Companies need to define their purpose around social benefit, argues Mallen Baker

Siemens has pulled out of the nuclear energy business. It feels like a big deal, because the company built all the nuclear plants in Germany – a country that used a lot of nuclear power.

Times have changed. The problems at Fukushima have had a ripple effect that led Germany’s political leaders to reverse their stance on the future of nuclear power in a radical way.

But Siemens didn’t make its change because of market conditions. It didn’t say “we’re pulling from nuclear because the German government’s move means that there won’t be money in it”.

Rather the company said that it was ending its work in nuclear power because of society’s clear shift. It will avoid any involvement whatsoever in technology whose only purpose is to be used in nuclear energy. That sounds more like a decision based on a moral conclusion – ie avoiding the taint of a “bad product” – than it does a simple market calculation.

For me, the move is just the latest reminder of a truth that would help a lot more of our big corporations to build a mission that is socially beneficial. You should define the purpose of your business around a social benefit, not around a specific product or process.

Think about the position of the old, now-defunct British Nuclear Fuels Ltd, BNFL. In its time, it was a nuclear power company. The clue was in the name.

It only had one official position in the face of early controversy and criticism around nuclear power, which was that nuclear power was the answer to the world’s problems. Possible energy shortage? Rising prices for oil? Global warming? The answer was always the same.

It was all the company had to offer. That’s why the big energy utilities now provide power. British Gas remains as a brand, but its parent, Centrica, takes a strategic view across the energy mix (and is ironically still poised alongside EDF on a will-it-won’t-it approach to new nuclear).

Every energy utility should have the following mission – to be the provider into the future of sustainable energy, meeting society’s needs for the short and long term.

The utilities get this, to varying degrees. The oil industry does not.

For a brief time, it looked as though the oil industry would begin to shake itself up. Some Young Turks in BP coined the term “Beyond Petroleum” (prompting a backlash within the organisation from the die-hard oil men). Shell and others began to found renewable energy businesses that one might have imagined would grow to define their businesses over time.

But ultimately, they decided that their business was about extracting oil, and moving it around the world. They could cope with the idea of biofuels – because it involved shifting a slightly different gelatinous substance around the world.

Impossible to be responsible

That, in my view, makes it impossible for oil companies – staffed as they are by largely good people who want to do their work in the right way and to be good citizens – to be socially responsible. Because the logic of what they are set up to do in the world will lead them to resist moves to end the fossil fuel era.

In the same way, tobacco companies resist effective legislation to end smoking; fast food restaurants will fight tooth and nail against anti-obesity measures; and the Detroit motor manufacturers undermined fuel efficiency proposals for so many years.

The logic of the product and the marketplace makes these actions the obvious thing to do. To protect the company.

Ultimately, all they do is to guarantee that some disruptive new element will see the market’s need more rationally and either put the incumbents out of business or, at the very least, relegate them to a sidestream.

But in the meantime, their fight to preserve the status quo logic that made their business profitable in the early days can damage society and mean that we fail to achieve a sustainable future. All those old-industry companies, for instance, that funded vociferous attacks on climate science in order to turn public opinion against measures to combat climate change. The consequences of those actions will be with us long after the chief executives of those companies have been forgotten.

So if your company is large enough to lead and define its sector, the first step towards becoming a profitable force for good in the world is to define your mission around achieving that social goal. It means you will always be able to assess the intelligence rationally when it suggests you should be changing direction. 

Mallen Baker is founder of Business Respect and a contributing editor to Ethical Corporation.