on future productions. These are conversations that you just can't afford to miss.