Sir Mark Moody-Stuart, chairman, Hermes Equity Ownership Services; former chairman, Anglo American and Shell; shared some thoughts at the recent Responsible Business Summit

I want to talk about the importance of listening to, and working with, civil society, including our critics.

One of the real innovations in the last 25 years or so is the discovery that when responsible business and civil society work together, we can achieve really good things, particularly where governments have largely failed.

That started in traded goods, like timber, and the Marine Stewardship Council with WWF and Unilever; the fantastic work Nestlé have done for standards in milk marketing and so on. Then it moved on to non–traded areas, such as the Kimberley process in diamonds, controlling the flow of diamonds from areas of human rights abuse.

The UN voluntary principles on security and human rights achieve real effect in the extractive sectors: 26 countries have become compliant and another 18 are in the process of doing so. Establishing this independent multi-stakeholder oversight organisation is a major achievement.

The UN global compact, functioning for the last 12 years, brings together business and civil society to address major issues of human rights, working conditions, the environment and anti corruption. There’s a strong local network.

I declare an interest because I’ve been involved since the outset.

Working with civil society you have to build trust and be extremely transparent: it’s about listening to our critics and building them into the solution. No problem can be solved without different sectors working together and the biggest mistakes we make are when we forget that.

It’s better to think of society in the middle and your large company as just one of the stakeholders, rather than the other way round.

These contacts with civil society give us a kind of radar and show what new trends are coming up.

Sometimes we need to take our corporate hat off and put a kind of societal hat on. This is not about making voluntary contributions to government or HMRC in penance, but working with civil society, who have a lot more trust from society than we do, to put in place sensible international tax agreements.

Without that, we are going to continue to get into trouble. Resource companies like Anglo American and Rio have already started to be extremely open about how their revenue is shared. Not just about tax but how we share with employees, our suppliers, contractors and so on, with investment dividends, retirement income etc.

If we look internally at tax distribution, for example, we have to think: would there be a public row if this was published? We need to be clear on justification. If we are not comfortable with it, what should be done to change it? Not by giving it away but by saying: what’s gone wrong with system. So we need the right sort of regulatory frameworks in place which guide the market but don’t impede it.

In many areas such as climate change we need these regulatory frameworks but ones that don’t specify the outcome – they allow markets to choose the mechanism. Unfortunately regulators like to tell us how to do it too.

Business and civil society can keep each other honest. In 1995 Shell went through a very difficult time. There was not only the Brent Spar disaster but the execution of Ken Saro-Wiwa in Nigeria.

At the time we thought we had a well developed and embedded set of principles. All of a sudden we were subject to major criticism on human rights and the environment.

That kind of thing is an opportunity and it’s what bankers are going through now. We organised workshops with outsiders all over the world, examining the responsibilities of major global companies. Collectively we made modifications to our stated principles: including support for fundamental human rights.

We went back to our stakeholders and they said: great, but it’s just words. What are you actually doing about it? Shell’s first sustainability report was published in 1997, entitled: Profit and principle: does there have to be choice?

Then we went back to all our partners, in China, Latin America, Saudi Arabia. We asked our (very often government) partners: these are our principles – are you happy? In the end they all bought in.

How do we embed values? Words may be important but how do people actually live it?

It’s very often a case of whether people believe you are just saying it because it’s the right thing to say or if you actually mean it.

In Shell there was a problem with safety. We made it plain that absolutely anyone could stop an operation on safety grounds. But I found for two years after that, if I had a meeting with technical staff, they weren’t quite sure whether I really meant it.

If people can see there is a short term cost to stopping operations and you are prepared to pay, it really penetrates.

So listen carefully to your critics and work with them, engage with them, because they often have good ideas.

If you have a clear set of values, spend a lot of time finding examples of people acting in line with them, and praise them, particularly if it costs the company a lot of money. Then people will know it’s not just words, it’s actually serious business.

The above is a summarised transcript from the recent Responsible Business Summit 2014. Take a look at other upcoming Ethical Corporation events.

Sir Mark Moody-Stuart has recently published a book on Responsible Leadership

Responsible Business Summit  responsible leadership  Sir Mark Moody-Stuart