Customer expectations are changing. According to recent research by consultancy PwC, consumers are willing to spend roughly 9.7% more for sustainably produced or sourced goods, even amid the current cost-of-living crisis. This is increasing the pressure on business leaders to ensure their operations are as responsible as possible.
This task, however, is fraught with difficulties. Every item a business produces will have a carbon footprint, regardless of how green the process may be. Expanding to new countries to spread a sustainable message may mean working in regions where practices do not align with the organisation’s values. And, securing investment requires businesses to show that they can make money as well as change the world.
To understand the complexities of balancing profit and purpose, and the demands that come with being an ethical leader, we hosted a panel discussion with three members of the Raconteur 50, our list of the UK’s most outstanding CEOs.
“All CEOs should be ethical,” says Tessa Clarke, chief executive and founder of waste-reduction app Olio. “The time has come for us to start focusing on solving the problems for the 99%. This is something customers want, so stakeholders across the landscape want to work with, partner with and be employed by a business with a clear, ethical stance.”
Watch the discussion in full above and head here to meet the other members of the Raconteur 50.
How do you get buy-in from investors for sustainable initiatives?
The Cheeky Panda was started as an ethical business. We’re a female and ethnic-minority founded company, the material we use in our products is FSC-certified bamboo, we gave back to charities from the very beginning and we were certified as a B Corp in 2017. Because of this, investors choosing to invest in The Cheeky Panda know that they’re investing in an ethical, sustainable business, so there wasn’t a lot of buy-in that I had to get from backers.
You need to get alignment though. For instance, there was a debate about whether or not to wrap our toilet rolls, as that is a bit of a trend at the moment. As a leader, I had to be firm in my position to say ‘no’, because it’s unnecessary waste. Sometimes you have to be firm in terms of the decision-making.
The key thing to understand about external stakeholders, investors and shareholders, is that they want your business to succeed. If they’re in discussions with you, they’re looking for a business that might succeed. What you have to do is actually prove to people that you’ve got something that is meaningful and has a real chance of succeeding and that’s about making sure you have something you can hang your hat on in terms of purpose; that you have a North Star you’re going after and a team that can deliver on that. Fundamentally, if the idea is good and the people are good, that’s what they really want to understand. It’s really about finding the right people who understand what you want to achieve and bringing those people on board.
Investors don’t want to invest in something that isn’t going anywhere. The more you can prove that what you’re doing is showing success, the more likely that is to happen. It’s about breaking things down into bite-sized chunks. How do you incrementally make things better all the time? And how do you demonstrate that to investors? Those KPIs could be around responsibility, around the top line or the bottom line – but showing that story is always important.
There are three things that I would focus on when it comes to investors.
In terms of getting buy-in, you’ve got to really believe in your company with your heart and soul. The reality is that people buy into other people. Passion and conviction is infectious. So if you don’t genuinely believe in your own mission, then don’t bother because you won’t be successful.
The second thing is: you should only try to get buy-in from people that you realistically think are open and receptive to it. This movement is still in its early days and there are a lot of people whom you will be wasting your emotional energy on. And, honestly, my advice there is to give up. Go seek investment from someone else.
The third thing is that people want to see the data. I point people to a report called The Purpose Dividend, which was released at the end of 2023 by B Lab UK and Demos. The research found that if the UK business sector were to become purpose-driven overnight, then it would boost the UK economy by 7% – that’s £149bn. So there is a really thorough, robust piece of data, which shows how being a purpose-driven business impacts performance.
