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  • Writer's pictureTimothy Henry

Episode #14: Purpose-Driven business

Best country in the world for Purpose-Driven business? Think UK, and Ed Boyd, and the effort of ReGenerate to do just that!

Listen to this episode on Apple Podcasts, Spotify, Stitcher, or wherever you get your podcasts.


References & Resources:

ReGenerate website -

Follow Ed Boyd on Twitter.

Conscious Capitalism main website -

Levi, P. (1947, 1999). If this is a Man / The Truce. Abacus.

Mackey, J., Sisodia, R. (2014). Conscious Capitalism: Liberating the Heroic Spirit of Business. Harvard Business Review Press.

Mayer, C. (2020), The Future of the Corporation and the Economics of Purpose. Journal of Management Studies. Accepted Author Manuscript.

Sisodia, R., Henry, T., Eckschmidt, T. (2018). Conscious Capitalism Field Guide. Harvard Business Review Press.


Episode Transcript:

Timothy: Hello everybody! And welcome to episode 14 of the Conscious Capitalist, with myself, Timothy Henry, and my partner in making business better, Raj Sisodia. Hi Raj.

Raj: Hi Timothy. Good to be with you.

Timothy: Good to be with you! And today we have as our guest, Ed Boyd from the U.K., live and in-person, and in lockdown in London, we’ve got Ed Boyd to be able to come out. He’s going to keep his social distance, so we don’t have to worry too much about that, but Ed is the Executive Director and really the cofounder of a not-for-profit over here called ReGenerate Trust which is aiming to make the U.K. the best place in the world for purpose-driven businesses. So, Ed, welcome to our podcast.

Ed: Oh, thanks Timothy. Thanks for having me on. I’d have come on anyway, but there’s so little to do in lockdown, that you’ve got all the time that you want. So, glad to be here.

Timothy: Great. Thanks for joining us.

Raj: Yeah, so Ed, it’s wonderful to meet you and as always, I’m curious about the path we’ve been on, all of us, arrived at this kind of work in our ways. So, I’d love to learn a little bit about your journey - - where it started, how it evolved, what made you start to focus on these kinds of topics. So, if you could tell us a little of your life story.

Ed: Yeah, no, I’d be really happy to, and so I guess it all started… so I studied economics when I was younger… kind of followed that path into The City (London version of Wall Street) and I still remember this Christmas party where my boss put his arm around my shoulder and said, “Ed, you know, in ten years’ time, if you play your cards right, you could be that guy.” And he pointed at a really successful guy and he had lots of money and a great car, but he was also stressed and divorced and I was like, “Hey, I don’t want to be that guy. That’s not going to motivate me.” And so, I started off from working out, “Hey, actually, maybe I don’t want to work in The City. Maybe something else motivates me.” And I then spent a career for about ten or twelve years, kind of working on domestic social impact in the U.K. And what motivated me in that is, you know, the same time is spending time within king of political circles or within governments to try and change policy and law. I probably spent half of my time in prisons with people convicted of drug dealing, with gang members, with homeless communities around London and around the rest of the U.K. And I think it drove in me this passion that actually we can create a society that is fair, that rewards effort, that uses the power of markets for good and government for good. And it’s kind of been a lifelong passion of mine to drive an economy in this society that kind of works for everyone. And so, I went into government when David Cameron was Prime Minister, with a view to helping to try and shape welfare reform, shape the kind of poverty strategy from a government side. And I feel like we did some good in that, some lessons learned that I would change if I had the chance and we went back. But one of the bigger lessons I learned was… one of the big things that came from it, I guess, was in itch… and it was on one hand we were saying, ‘The best route out of poverty is a job.’ And on the other hand, anything to do with business was divorced from any poverty strategy. You know, you talk to people in charge of business and it was like, ‘This is about productivity. This is about growth. This is about GDP. We’ll deal with that. You deal with the poverty stuff, the welfare reforms and through other initiatives in that kind of traditional space.’ And that itch never went away because I think from my background studying economics and working really briefly in the city, I just felt like investment and business had a huge role to play in helping those people that I saw struggling to get a job to turn their life around, to get enough money to pay for housing. And that with all the best will in the world, like we could get government to do as much as it can. But why not start taking on the responsibility of maybe where businesses should be stepping in. It often did it badly. And there was no mechanism for business to kind of think, ‘Hey, how can I play a greater role?’ And so, that was the heart behind ReGenerate for me and the other co-founders right at the beginning, and yeah, that’s why we got it going.

Raj: Wow! And I think you’ve… as many others have, you’ve diagnosed or identified a key problem in our societies and why we have this rising economic populism and the appeal of some demagogue type of leaders around the world. To me, it’s a bigger problem than religious fundamentalism or terrorism now, is this underlying distrust, as well as suffering that has existed now for a long time, where worker pay has been flat and people haven’t seen the benefits and the fruits of capitalism in the way that it’s capable of delivering. And so I think unless we address that, we have the danger of… the way I said we need to celebrate and elevate capitalism, otherwise we will decimate it.

Ed: Yeah.

Raj: And I think that is the real danger that we are up against, so we really do need to rethink that and I think treating people at the bottom of the economic ladder well and giving them a pathway up, I think that should be something that every company does, so I’m delighted that you’re part of that effort.

Timothy: Well you know, Raj, it also reminds me of a conversation that we had, and in October of 2016, when we were in Austin at the Conscious Capitalism CEO Summit, and Tom Perez, who at that time was the Secretary of Labor in the Obama administration, was at a lunch table and I know that Kip Tindell was there, you were there, I was there, and a couple of other people, and Tom, at that point, he's now the Head of the, I think it’s the Democratic National Committee… but at that point, he was going to be leading what we thought was going to be the next President’s transition team, which was Hillary Clinton, and he said, “Listen, I can get you into Hillary, to talk about Conscious Capitalism. What are you going to say?” And we said, “Well, Conscious Capitalism is good, you know, and we need to elevate humanity and business can be a force for good.” And he said, “Yeah, that’s great. What are you going to ask her for?” And we said, “Well, we’re going to ask her to support Conscious Capitalism, Conscious Business. It’s a force for good. It’s a good thing in the world.” And he said, “No guys, what’s your legislative agenda? What are you going to be asking her to be promoting the government to do differently?” And I know at that point, we all sort of sat around and went, “Uh, duh… no idea really, but maybe something around…” It was one of those aha moments and I think, Ed, that’s where you’re trying to step in here and sort of say, “Hey, listen, there is an opportunity for us to be thinking about what’s the ecosystem that needs to be in place to get the best out of capitalism?” And that means working, talking with civil society. It means working with the government. It means reaching out to others as a part of that broader capitalist ecosystem.

Ed: Yeah, and I think part of that was governments often have this lens, because you vote in a government. They want people to like them, because they get more votes if they do. And so, I think over the last couple of decades, they are more likely to say, “Yes, we will take on this responsibility when often it’s a responsibility to maybe businesses, maybe charities, maybe individuals should be holding.” So, increasingly government soaks up that responsibility, that should be spread out across different actors. When asked about this topic I would focus on what government needs to focus on, here’s the problem. What it is that we can do to help business solve this problem as much as what can we do directly to solve it? And just to give an example of that, in the U.K., there’s an issue with low productivity and stagnating pay for those in entry level jobs and lack of progression. And so the traditional government responds so the campaigns that kind of go to government is so buried in them. But it is often to say, hey, how can we top off welfare payments for those in work, such that if you’re in that kind of job, the government could subsidize your wages so you could feed your family, get a roof over your head. There was far more focus on that than there is on hey, how can we help businesses invest in stars, such that they are more productive, such that we can pay them more money, such that we don’t need that government input to make sure they’ve got enough to get by, but actually may progress out of entry level jobs into advanced ones? And I think that’s where conversations need to be matured with leaders, is hey, what is your theory about the problems you are trying to solve and the role you feel business has in tackling them, and that conversation’s not really been had enough.

Timothy: Well, I like the fact that you’ve picked one particular angle on this, which is purpose-driven businesses. And maybe say a little bit about that, because clearly, our first pillar of Conscious Capitalism is around purpose. Businesses have a higher purpose. And it goes beyond just making money. And so I’m curious… how did you and ReGenerate get to this point that’s saying, “Okay, that’s going to be the lever point that we’re going to use to elevate this ecosystem to have a greater impact.”

Ed: Yeah, great question. To be honest to start with, it was a focus on thinking about a client I met in a homeless shelter or people I met in kind of in prisons and thinking, you know, there were big social issues here that we’re facing in the U.K. and around the rest of the world. You look at climate issues and they’re not smaller than our social issues. It was already a simple calculation. We just need the power of everyone to be pulling around, tacking these social and environmental issues. And we need a bit more from business. And so my starting point was coming far too much, probably, from a government hat was like, right, how can we force people to do something they don’t want to do? And the amazing thing is we talked to a lot of businesses. This was founded by a group of entrepreneurs and businesses in the U.K. who are passionate about this purpose-driven business agenda and they are hungry for change. Actually, there is the demand within busines to go beyond just employing people, which is good by itself, paying taxes, to do more to tackle these social and environmental issues, consumers. What are businesses? They are just collections of people are as passionate about these topics as you or I are all the time. And so, we nailed down kind of purpose-driven businesses, because we found that actually had the heart, there was so many businesses in the U.K. that maybe not because of the system, but despite it, were saying, “Hey, we’ve got a purpose beyond making money and we think we can do good in terms of those social and environmental issues. And I guess the final nail in the coffin, as it were, to say, “Hey, this is the agenda to pursue.”; which we did a lot of research and we looked at every study that anyone has ever done on purpose-driven businesses or businesses trying to do good, or have the refrain. And the evidence is so clear, that if you act in that way, you are more likely to make money over the longer term. You’re more likely to have a sustainable business, and so whether you’re looking at it from a shareholder perspective or these wider stakeholders that we’re talking about in society, it just makes sense. You’ve got business leaders wanting it to happen; you’ve got big problems that need tackling; and also something we haven’t mentioned, you’ve got the public so on board with this agenda, they want to work for these companies. They want to buy from them, and they want to invest in them. So, if I’m honest, it feels like this is the way that business is going and will naturally go, because all of the forces are heading in that direction. Our job isn’t to make that happen. Our job is to try and speed them up, because the quicker it happens, the more work will be done and the better and stronger the business environment will be.

Timothy: I love it. Now you’ve just come out with the White Paper and the White Paper tries to tackle what’s getting in the way. In fact, the title of it is ‘What Is Holding A Purpose-Driven Business Back?’ So, I’m curious, tell me a little bit about how we got to that title and to that White Paper.

Ed: Yeah, so our previous research showed hey, there was so much demand for purpose-driven business, from the business leaders, from consumers, from employees, from investors… and we knew of a load of companies that were acting in this kind of way, and it really inspired us. But there’s also lots that aren’t, but have that intention to be like that and we had a question, which was well, given that everything is heading in this direction, why is the agenda not moving faster? Why are more companies not acting in a purpose-driven way? And what we found was actually those few were doing good and going beyond the basics, were doing so despite the system around them. And often hats are pushing a lot of boulders uphill to make it work. And there were four areas we identified in our research… and they are really simple. First is it’s actually quite difficult to identify a purpose-driven company. First is one that’s purpose watching. Second area is it’s actually quite difficult for lots of them to demonstrate that they are having that positive social and environmental impact. Thirdly, it can be tricky for them to set up legally in a way that ensures that their purpose is protected. If they suddenly get a very big activist shareholder, for example that doesn’t really care about it and doesn’t agree with it, to make sure that actually they can protect themselves against someone trying to steer them off course, as it were, or any other kind of influence. Actually, that can be hard in the U.K. And finally, we found that it can be tricky when a company needs it, to get sufficient investment. There is a line to its purpose and remains a line to its purpose, both in terms of the type of investment it is and also the timelines with which those investors are looking to seek a return, if it’s a long-term play.

Timothy: I love that first question of how do you know a company is purposeful and versus purpose washing and I’m curious, maybe go through each one of these in a little more detail, but maybe start with that one. What did you find when you dug into that?

Ed: So, we did some polling with a group called B Lab U.K.

Timothy: B Lab. That’s our friends at B Lab and B Corps and things, yes, go ahead, yeah.

Ed: They’re big fans. And there’s was a striking finding in that, asking the public, “Do you find it easy or difficult to tell apart someone who is generally purpose driven, trying to make the world a better place and someone who’s just saying it reasons for marketing or branding. It’s not connected with who they are as an organization. And that only one in ten said they found that very or fairly easy to identify one from the other. This we can then couple with a load of studies that show that employees and consumers want to buy from and work for purpose-driven companies. I won’t go into the details now, but safe to say they are often prepared to pay more. They are often more loyal. They are often more likely to tell their friends to buy from a company that they think is really ethical in the way that it’s behaving. Equally, employees are more likely to stay for longer, often sometimes accept lower pay, if they think ‘this company has a purpose and a mission and I’m behind it and I get to be part of it and it’s genuine’. Now, all of that is fantastic, but if it’s difficult to identify who those companies are, a lot of that benefit from consumers, employers, and we won’t go onto investment yet… is muted. And so the benefits of being purpose-driven are muted as well, which therefore kind of undermines this whole agenda because if you can’t tell who they are, you can’t prefer. You can’t benefit them. You can’t say, “I can take a job at that one, that company, but not another company, because I know they are purpose-driven’, because you’re not sure if it’s true or not or whether one company is just invested some really good branding, but doesn’t care about what they talk about at all.

Timothy: Yeah, I think that’s really important to me. One of the things that Raj and I sometime debate is somebody comes up with a purpose. Now, first of all, how do you know it’s a good one? And secondly, how do you know they are actually living it? Raj, you jump in on this, because I know you have some opinions about that.

Raj: Yeah, so I think a genuine purpose, first of all, has to impact all of your decisions filtered through that, right? It has to have the framing that I use nowadays, is that every great purpose is has a healing purpose at some level. It reduces suffering in some dimensions. It brings more joy into the world. And then it has some characteristics, so we have a way of looking at somebody’s purpose and seeing how real it is and what kind of impact it can have. So are you simply looking at it from the lens of how do we identify and so almost give an assessment or evaluation of companies or is it also helping companies figure out how to make their purpose more real, more tangible?

Ed: Well first, on the working out if they are real and tangible? I got some great advice from a guy called John Elkington who coined the term, Triple Bottom Line. I was spouting about it’s all about them having a purpose and that’s where it leads. You need a company with a purpose. And he kindly reminded me that the Mafia has a purpose, but we might not think it’s a positive purpose and helpful to the environment. And the nature of the purpose is important, and so, the work we’ve done to date, which is pretty new, it’s simply to say, “Hey, what do we mean by purpose?” Similar to you, it affects everything. It’s in their DNA and it’s positive towards both the society and environment and this technical work about what that means, but at a high level, that’s kind of how we see it. Our focus has been less on working with individual companies, but instead trying to change the system within which these companies sit. We think there are lots of players helping companies to do better, to be better. We want to make it easier for that to be the case. We want to make it more likely that the good guys win and that the obvious case for being purpose-driven becomes that much more obvious, because it’s easier to identify them, set up with them, get investment if you’re one of them. And so that’s been our focus to date. You know, we started earlier this year during a pandemic, so we’ve got a fair amount done, but that’s something that we haven’t got to yet.

Raj: And you cited a statistic in the report, which I found a little surprising, 44% of companies are thinking about their business in terms of purpose, but about 44% are still thinking about it in terms of shareholder maximization. Is that accurate?

Ed: Yeah, that’s true. So, we worked with the British Academy, who did a fantastic poll, that wasn’t based on what public thought, but looked just what we classify as business leaders. You know, people within C-suite, direct reports of C-suite, that kind of level… and one of the questions we asked them is ‘What do you think business is all about?’ And it was a neck and neck tie between those who said, “Actually, the main purpose is maximizing shareholder value” and another group that said, “It’s actually about having a positive purpose that goes beyond just maximizing shareholder value”. And when we broke that down, what was fascinating was if you were younger, if you were female, you were more likely to think that companies should be purpose-driven, the purpose of business went beyond the financials. And for us, that was encouraging. You might think, ‘Oh, we want 90% or 100% of business leaders to think in our direction’. And I think this is something that if it’s level pegging, that’s a good start. Next year, maybe it’s 60% think this purpose-driven business should be the way forward and maybe in ten years’ time it’s 70%. And I think moving that dial is quite a good metric of success, I think because the business leaders will determine so much about where their organization is going.

Raj: Well, I do think it does point to kind of a mental model about purpose and profits, that these are two different parts that one can choose, whereas our research and I think you also cited some of that, that the pathway to higher profitability is purpose, sustained higher profitability and I don’t think the phrase of maximization serves us. Yes, higher profits… that doesn’t mean you maximize profits. In fact, you might have higher profits than you would if you had a profit maximizing mindset, actually. But the mindset, actually, changes everything, because if it’s profit maximizing, that means you’re going to trade off other things. But I think breaking that sort of bipolar thinking, or trade-off mentality that it’s either one or the other, I think the way somebody in the U.K. expressed it right… Colin Meyer I think… that the purpose is to find profitable solutions to the world’s problems. It’s not to make a profit. It’s to find profitable solutions. And I think that’s the missing piece from any leader, still…

Ed: You’re spot on and that’s why we see what we’re doing is not going against the grain or saying, “Let’s defeat one side and the other side’s perspective of business wins.” It’s about aligning all stakeholder’s interests and realizing that this is way that everybody wins. I think some area we’ve done some research in, but we need more in, is long-term, businesses are proven if they are purpose-driven, to be more sustainable and successful. It is the case though that it’s possible to make a lot more money in the short term if you ignore that, and I think there is an issue of timelines of short-termism in the kind of markets that can work against, I think, when a lot of people that we’ve spoken to talk about the profitability side of things and there being a trade-off. I think often they are thinking about it in the short term, rather than taking it a long-term view.

Raj: Yeah, I agree. But even in the short term, if you increase profits, usually there’s somebody else paying an intangible price for that.

Ed: Yeah.

Raj: Whether it’s the community or the environment or people and their health and so-forth… so even the short-term ability to increase profits could be an illusion. You know, you’re extracting more than you are creating, I think, in the business.

Timothy: Well I think that leads an interesting point, Ed, you know, in the paper, you talk about four different areas where you start to identify what a purpose-driven company might look like, and if I recall, one was around intent; one was around what’s their business model? Is that aligned? There was something around governance and operations, and then finally about measurement.

Ed: Yeah.

Timothy: Do you want to talk a little bit about that and how that fits in here?

Ed: Yeah, sure. So, I think this is what, for us, separates those who talk about purpose and those who are living it out. And it’s about making sure that the purpose is in the DNA of the company. And so for our view, we spin out into those four areas, like do they have the intent? Is it in operations? Is it in governance? Are they measuring it to understand it? You know, you can simplify that as holistically, it’s imbued in every part of what they do and every level of that organization operates that. And I think unless that’s the case, there’s a question. Do they mean it? Is it driving their decision making at every level? Is it affecting how the organism of a business is operating? So, I think when we talk about can you identify these companies, words are really important, because they are things we are committing to. But I think we are often looking for things that go deeper than that and is it embedded in their DNA? That’s the way, I think, that we often summarize that.

Timothy: Yeah. So, one of the interesting things that I know that you and I have discussed, is this notion of sort of opting in or opting out on purpose. And I want to get into that discussion by, you know, there’s this behavioral economics study that says, certainly in the U.S. when they are trying to get people to save for their retirement, if you have to opt out of the retirement program, you’re much more likely to stay in and save money, versus if you have to opt into the retirement program, you’re much less likely to go and save the money. So, the presumption is, presume you’re saving, but give them the freedom to step out if they don’t want to. And I think that’s part of what you’re talking about when you start talking about government role and how companies are incorporated is to sort of try to move towards that place where you ought to be assuming you have a purpose. If you don’t want to have a purpose, that’s okay, you can opt out, but let’s try to make that the norm.

Ed: Yeah, I will be so excited the day when purpose-driven business is just seen as normal business. Maybe we drop the word, ‘purpose’ because you’re like, ‘that’s just who businesses are’. And I think the day when it can be surprising when someone can say, “Wow! I thought about working for that business, but they didn’t really seem to have a mission. They didn’t really seem to be thinking this is how the world would be a better place because we exist, so of course I didn’t go and work there or buy from them.” And I think making sure that we go on the transition, that this approach goes from being somewhat of a niche but a massively growing one, to just being how businesses should be, is such an exciting journey because, again, going back to the fundamentals… business leaders want to move things in this direction. The public wants to be moved in this direction. The big issues that only businesses can help solve and a unique role for them. So, it’s kind of everything is moving in that direction anyway… speeding up that journey of normalizing purpose within business is at the heart of what we are doing and to give a little anecdote with this, part of it is about looking at the legal side. Part of it is also cultural. And I know what it’s been like in the U.S. In the U.K., there’s been a big shift in the last 18 months on plastic bags. No one thought much unless you are particularly environmentally conscious about popping into Tesco’s or Waitrose or another supermarket and, “Oh, yeah, I’ve haven’t brought a bag with me. Yeah, I’ll have some more bags and I’ll throw those bags in the bin when I am finished.” Fast forward, a big cultural change that came through, came in government policy, changes in the way that supermarkets worked, changes in the kind of culture, within London where I live, and it was all brought home to me when I forgot my life-time bag, went into the supermarket and I asked for plastic bag and I heard this woman behind me tut-tut me and I realized at that point there being this huge cultural shift - - that suddenly not only was there legal pressure for companies, but there was a social pressure to say, “Hey, you aren’t being responsible towards the environment.” And I’m maybe not encouraged tut-tutting which is a British thing and I don’t think American’s should adopt it. But it just shows that sense of if you combine top-down government legal change, at the same time there’s a bit of an uprising about what the public thinks and get it right, you can create social pressure and legal regulatory direction at the same time. And you can have remarkable results in a short period of time. And so I think that’s a bit of model that we look at when thinking, “How do we normalize what we know is in everyone’s interest for business?”

Raj: I’ve been a business professor for 35 years and I really think that business schools are a big part of the problem and the challenge here. In the university, they are mostly rooted within the old paradigms and professors are notoriously slow to adapt to new thinking. What do you think about that? Is that part of your agenda in terms of impacting business education going forward?

Ed: We don’t know yet and I totally see that. There’s also been a number of business schools in the U.K. who’ve been kindly super helpful for what we’re trying to set up, and I guess that’s given us an insight into, yes, I think academia is often quite slow to move, because it’s got quite deep entrenched views about how things should be. There’s less openness there than say in startup land with entrepreneurs. And, you know, I reflect on my own education of two degrees in economics and still remember asking the question about the rational economic man, the I am here to maximize my profits and thinking, “I don’t think I like the sound of who you’re telling me I am” and challenging that and saying, “No, no, no, no, no. This is just a model. This is how it works.” And, you know, that’s still the heart of our economics textbooks and that hasn’t changed. To that extent, yeah, there’s a lot of work to be done. But, there’s some enlightened one’s in the U.K. that we’ve worked with, that have been at the forefront in thinking through some of this, so Colin Mayer, who you mentioned earlier, comes from Saïd Business School (at Oxford) and is thinking about actually the purpose of businesses to find possible solutions to the problems of people and planet. And so I think I’ve got hope that if you can move those business schools in the right direction or them moving themselves in this direction, that you can have sweeping change quite quickly. But we haven’t got into the detail of it yet, so it’s probably what I can say for now.

Timothy: Yeah, the Saïd School at Oxford is going to be an interesting example because Paul Polman is now the Chairman of the Board there, and between Colin Meyer and Bob Eccles, who has come over from Harvard, who is working on a lot of the ESG metrics and how do you drive standards around those things, and their connection with the Economics of Mutuality program that comes out of Mars, the big confectionary and pet food company… they are really trying to change the paradigm and trying be to the business school with purpose. I think that’s what they’ve declared is their purpose or something close to that, isn’t it? Just because I’m an Oxford alum, doesn’t mean anything that I’m pushing the business school. I didn’t go to the business school

Raj: No, that’s great. I think overall, business schools in England are more progressive in that sense. American business schools, I think, are more stuck in the financial paradigm. But one of the other things that I’ve seen in Columbia in South America, going to what Timothy was talking about, how do we make this the default rather than an opt-in is that the government there is pushing kind of their own version of B Corps. They have another BIC I think they call it. And they are trying to create 1,500 of those in the next year or so. They have about 300 or 400 so far. But the twist is that if you want to do any kind of business with the government, you have to be certified that way. I think that becomes the catalytic process, what Timothy calls a forcing function, that if you can do that, then that will encourage more, and you can kind of get that flywheel going and then others will emulate. So, I think there is a scope for policy changes along those lines as well, in addition to taxation and things of that sort that we use. The other thing I remember in the U.S. when I first became a professor, we used to lament the fact that quality had slipped so much in the U.S., right? The Japanese and some European companies were far better in quality than American car companies and many others which are shoddy and then they started the Malcolm Baldridge National Quality Award, named after a former Commerce Secretary, I think in the Regan administration, and that one award just triggered a whole consciousness around quality and six sigma and all of those kinds of things came out of that and to the point where it drastically elevated quality standards over the years. So, I think things like that, the government can play a role, a catalytic role in moving these things forward.

Ed: And Raj, I am hesitant to say the least, to comment anything on academia, with someone of your caliber having been at it so long, but one of the reflections I’ve had is it’s kind of in the U.K., but it’s in the States more so, there’s this kind of polarization that is kind of connected with politics as well, whereby things have become quite binary, such that this kind of either you’re for the free market and the free market is the way that we’re all prosperous and successful, or you’re a socialist. And the language has become polarized and I feel like a lot of the agendas have done too. What I find fascinating, as we’ve explored our agenda, is there is an agenda for the free-market, as it were, whereby we have more sustainable markets, people make sustainably more money, and big social environmental issues are tackled and that business can do that. And if you look at the history, I don’t want to pin everything on the Freidman, the Chicago School of Business, but like before them, there was this general sense that businesses were there and had a right to operate because they made the world a better place. And I think if we can kind of bring all sides of political divides and academic thought to that place that kind of unified, “Hey, this is the good that can be done and we’ll all become successful off the back of it, and here’s all the evidence to prove it.” If academia could move more into that space, alongside everybody else, politicians, businesses themselves, that makes me so excited. I’ve got no idea how to do it, especially on the academic side, so let me know if you can think of anything. But that would excite me.

Timothy: I also like the discussion that opting in and opting out. Say a little bit about the Company Act in the U.K. and some of the things… I know we’ve bounced around some ideas about what that might look like but say a little bit about what the ask is on the legal side in terms of creating a legal structure that might support more purpose-driven businesses.

Ed: Yeah, absolutely, so the first thing to say is we’re in the middle of this, such that in about six months’ time, we will have a full suite of reforms that… not me, but the whole group of business leaders and government leaders involved in ReGenerate, will be saying these are the things that we should do to tackle the blockers that I mentioned earlier, and one of them is on the legal side. So, I am going to deny here is the final pitch of it. I can give some thoughts on it. And there’s a problem with the moment, which is the overwhelming majority of companies, set up in the standard way, you use something called section 172 of the Companies Act of 2006 and when you’re setting up a company, through Company House, that’s the default. There are no model articles around purpose. There’s no nudging towards thinking, “Hey, what is your company trying to achieve in your settling things up?” And almost every large company other than co-ops or partnerships, are set up in this way in the U.K. And under this, it’s set up under what’s called enlightened shareholder value, whereby the focus is on your responsibility to the shareholders, the owners of the company and your told to have due regard to a number of the factors that we would consider really important. And there is a lack of legal precedent of anybody holding a company to account anything under that due regard bucket, which in many people’s eyes means that the legal setup that we have is geared far too much towards shareholder interests and is shaped around that then it is around shareholders alongside other stakeholders. So, there’s a couple of questions that come out of that that we’re going to explore over the next six months. The first one is if we feel that purpose-driven business is genuinely better for shareholders and everybody else, well actually we need to actually make sure that evidence is more widely available for people, because that actually solves half our problem. The other side of things though, is the presence of ambiguity, the presence of concern that actually legally, companies are set up around shareholder value maximization rather than having proper regard for all those other stakeholders, means that the orientation of many companies is towards shareholders rather than wider stakeholders. And that came up in our poll that we did with the British Academy, we asked them which of a number of things they thought would be most helpful in developing purposeful businesses in the U.K. And the top two issues by absolute mile were governments supporting and incentivizing it, and the legal and regulatory environment within which they sit, making it obvious that that was the purpose of the business. And so, at the moment, there’s a default which is ambiguous but tends to point towards shareholders and not wider stakeholders and that’s something I think we need to fix and something we’re going to try and work out how to do that.

Timothy: I like that idea of in essence, basically saying that when you go to incorporate… in the U.S. it’s an S-Corp or a C-Corp and it’s about tax pass-throughs and things… but the idea that in your articles of incorporation, that you have to at least file that you have a purpose and describe what the purpose is. You know, if nothing else, make that one of the legal requirements to incorporate, that you’ve at least done that. And then if they want to opt out and decide not to do that, then let them do that, but make that the expectation that when you fill in your application for incorporation, you’re asking them to put that in and describe it.

Ed: Yeah.

Raj: That kind of used to be originally corporations always did have a charter and a purpose, right? In a way of charter by the state to accomplish certain specific things, so I think we need to go back to a version of that. It became purely about commercial outcomes. But one of the other reforms, I think, is exciting, which looks like it may be moving forward, is the idea of a Long-Term Stock Exchange, which has been approved in the U.S. by the SEC, LTSE, and it has several different factors within it, but one of the key ones is that your voting rights as a shareholder depend on how long you’ve held the shares. So, if you buy today, tomorrow you really can’t influence the direction of that company, which actually happens a lot. Activist investors will take a position and then threaten to or actually issue proxies to actually change the board composition or change the strategy etcetera. And I think that kind of reform would go a long way. Is there any version of that that’s being contemplated in the U.K.

Ed: No, but I’m totally going to steal that and look at that for the U.K., because I love the sound of that. Yeah. There’s been a social stock exchange and there’s been attempts at similar stuff that if I’m honest, they didn’t quite land and get the momentum they needed to be significant things. This is an area that I think one of our underlying thoughts on is we think that this agenda makes sense for everybody, and therefore what we are minded to do is to find reforms like that, which is why I quite like it, that nudge and incentivize this kind of behavior, rather than demand it or force it.

Raj: Yeah.

Ed: The reason being, we think given it in everyone’s favor… actually if you give people the education and the information, this is the direction things will go. And so, I like the idea of, hey, here is an option for long-term stock exchanges. Would you like to list on that kind of platform rather than another? Rather than saying, right, every company must list in this way. Every company must set up in that way. Because I think you’re more likely to create that kind of binary us and them. There’s Profit People and then there’s Purpose People. Rather than seeing purpose or seeing that drives profit and benefits more stakeholders. So, I think underlying, a lot of the reform ideas we’re going to be coming up with is this idea of how do we support and encourage what people already want to do and accelerate the growth of this ecosystem. Because all of the evidence says this is direction it’s heading.

Timothy: So, when you say that, I guess it sort of also brings up the money, right? Follow the money and you said one of the blockers is the “capital available” to purpose-driven businesses. Say a little bit more about that blocker and what you’ve uncovered there.

Ed: Yeah, so this is a really interesting one we’ve just scratched the surface off, really. You’ve got two parts. You’ve got mainstream finance and then you’ve got specific social impact investing or environmental impact investing parts. And we did some digging and found some new data which showed they aren’t equal parts. The impact investing part is about 1% and the mainstream investment is about 99%, so it’s not nearly as big. And when talking with entrepreneurs especially, what we had was early on, you need some of that social investment a lot of the time to have this space, the encouragement and the support to have a proof of concept that your purpose-driven approach could work. And once you’ve done that, actually mainstream finance can often be the best way to go, because there’s so much more of it, you’re more likely to have every stage of your growth, what you need in order to grow into their philosophy and impact as many people as you want. One of the things that we’re going to be looking into and I think making recommendations on, is is there enough of that impact money early on across different sectors when people are trying to stand up these kind of organizations, because we had some feedback that in some cases that wasn’t the case. And how that should react with the mainstream markets, because I think there’s also something about education and reform within that mainstream market that are necessary to make sure that this kind of purpose driven agenda doesn’t become this niche that can only be funded in a certain way and is only interesting to a certain group of people. Because ultimately, if we’re going to normalize this, then it’s got to be taken on by everybody and I think you look at the data around it, the expectation, the hope is that that’s what will happen.

Timothy: And what about at the broader for the larger businesses and the dynamics that are going on there? What have you observed in that space?

Ed: This is our least worked through space, to be honest with you, because as you start to map all of the different influences, we did a systems map of all of the different influences in a FTSE 100 or FTSE 250 business and often things are simplified, saying, hey, it’s the asset owners. It’s the pension holders, or it’s someone in that system who’s the problem and we need to demand that they change the way that they do things, and what our analysis reveals is the shear complexity of that system means that there’s not one actor for whom there’s a huge responsibility to change things, to proper purposeful activity and to facilitate companies being more purpose-driven. Actually, it’s a systems issue that needs to be looked at from that perspective, so being honest with you, with our initial analysis, we looked at that and thought, “Hey, we need a longer runway to work this through, because otherwise, we’re going to come up with a simplistic answer to a very complex problem, that if you get it wrong, it’s just going to create more problems down the line. So, have me on in nine months, six months’ time or something and I hope we’ll have an answer to that. But we don’t have one yet.

Timothy: So Ed, I think this discussion about investors automatically, or not automatically, but certainly leads us into the place of discussing, if you’re going to go make an investment, you’re going to want to be able to measure who’s good at this, who’s not good at that, and I think that was one of your fourth blocker, I think, was around the ability to measure.

Ed: Yeah.

Timothy: And say a little bit about that.

Ed: So, in it, there’s two sides to this. One of them is how can you identify who is a purpose-driven business and that is about do they intend to make the world a better place? Are they shoving that into every part of their DNA as a company? And then there is this terrifying bit of, I think, all businesses, which is that’s what we’re intending to do. Like have it done it? Have we made a positive difference? And for a purpose-driven business, that’s huge, for consumers, for employers to say, “Hey, this is a company that I want to get on board with.” You know, intent is one thing and it’s really important and it’s different from having an impact. But understand that impact is important, too. And just to say the reason we think identifying intent and finding out the kind of impact business, both needs go hand in hand for us, is because impact measurement definitely needs to be improved, but it will never be perfect. And unless we understand who has intent, there’s chances for gaming it, such that you can show a good metric, but not believe it and be doing terrible things in other areas, and so that’s why the two need to go hand in hand.

Timothy: I think it’s a really interesting time, because on the one hand, there’s this whole EFG and metrics happening and it’s very clear that people are starting to coalesce around a smaller group of ESG metrics. Blackrock came out last couple weeks ago and said they are launching an initiative to make sure that the various different alphabet soup companies that are groups that are all out there working on ESG, come to some kind of more focused effort on here are some numbers and they’ve also called into question what the IBC, the International Business Council has been doing with the Big Four and saying, “Hey listen. We really need you folks to work together to try to figure out how to get this done and they’re putting some money behind it, so I think that you’re going to see from the outside, the standards emerging around some of the ESG metrics. On the other hand, the internal reporting of what are we actually doing inside the company and are we executing on those things that we say are important, particularly in regards to purpose, they may or may not match up with some of that external reporting. So, I think it’s going to be a really interesting journey over the next few years, as companies start trying to meet some of these standards that are set from the outside by the ESG world, while at the same time, trying to live specifically inside our company if we’re living our particular purpose; what are those “leading indicators” that are starting to show that we’re having an impact?

Ed: Yeah. Totally agree and I think that we are looking at it quite simply. There was so many big brains working on how you solve this problem, that on one hand, it kind of means we are likely to find a better solution than we currently have. On the other hand, interestingly, it’s kind of led to complexity because there’s been lots of different people working on impact measurement, which means the really simple questions of “I’m in business. What is the framework I should use?” It’s not an easy question to answer. Flip it round. If you’re an inventor, hey, what is the measurement metric that I should be using to identify which companies to invest in? And it’s like the wild west out there, because there’s so many players. So, you know, one of the examples of where things seem to have gone wrong is you’ve had Boohoo in the U.K. who were recently have found to have kind of modern day slavery issues within their supply chain in terms of working conditions and the level people are being paid at in the U.K. And they were by a number of ESG ratings agency, given an AA rating. And one of them especially mentioned how lax they were on labor standards. And so it brings into question some of what’s out there. That, combined with the complexity of there being so many players, I think it’s part of the problem and like you said, bringing this all together, such that there is consistency, there is continuity, such that we can ask that question easily if a business says, “Hey, where should I go to measure?” And if you’re an investor or a consumer, you say, “Hey, how can I tell who’s doing good and who is not? When those questions become easy to answer, I think we will have all done our job.

Timothy: Well, I think you’re right. At one level, there’s this deep complexity, and the other hand, not to push our own… blow our own horn, but in our book, the Conscious Capitalism Field Guide…

Ed: Very smooth.

Timothy: In the introduction to part one, we sort of lay out, here’s ten simple questions on purpose. And we designed that for an executive team to sort of look at that and sort of ask themselves, ‘If this was true, you know on a scale of one to five, score yourself and then reflect on whether or not this is real for you.’ And then we also recommended that you go a couple levels deeper in the organization and do some quick surveys. Ten questions and get feedback from whether the organization believes these statements are true. So, it’s interesting that on the one hand, we have this great degree of complexity of trying to maybe even eventually connect with the SDG’s, the Sustainable Development Goals of the U.N. and say, “Yeah, we’re having a big impact.” Yet at the other hand, I think that there’s some real simplicity to sort of saying, “You know, let’s go into the organization and ask a few questions. Do we think that we’re living our purpose? Do you understand our purpose? Does it impact your workday today? Do you think our customers believe in our purpose?” You know, there’s just a whole… there is the other end, you know? You don’t want to oversimplify it, but I don’t want to make it overly complex either.

Raj: Well thank you, Ed, for the work that you are doing. I’m really excited to see where this evolves to and how we can learn. I think many countries are doing things along these lines and I think we can all learn from each other, so it’s going to be an exciting journey. I’m just curious about some of the influences on you, some books that you would recommend or hot leaders that you follow. Do you have any suggestions for our listeners?

Ed: So the truth is so much about what we are building our work on, so little comes from us and we’ve just tried to absorb everything that’s out there. Two things I think from very different angles that influence me. One is your top-down strategic, big-brained thinking, which has come from the Future of the Corporation work, led by Colin Meyer, who has been working at the British Academy, and that has really led the thinking, especially in academics that was along with Paul Collier, who was been thinking about capitalism through this lens and I think I would really be inspired by both of them. There’s been a bit, which I love because it comes from a very different angle called This is a Man by a guy called Primo Levi and that talks about the second world war, the narrative being a Jew in Germany going through all that he did and the reason I recommend that is it’s such a brilliant tale of someone going through all of life’s difficulties and explaining the kind of social impact of decisions on the ground and I think that if people have in mind, like how is this affecting people outside of my boardroom, I think that goes a long way to finding the problem, because ultimately, this is about people. And so that focused on that, alongside the kind of esoteric academic big-picture thinking. Those two, hand in hand, are always what we try to do at ReGenerate, so yeah, those are my three I’m going to go with.

Timothy: I love it. I love it. Well, Ed thank you so much for your time and I’m glad you could join us today.

Raj: Thank you Ed. I’ll see you next week, Timothy. Take care.

Timothy: Yes, indeed. And thank you everybody for listening into our 14th episode and whatever channel you’re subscribing to, remember there’s a subscription button somewhere on that dial. Press it and if you have any thoughts or comments, don’t forget to go to our website, and leave us some comments or thoughts there. Thanks everybody. See you next week.

Raj: And do look at if you want to learn more about the Conscious Capitalism movement.



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