Own It

Corporate Ownership

The SEC’s decision to force two of the US’s largest oil companies – Occidental and ConocoPhilips - to hold shareholder votes on far reaching emission targets is a clear sign of the Biden Administration’s intent to pull multiple influence-levers when it comes to climate change.

It’s little surprise then that the response to the decision has polarized corporate America.

Whilst many applaud the push for greater shareholder democracy, there’s a seemingly equal number crying ‘micro-management’. Just how disruptive or constructive shareholder intervention in a call for greater transparent planning around Scope 3 emissions will be, only time will tell.

Whilst the complex relationship dynamics of the current US Administration and the heavily politicised oil industry may seem to be an issue of national rather than global importance, Australian businesses should take heed.

We see three core issues emerging from this development that reflect some of the challenges and opportunities ahead.

Regulation

Leadership teams know their social innovation agenda is under the spotlight. As consumers vote with their wallet, so employees vote with their feet. A more regulatory environment will only amplify the need for swift and increasingly conciliatory action.

But of course regulation comes in many shapes and sizes. The SEC’s move in the US is one. The outcomes of Cop26 in the UK will be another. Perhaps more pressing is the influence and expectations of major retailers and a growing number of industry bodies across the supply chain - organisations whose own procurement guidelines are quickly morphing into definitive contractual requirements.

Organisations need to anticipate and get ahead of regulation. Sector-wide collaboration and consensus is difficult, but helpful. Corporate commitment, clear action plans and metric based deliverables are no less daunting, but far more impactful if only on account of the fact that ownership remains with the company.

Future of Work

Environmental impact shifts inevitably demand structural change. More often than not, product and service design needs evolve too. These are significant things for any organisation to address.

However, the push to create a more sustainable business has an immediate context that stretches beyond social innovation initiatives and ESG metrics. Entire industries are in the midst of the Fourth Industrial Revolution. Which makes the automation and augmentation of the workforce real to the point that it now compounds the decision-making challenges of organisations everywhere.

It could not be happening at a better time.

Organisations need to reshape their approach to market; they need to rethink how best to retrain, not replace, their talent; and they need to recalibrate their operations on the back of a 12-month period that has forced a complete rethink of what work, workplace and productivity looks like. Workforce automation and augmentation presents an enormous opportunity.

Activism

The SEC’s empowerment of shareholders will result in sustained stakeholder activism. That is, after all, what it is designed to do. But we can expect to see emboldened employee and social activism falling out of this move too, something that adds to an already potent force for change.

But here’s the thing about ‘activism’. It’s a tag that has many sides. What for the most part was a descriptor for fringe politics at the turn of the decade, has quickly become a nomenclature for needed and progressive change across a raft of social issues. Activism is now a force for good.

In practical terms, that means organisations must increasingly apply the principles of Ohm’s Law when managing and embracing stakeholder activism. The greater the pressure it exerts, the greater the resistance it will face.

That is not a cry for surrender. It is a call for engagement.

Organisations must now acknowledge the fast-moving currents of commercial, cultural and workforce change around them and determine how best to address them. To do so will ensure they come out of the other side better informed, better equipped and far more competitive.