Organisations have come to appreciate health, safety and environment (HSE) as a valuable tool for increased performance. Corporate social responsibility (CSR) programmes enabled companies to go beyond simple compliance with the law. However, profit is still regarded as the real measure of success. This leads to a kind of double-speak in which the directors are looking at revenue and profit; and everyone else is suspicious of HSE and CSR as developments to mask a company’s true goal. This is one of the challenges that boards and directors face today.
For more than 50 years, most people, many directors included, thought that it was obvious that the purpose of a company is simply to make a profit while following the prescriptions of the law. In that view, HSE matters were to be taken into account mainly because the risks associated with HSE breaches, for example, fines, disruption in the work process, and reputation, were onerous.
Company acts around the world contain a clause that clearly states that directors need to act in the best interest of the company they are serving. Company acts expand on that point in a variety of ways, specifying a range of different aspects that directors should consider when determining what is the best interest of the organisation: shareholder interests are not the only concern; people must always feature as well. But the underlying purpose was still thought to be profit.
Over the recent 20 years, it has become clear to most organisations that employee health, safety, security, and the environment (HSSE) as well as respectful treatment of other stakeholders and responsibility to society as a whole can actually lead to greater profitability and shareholder returns. Organisations with well-functioning HSE programmes have come to appreciate HSE as a valuable tool for increased performance. CSR programmes have aligned with this perspective and enable companies to go beyond simply complying with the law. However, these expanded perspectives have not necessarily succeeded in replacing the foundational assumption: profit is still seen as the ultimate measure of success.
Two thousand years ago, corporations were formed to create socially beneficial outcomes in ways that are viable over time. The world is now turning back to this original intent and there is a global shift to build on the historical roots. Companies today are expected to turn away profiting that creates or results in harm to humans or nature, and to solve meaningful problems of people and planet in profitable ways.
The modern corporate form is different in a number of ways; these differences pertain to some quite specific expectations. Corporations need to also produce sufficient returns to the providers of capital, to generate safe, meaningful work opportunities for people to earn at least a living wage; to protect and restore the natural capital on which companies rely; to sustain ethical business relationships with their suppliers; to contribute to the vibrancy of the communities i
