Toby Webb argues that government must learn from innovative companies, not the other way round

I’m a big fan of Gillian Tett of the Financial Times. She was one of the few journalists to spot the credit crunch and financial crisis, and her book Fool’s Gold is an excellent, if complex, treatise of events leading up to 2008.

In a recent column for the FT, Tett writes: “I think that companies should recognise their wider impact on society, but I also think that it is primarily up to governments – not companies – to set the rules and pursue wider social aims. In other words, I don’t want Unilever to trash the environment with high-margin shampoo, but I expect the government, not Unilever, to set environmental standards, penalise miscreants – and tax Unilever to help the poor.”

This is the classic economist’s opposition to the notion of business in society operating beyond classical boundaries. All very well in theory, but in practice, if we leave it up to government alone, we’ll make no real progress.

One could apply Tett’s same argument to civil society groups. Yet we know NGOs play a considerable role in government policy and implementation. Business does too. Now sustainability presents an opportunity for that role to move beyond narrow self-focused lobbying to contributions towards collaborative governance.

Anyone who has worked with politicians on corporate responsibility knows how inexperienced of the real world many of them are. Most are bright and dedicated, but all suffer from unfortunate outdated ideologies based on their upbringing. Given most these days have done little else but be politicians, that’s not surprising.

Take just a couple of issues where had companies and NGOs not acted, government would be doing even less than it currently does.

First, climate change. One reason a few governments are even semi-serious about starting to tackle it is NGO and business pressure and action.

Second, timber. The Forest Stewardship Council was set up in 1993, by NGOs and with business support. It took governments another 15 years to begin seriously taking action to begin preventing illegal timber exports into the EU and US.

There’s another point here too. Should we be voting for governments to simply make all our decisions for us? Should their job really be just to regulate or de-regulate? I vote for governments, useless as they generally are on sustainability, because I want them to demonstrate leadership, broker debate and drive collaborative, representative and fair decision-making.

Corporate muscle

Tett acknowledges that in the right circumstances, companies can make a big difference beyond the old paradigm of products, services, jobs, taxes and legal compliance. She writes: “when corporate muscle is engaged, the outcomes can be powerful: when, for example, Coca-Cola started battling Aids in Africa, it had an extraordinary impact.”

Yet she seems to think it’s some kind of zero-sum game with business and government.

I don’t imagine for a minute anyone in the world of corporate responsibility wants Unilever to set environmental standards, least of all Unilever. That’s not the point.

The point is to show the way forward, to show what can and does work, and then let government find its way to the sensible path of standards-raising, by law, incentive, name and shame, or otherwise. And yes, to push government to do so using arguments and proof that raising standards is in all of our interests.

What worries me about smart, influential economics commentators such as Gillian Tett is that they are listened to much more by governments than any corporate responsibility expert is.

If the economists don’t understand that the world has changed and business must play a role in demonstrating that better social and environmental performance is better for everyone, what chance is there that senior politicians will?

Perhaps what business should take away from this is that there is a job to be done with business and economics commentators, to make them understand that corporate responsibility is not just the odd panel at Davos, but an actual business strategy shift, at least among the bigger companies.

If I worked for a large company in the field of sustainability, I’d be thinking hard about how industry groups such as the World Economic Forum and the World Business Council for Sustainable Development, or even the UK’s CBI, can be pressured to do more of that.

Toby Webb is founder and chairman of Ethical Corporation, and chief executive of Stakeholder Intelligence, a research and training firm. He blogs here.