We live in an era of profound mistrust. Corporate misbehaviour and scandals affecting even the most august of institutions have eroded public faith in the leadership of large parts of civil society.
In a world with more than a billion constantly connected citizens, judgements are formed almost instantly on the basis of corporate deeds – real or imagined – far more than corporate words. True transparency – detailed, honest and sometimes painful – is essential if organisations are to be trusted in future.
Millions of people around the world profoundly distrust the companies that we work for, and for two reasons. The first is dishonesty: a belief that companies habitually mislead and obfuscate when addressing real and profound concerns about issues that matter to the public. The second is disempowerment: a belief that companies view people as no more than a fungible commodity with financial logic always trumping social consequence. Those views are widespread and, sadly, they are not exactly without evidence. But it doesn’t have to be like this.
Let me tell you about our journey. From 2010 onwards – at the height of the global financial crisis – we faced accusations of corporate tax avoidance. If you wanted to understand what public mistrust felt like, working in one of our stores with protestors outside the door would have given you a good insight.
Anyone who has worked in issues and crisis management can tell you that when you are publicly accused of wrongdoing, life gets binary really fast. Either you did wrong – in which case you apologise, explain what happened, set out what you’re doing to fix it and what you’ll do to ensure it doesn’t happen again and the world moves on (providing you can keep your promises) – or you have done nothing wrong, there is a misunderstanding, in which case you need to come out fighting to tell the world what’s really happening.
Our corporate tax challenge was a matter of transparency, not malfeasance. The problem is that accounting standards and international tax norms are highly complex and opaque. It became clear to me and my colleagues across the business that there was a pressing need to explain how tax works in layman’s terms and to do so in depth, with clearly stated principles setting out what our company would (and would not) do – and, moreover, to do so in a public report with numbers that were disclosed on a country-by-country basis.
Those discussions led to the first-ever annual tax transparency report published by a company in the global telecoms and technology industry. So did this transparency report persuade all of the protestors and doubters? Not at all. There will always be some people who, as a point of principle, will not believe anything any large company says. But our transparency report did prompt the more reasonable and thoughtful critics to consider that what they had thought were simple answers weren’t, perhaps, quite so simple after all. It also helped people realise that international and national taxation systems were at the root of their concerns, not the activities of a specific company that had at least made the effort to try to explain how those systems worked in practice, so their opprobrium should be redirected accordingly. The report changed the nature of the debate for us. It meant that, for the first time, it was possible to have informed and constructive conversations with a range of different people who cared passionately about the issues for good and honourable reasons.
Secrecy versus transparency
About a year later, there was a new issue on the horizon from a completely different direction: the former NSA contractor Edward Snowden. His initial allegations appeared to imply illegal collusion between UK intelligence agencies and UK telecom companies, including Vodafone. As we all remember, the allegations quickly gained traction and were reported around the world.
This was a difficult challenge. In preparing our tax transparency report, my team and I could speak to all the internal experts in our own organisation and were able to get to ground truth quite quickly. But this issue was different: the problem with national security and secrecy is... it’s secret. If you know about it, there’s very little you can say about it – not least because you can go to prison if you reveal what you shouldn’t reveal. Secrecy and transparency don’t exactly go hand in hand. This was, to put it mildly, a bit of a headache. So we focused on what we knew and what we knew we could say.
We knew that our own code of conduct, which applies to everyone who works with us, anywhere in the world, is extremely clear that any form of access to customer data without lawful authority is utterly prohibited. We also knew that our colleagues who are tasked with law enforcement agency liaison – and, to be clear, all telecommunications operators’ licence obligations in all countries require them to provide lawful access to law enforcement agencies – are decent people who act with integrity. So our strategy was to take the same playbook that we applied to tax. We set out to shine a light on the law – and to explain the operating-level reality, in layman’s terms. We did so simply, clearly, globally and also at a country-by-country level – up to the limits of what the law would allow us to say.
The result was this: our law enforcement transparency report. As with tax, we set out to reveal important truths that were already understood by the experts but not by the wider public. This was a massive task. It was also quite risk. As I mentioned earlier, in most of the countries in which we operate, public disclosure of matters deemed by the government to relate to national security can lead to arrest and imprisonment, even if what is said is seemingly innocuous.
But we believed we had to do this, balancing those risks against the need for us to be robust in explaining our position to our critics. I think our law enforcement transparency report has helped to change the nature of the global debate on privacy in the digital age. It’s updated annually, it is the most comprehensive of its kind in the world and it has enabled us to have a completely different kind of conversation with the many people out in the world who are deeply concerned (with good reason) about these issues.
What these two experiences – tax and law enforcement – taught us is the value of what I call “aggressive transparency”: focusing on the global themes that are material to the business and that are also the greatest source of public concern, then going out into the world – proactively, loudly, clearly – to explain what’s going on.
“Corporate transparency programmes defuse the negative; but on their own, they are not enough to secure a long-term licence to operate.”
Corporate transparency programmes, when done well, defuse the negative; but on their own, they are not enough to secure a long-term licence to operate. At the same time, companies also need to prove the positive: you have to demonstrate the substantial social gains that flow from your business. I’m sure all of us would agree that large businesses have a massively positive social effect on society: the modern world would not work without us. The problem is that many of the people with whom we come into contact and who are affected by our actions feel disempowered as a result of globalisation. They do not see our companies’ words matched by our companies’ actions. This is where I take issue with the notion of corporate social responsibility because I think the conventional model of corporate social responsibility is past its sell-by-date. It is not enough for a company to run a feel-good social offset bolt-on while they get on with the real business of making money. It simply doesn’t cut it any more. There’s an old joke that CSR is essentially like saying to the people of a village “Yes, we chopped down your ancient forest but don’t worry, be happy, we used the logs to build you a new youth club”. CSR just doesn’t work.
Earning social licence
Last year we created a new Sustainable Business Framework for Vodafone. This combines the corporate transparency programmes I talked about with three, 10-year global transformation goals. Each of these is large in scope, meaningful in terms of social impact and, most importantly, is part of our core business strategy, not a bolt-on. These goals are not run by any corporate social responsibility team. These are hard-edged commercial programmes owned by senior P&L leaders with financial key performance indicators that also offer a substantial benefit to society as a whole.
Our first 10-year global goal focuses on women’s empowerment. We are lucky that our core business is a profound social good in its own right, particularly for women in emerging markets: when you put a mobile phone into the hands of a poor woman in a low-income country for the first time, you change her life forever. So we’ve given ourselves the challenge over the coming decades to bring mobile to at least 50 million more women in the poorest communities on Earth. We also have an internal goal – to become the best employer for women in the world. Doing so will strengthen our own internal talent market and also will act as a beacon for other companies in all countries, including in emerging markets.
Our second goal focuses on energy innovation. Our industry requires vast amounts of power and, as such, is a key source of greenhouse gas emissions – comparable, in fact, to the aviation sector. So we intend radically to reduce our energy costs, consumption and our carbon impact over the next 10 years. We also have a very positive impact: our technologies enable our customers to reduce their emissions very significantly. Our goal is that for every tonne of CO2 we emit, we will help our customers reduce their emissions by two tonnes. That 1:2 ratio will increase over time – in our Netherlands business we are already at 1:25.
The final goal is the most difficult. There is a serious societal challenge: the modern technology industry essentially destroys jobs. There are entire cadres of employment in middle management layers that have disappeared. Foremen, supervisors, back office clerks and many other such roles have been replaced by silicon, algorithms and high-speed data connections. This in turn has greatly narrowed traditional employment opportunities for large swathes of the next generation.
“The problem with national security and secrecy is... it’s a secret. If you know about it, there’s very little you can say about it.”
Tens of millions of our customers around the world are under the age of 30, and many of them are unemployed or insecurely employed. And that, at root, presents a bizarre paradox: we have a generation that was born digital that is losing faith in the world of work at exactly the same time as businesses big and small are realising they need a much greater level of digital skills to prosper in the future. It’s the most extraordinary disconnect.
We have a direct relationship with millions of young people who are in that position while every sector of the future economy is going to depend on digital to some extent – and within my company we have some pretty good insights into how the workplace will evolve over the coming decades. So there must be scope for us to use those relationships and that knowledge to offer young people in every country in which we operate the opportunity to gain advanced digital skills, to a deep level, and then provide a comprehensive online market place for them to find jobs. If we get it right, those programmes could help to enhance millions of people’s lives.
The Better Business Blueprint
Finally: all of this was informed by the Better Business Blueprint. The Blueprint sets out what a business must do to establish and maintain its bond with society as a whole. We’ve been involved since the outset, and today there are about 50 large companies actively involved in the Blueprint movement. Several have reflected the Blueprint Principles within their business strategy – including Vodafone and Unilever – or are actively considering doing so. I urge you all to read it at www.blueprintforbusiness.org and think how you could apply it within your companies.
If you work through what your company would need to change to become a truly purpose-led organisation, there is a pretty good chance you would emerge a lot stronger for the effort; and, over time, the trust gap between business and society – one of the defining challenges of the age for all of us – will hopefully be that much smaller.
This is an edited version of a speech given as part of panel on the Social Liecence to Operate at the European Communication Summit in July 2016. During the panel John Morrison from the Institute for Human Rights and Business, Matt Peacock from Vodafone Group, Roche’s Daniel Grotzky and Craig Winneker from POLITICO Europe tackled the ongoing debate over the role of companies in the wider society from different perspectives. Watch the full panel here.