Andrew Winston: The Case For Doing Business Differently

In 1970, the economist Milton Friedman wrote a controversial piece for the New York Times Magazine entitled “The Social Responsibility of Business Is To Increase Its Profits.” During the ensuing “greed is good” era of runaway American capitalism, many a titan of industry has quoted these words to rationalize dubious business practices. With a planet in peril and investors and consumers better informed than ever, isn’t it time big business develop a conscience? Our guest this week on Sea Change Radio is Andrew Winston, a sustainability expert and author whose latest book, “Net Positive,” maps corporate social responsibility trends through a case study of the multinational Unilever. We examine the path forged by former Unilever CEO (and Winston’s co-author) Paul Polman, discuss how the pandemic has affected corporate sustainability efforts, and look at the nexus of government, business, and philanthropy in the evolution of social impact.

Narrator  0:01  This is Sea Change Radio covering the shift to sustainability. I’m Alex Wise

Andrew Winston   0:23 We’re facing bigger and bigger challenges, which means you need large scale action that’s public and private. It’s not one or the other business has to be part of the solution, but it’s can’t do it alone and vice versa.

Narrator 0:36  In 1970, the economist Milton Friedman wrote a controversial piece for the New York Times Magazine entitled “The Social Responsibility of Business Is To Increase Its Profits.” During the ensuing “greed is good” era of runaway American capitalism, many a titan of industry has quoted these words to rationalize dubious business practices. With a planet in peril and investors and consumers better informed than ever, isn’t it time big business develop a conscience? Our guest this week on Sea Change Radio is Andrew Winston, a sustainability expert and author whose latest book, “Net Positive,” maps corporate social responsibility trends through a case study of the multinational Unilever. We examine the path forged by former Unilever CEO (and Winston’s co-author) Paul Polman, discuss how the pandemic has affected corporate sustainability efforts, and look at the nexus of government, business, and philanthropy in the evolution of social impact.

Alex Wise  1:53  I’m joined now on Sea Change Radio by Andrew Winston. He’s an author, advisor and speaker on sustainability. Andrew, welcome back to Sea Change Radio.

Andrew Winston   2:02  Good to be here, Alex. Thanks for having me.

Alex Wise  2:04  So your new book that you co wrote with former Unilever CEO Paul Polman is called net positive, how courageous companies thrive by giving more than they take. Why don’t you give us the genesis of the project, if you will?

Andrew Winston   2:19  Yeah, well Paul reached out to me and it was fall of 2019, like climate week in New York, and we had dinner and you know, he, he had never really wanted to write a book. And he talks about this in the, in the preface, because he kind of felt like sometimes CEOs are just out there like tooting their horn, and it’s not really his style. But we spent a couple years we started we started having meetings, and then you know, for a few months, and then the pandemic hit. And I don’t know if it really changed the content that much. But it certainly you know, framed the urgency or the role of business in society, I think that’s what’s really changed pretty dramatically in the last, it’s been changing for years, but the last two years have really accelerated it. So I think it kind of framed, you know why we need this really badly why we need to be providing a map for how do you build a company that serves the world? And that’s fundamentally what net positive is about, you know, how do you? How do you build a company that solves the world’s problems instead of creating them? And that’s how they profit. That’s how they grow? The core question we ask in the book is, is the world better off because your business is in it? And that’s kind of its throughout? Really, the whole feel of the book is about that question like, how are you serving everyone that you touch in the world?

Alex Wise  3:34  So you started this project toward the end of the Trump administration before the pandemic hit? With all that’s happened over the past two years? Do you view corporate social responsibility in the same light? Or has your thinking changed a bit?

Andrew Winston   3:50  Well, not really. I mean, I think the case we make and the one I’ve been making for 20 years is that the right thing is the right thing for business. And it doesn’t mean that those things line up in every minute and every tiny decision you make, but that in the larger sense, especially over the longer term, you know, doing, quote the right thing, whatever you define that as but I think means not, you know, taking from the world and taking from people but trying to improve their well being that that is a good business model. That is, you know, in the end, businesses thrive because they solve some problem for people. You know, we can talk about fossil fuel companies in the damage, they cause the environment, but they provide energy, right, there’s a reason they exist, and it’s not for nothing. We have better technologies. Now, we need to move away from fossil fuels for our own collective well being. But it’s really you know, it’s really about understanding that collective well being right and understanding how you contribute to it as an entity as a person as an executive, and working within that greater common good. I mean, we were writing this book during the pandemic and and during the, you know, the latter couple years of The Trump administration and you know, like, so, you know, the book came out, fall of 2021, we finished writing it, you know, some months before. So we were into the the Biden era. But I think, if I had to start again, now, I mean, and we, and we talked about this in the book, but I’d probably spend even more time throughout on things like democracy and, and misinformation, and it’s become so pressing. I mean, the thing, frankly, that I worry about daily is, I mean, I worry about climate. I mean, who doesn’t if they know the space, but I worry more about the demise of American democracy, which I think is imminent, and is getting closer every day. And that’s gotten much worse. I think we maybe all hope that January six was the bottom. But it really wasn’t. I think there were some good things that came out of it. Like I think January 7, and eighth were kind of surprising a bunch of companies, a lot of big companies pulled money from from politicians, and a lot went back to giving money, but a lot didn’t. So there’s been a change in some of the relation between between government and business. There’s been a shift. I think that’s creating attention. That’s probably good in the long run. But we have serious problems, right? And business has to kind of step up even more, I think we have to try to be the, in some sense, the last wall against some of the things that are really undermining our country.

Alex Wise  6:21  So Andrew, we’re talking about the the shift in businesses, but also there’s a shift underway in terms of investors and shareholders, maybe you can kind of take a step back and talk about the canard that Milton Friedman throughout 50 years ago that seems to be accepted wisdom, but does not really square with having a sustainable business.

Andrew Winston   6:46  Well, look, we open the book, in the first chapter, we have a kind of a box as Milton Friedman is dead, which we’re, you know, saying to be provocative, but yeah, I mean, so there’s, there’s the Milton Friedman idea, you know, 50 years ago, he wrote that the purpose of businesses business, right, that it’s just shareholder value he was, he had been building that theory for years, there were other economists. But it became kind of the accepted wisdom of really the neoliberal economic model, right. And it became the dominant, just by far the dominant form of capitalism and market based economies, you know, starting in the 70s. So it’s been like 50 years of commitment to this, and it’s affected even the autocrats. It’s affected the way China runs its economy. There’s just this sense that the, the measurement of a business is on its profits, and maybe its stock price, those are the two things that matter. And it’s, you know, it’s affected the measurement of our economy. It’s just the stock market in general, and GDP, right. And GDP is has tons of problems with it as it as a metric, right? It’s an it’s an industrial output metric, which is not really fit for today’s economy anyways, so we’ve boiled things down to these like specific numbers, and kind of lost sight of the fact that a business exists to solve some problem to answer some question for a customer to do something for somebody. And we’ve made it like overly simplistic for decades. And it’s part of what’s, you know, driving us off a cliff, right? If you just put shareholders and all you care about is profit. And the real problem is not so much shareholders, it’s that we’ve, we’ve put the phrase short term in front of the shareholder that we’ve made it quarterly that we’ve done these very narrow minded views of value creation. And in fact, companies will make bad trade-offs all the time, if they can do something that maximizes the quarter, but hurts them in the long run. They do it. You know, and we’ve seen the outcome of this is things like R&D, falling, you know, for decades, in companies and across the country, and the shrinking of government budgets and common good spending. I mean, it’s, it’s all related to all the problems we’re having, and, and it’s helped drive deep inequality. So investors, you know, we’re kind of, I think, in a major, the biggest problem, but in the last couple years, part of the reason that this whole thing has become so mainstream, and you have basically every company at the table. I mean, everything I’ve been saying sounds really negative. But I will say that I talked about this, like we’re at the end of the beginning, that every company is now talking about this. And there’s a lot of reasons but investors finally kind of getting there and asking these questions about what they call ESG and is kind of the final straw like CEOs, they weren’t really gonna move, you know, their customers pushing help their employees pushing helps a lot. But I think they needed investors, they needed that cover, even if they thought it was the right thing for their business to think longer term. They needed investors to start asking those questions and it’s not uniform. It’s not happening perfectly. But there’s definitely been a change. And for lots of reasons, I think the pandemic kind of accelerated some of it, but it’s clear that now the investors are asking different questions than they did before and they’re there Climbing a learning curve as fast as they can I guess but it’s a rocky road right now at the beginning for a lot of these folks.

(Music Break)

Alex Wise  11:03  This is Alex Wise on Sea Change Radio and I’m speaking to author, speaker and advisor on sustainability Andrew Winston, his new book is net positive. So Andrew, let’s dig in a little bit more to the fundamentals that you lay out in net positive with your co author Paul Polman. Let’s talk about Unilever because looked online from four or five years ago, they were investors who were writing op-eds, complaining that Paul Polman was leading Unilever by his own principles that he was getting lost in the ESG weeds that he was too worried about social responsibility and not enough about the bottom line and shareholder value. Now, one could then point to the stock price being very solid during his tenure, but we’ve already kind of said that’s maybe not the best benchmark for evaluating whether or not his tenure at Unilever was a success or not. What does it mean to do really, really well is it’s not just the stock price going up, right?

Andrew Winston   12:06  No. But look, I think there’s a lot of ways to think about it. I mean, well, well, here’s the funny part. Right? If you ask investors, what really, really well means that they only think the stock price, right? Like, that’s part of the problem. Right? Is we are so narrow now I would include in the ways that we we talk about is is a business doing well, that the things that have been written about about great companies, you know, for decades and decades, is you know, how innovative is the company, for example, might be one, right? They’re just not even talking about, like, how are they serving the world? Just other attributes of a business? How great is it to work there, like the you know, the Fortune list every year of Best Companies to Work For? How do they treat people? How innovative are their products, you know, how how good a community member are they in the places they operate, there’s lots of things right that make for a great company, they, you know, they’ve been kind of this welcoming place for entrepreneurial businesses that have a real sustainability focus, they bought dozens of companies, some, you know, large, large ish, like seventh generation and years ago, Ben Jerry’s, but a bunch of kind of 100 $200 million companies, not tiny but but relatively new, that had generally, maybe a new market they were serving there was, you know, a business that was kind of personal care brands for the African American market. There were businesses that served that kind of new focus on healthy and sustainable foods. So they just they bought up a lot of a lot of brands and made them bigger and more successful. And so that’s one measure. I think, though, the measure that I heard Unilever, executives use all the time, when they were talking about sustainability, it wasn’t so much like, oh, here are footprints down, here’s what we did on carbon. It was how in demand they have been as an employer. And we we talked about this in the book, but the numbers are kind of remarkable that they recruit in like 55 countries, you know, go to business schools and undergrad and, and in all, but a couple of them. They’re the most in demand employer in consumer goods like in their sector. And in like 20 countries, they’re the most in demand employer of any, which they will tell you is kind of funny, like they make soap and shampoo, right? They’re up there competing with Apple, right in Amazon, and all the tech companies. So it almost makes no sense. But then you learn that 75% of the people who come to Unilever now say when survey they came there because of the Sustainable Living plan, their strategy and what they’re doing in the world. So in this moment, with the, quote, great resignation, and the talent crunch, it’s even more valuable. So companies have their ups and downs Unilever has its ups and downs. But I think there’s you want to find in businesses that are great things that are advantages they have right, that are hard to overcome. And I think attracting and retaining talent is tough as hard to overturn very quickly. And I think you see that with the, you know, the big tech companies as well. They attract the they attract the best people. So I think that’s one of the measures that that they’re really proud of, and I think they should be and it makes an awful lot of sense, you know, but you know, there’s like I said there’s others in and growth and global presence and, and what I learned in writing the book was I talked to, you know, the the heads of the business in a bunch of different countries. And they’re like the largest consumer product company in Ethiopia, for example, fast growing, you know, rising country trying to get richer. And they just built this relationship there as an international multinational company, where they help the company to help the country develop, they built the business, they built factories there, they built the communities out. And they’ve developed a like, trusting relationship with this country. But they they’ve done that all over the world. And it’s, it’s basically genuine, right? I mean, I think people can see through, you know, it’s not like, they’re not saying we want, they’re coming to these countries and saying, We want to sell stuff. That’s what we do. They’re not like pretending they’re an NGO, but they’re genuine about, okay, how do we help you develop the market? How do we help you develop manufacturing in some of the things that our supply chain for our business, you know, like, they’re, they’re doing things that help develop the world, and really, in really kind of broad, really interesting ways. And so that those are measures to me as well, of how successful is a business? Really?

Alex Wise  16:07 Yeah, I mean, you and Paul, kind of lay out a template for corporate advocacy, you call it net positive advocacy, which I think is it goes way beyond this discussion about Unilever. You write in the Harvard Business Review that net positive companies proposed solutions, rather than wait for or complain about regulations that tell them what to do. I think that’s a really important kind of reframing of what we’ve heard on cable TV news for the last 20 years is like, the whole problem with climate is the Democrats want to regulate, and they want to tell us what we can’t do, instead of putting your best foot forward as an organization and doing the right thing, because it’s the right thing and not waiting for, or lobbying against some kind of handcuffs that will keep you from polluting the air or whatever.

Andrew Winston   16:58  And I think this is one of the biggest kind of leaps or shifts in mindset. I mean, we, we talked in the in the book before, you know, the book really builds to that partnership idea that the scale of our problems require really big action. So you need to be working in conjunction with your peers, your competitors, your suppliers, with governments with civil society. And so we build to that through, you know, kind of laying out the elements that help you get there, you know, finding your own companies purpose and building trust, through transparency with the world, like building trust with these NGOs and with governments, you know, there’s a whole bunch of kind of things you got to get get in place, and then you can start to really work on these big scale partnerships. But you’re right, I mean, basically, business as part of this kind of shareholder first mentality. And part it’s, it’s, again, part of the same story where free markets above all governments always bad in this story, right.

Alex Wise  17:50  Just to add to that the people who are running the government, half the time have a whole message that government’s bad, right, that the government’s the problem.

Andrew Winston   17:59  Well, right. Well, they Yeah, it’s very strange, right? The people who run for office to then say, it shouldn’t exist is really kind of bizarre to me. Right? Because at least there’s a logic to that if you believe that Democrats, everyone, I mean, the painting of them is they equal big government is so it’s not very subtle, right? It’s not a very nuanced view. I think Democrats, by and large, on average, obviously believe that government has to be part of solutions. And I I certainly believe that because I think it’s, it’s a it’s not debatable, like, on most large shared problems. That’s part of why we have and we forget, like in a representative government, it is us like, we are electing people if you don’t like the policies run, like I know, it sounds silly, but I’m on my town legislature, for example, if you don’t like what’s going on, go run for something. And that’s, you know, what’s happening everywhere. There’s more engagement now in our in our politics in a way than there ever was, which is not a bad thing in a lot of ways. But I believe we’re getting bigger, we are facing bigger and bigger challenges, which means you need large scale action that’s public and private. It’s not one or the other. And we make that clear in the book, repeatedly, business has to be part of the solution, but it’s can’t do it alone. And vice versa. It’s we say upfront, basically, it’s naive, to think any one part of this equation could do this alone. It’s, it’s And so yes, if there’s people who just believe, well, we’ll just mandate, we’ll just write regulations, and it’ll solve everything that’s naive to right you need business to be, you know, generating solutions, putting capital in place that trillions that they have at their disposal, but it has to be in a framework of policy. So, you know, the the simplest, you know, example on, you know, climate is a price on carbon, right, not the simplest to execute, but like the idea of it’s very simple. We price the thing that we don’t want through taxes or through a cap and trade system, like you put some price on it. And we talk about a net positive advocacy is that companies have basically been taught that their job is to go and fight regulation, either fight regulation or just go get a tax break. That’s kind of the two things that government relations does. But in reality, if they want their business to be better, more sustainable, more longer term, there’s a bunch of things that need to be solved. And those problems are going to be more easily solved together, meaning walk in with your peers walk in with the the NGOs who know about a topic or care about it, and go to the government say, what, how do we design the right policies. And it might mean in some times, it might mean in some places, less regulation, absolutely. But it might mean, smarter regulation in different places, or different kinds of regulation are things that create a fair playing field. So companies don’t feel like they’re putting themselves out there on their own, you make it the rule for everybody. But if you’re gonna get to things like the words we all love in this space, like circular economies or regenerative, you’re gonna need policies that support that you’re going to need, you know, systems and businesses to recycle materials, or to put them into new uses, and you’re gonna need regulations that support that. And that means building trust between business and government, which is, you know, that trust is not there, really, most of the time. But Paul, and Unilever kind of built it in many countries, they would go to Brussels, you know, for EU discussions and show up and say, Okay, how do we make things better? And, you know, we have quotes in the book, they’re, like, you know, Commissioner saying that most people just come in here and say, give me a tax break. You guys are coming in, before we make a rule and saying, like, how do we design this? Right? Which is far more strategic, right? I think more interesting, frankly. But it’s tough, right? This is not easy. It’s not like everything’s gonna be win win win for everybody, you got to make some tough choices. But you got to go in as as a kind of as a group. And say, how do we solve this, this shared problem, that’s the best path.

(Music Break  21:39)

Alex Wise  22:26  This is Alex Wise on Sea Change Radio, and I’m speaking to author, speaker and advisor on sustainability, Andrew Winston, his new book is net positive. Thinking about the ways that governments and companies can work together, we’ve yet to discuss one piece of the puzzle, which is philanthropy, you right, that traditional corporate social responsibility and philanthropy are inadequate for our times. So let’s address the philanthropy piece. How can philanthropy evolve? How is it evolving? And do you see it being kindof, the lubricant that makes the machine of government and corporate cooperation work more efficiently, and effectively?

Andrew Winston   23:10  Yeah, I mean, look, I think, look, this is a tough conversation, I wouldn’t say I’m an expert on philanthropy, but from the perspective of corporate philanthropy, right, they have a foundation, they give a little money, they do a nice event on Earth Day. Like, that’s, that’s more what we’re talking about, that’s clearly not enough, that the scale of our challenges means it has to be how we do business differently. So it’s how you make the products, how you design them, how you the services, you provide the financing, you know, if you’re a bank, how you use your money, it isn’t just over here, on the side, we have a little foundation, and 1%, you know, goes to good causes. All of that. I mean, philanthropy is important in the world, obviously, always will be I mean, and you can see the smart philanthropists have kind of pick ways they can have the most impact. You know, the Bill and Melinda Gates Foundation picked vaccinations right around the world and saved millions of lives, right? There’s, there’s people who have taken a very kind of structured view of it, like, what’s the problem? Where’s, where are the leverage points, all that still useful, but we’re saying like on a corporate perspective, you know, as much as Bill and Melinda Gates can do, for example, they can do a lot, you know, Microsoft itself, you know, his former company can do more, and they’re doing tons, right. They’re working on how do you build out the the technologies and market for sequestering carbon? Because it’s not going to be enough just to use renewables. Right, we’re gonna have to come up with some other ways. So they’re investing in that stuff. They’re, they’re starting to put more money into the really tough to handle challenges of carbon reduction, the transitions that are needed in like big, heavy industries, and how can they and their technologies help, you know, think these are bigger questions, right than just philanthropic. But I think like all of us as people should have some philanthropic element to what we do, but the idea that that’s going to fill the hole. I mean, it’s, you know, we have a very again, kind of like, anti government kind of vibe. in the US are there’s a sense that, you know, through our, the, you know, our level of giving, we’re going to cover problems that are just way too big for that, right? I mean, you’re not going to solve, you know, homelessness or mental health issues or, you know, like these giant social problems just through philanthropy, like, that’s absurd. You know, you need you need the scale of business and government working together.

Alex Wise  25:22  So this book is not a traditional way of looking at publishing, either. It’s a call to arms for readers, in many ways, Andrew, why don’t you kind of speak to what your hopes for it are beyond just making some money off of a book?

Andrew Winston  25:38  Well, I mean, it’s interesting. I mean, look, I make my living writing, speaking, doing these things. Paul, you know, he doesn’t need money from a book, right? This is not his his mission from this. But so we’re aligned. I mean, I have to make a living, right. But we’re aligned that the larger mission here is, is a movement is creating a change at scale, in how business is done. And that means not just some business, people buying the book, but you know, reaching NGOs, and government people and reaching civil society. So they understand hopefully better how companies need to operate and the role they can play, where so we’re trying to see a deeper change in how business is conducted. So we’re doing we’re doing things like talking to professor’s around the world and trying to work out how do you really make a shift in curriculum happen, say, business schools around the world. And there’s people working on this for years. And Paul and I have both worked on this in different dimensions. But how do we use the ideas of net positive to change the curricula so that people are coming out of schools, thinking the purpose of a business is something larger than the tools they have in place, that they learn Systems Thinking partnerships, like they, they are learning the things they need to an undergrad and business schools to? To create these kinds of businesses? That’s the kind of thing we’re working? How do we mobilize young people, you know, to change what they expect of business? And that’s happening globally. But how do we accelerate that, you know, actually, the core principle that we talked about in net positive is, is taking ownership, which is find is a better word than responsible, but like owning your impacts on the world as a company across your whole value chain, like your suppliers, your customers, how you impact the world in really big ways. And that’s kind of just more than the kind of logical sense like we teach our kids like you break it, you own it, you know, like, you got to take some responsibility for your how you move through the world. So we do think responsibility and ownership matters. But it’s not like that old term of corporate social responsibility, which did kind of mean philanthropy. Right? It’s a deeper sense of ownership. But, you know, we’re calling for something greater in business at a time that we really need it. You know, we really need business to step up and people to step up as community members as business people, as consumers, as employees, you know, in all of our roles, that we have to step up and really accelerate and go at much greater speed and much greater scale.

Alex Wise  27:57  Andrew Winston, thanks so much for being my guest on Sea Change Radio.

Andrew Winston  28:01  So glad to be here. Thank you.

Narrator  28:17  You’ve been listening to Sea Change Radio. Our intro music is by Sanford Lewis and our outro music is by Alex Wise. Additional music by Vulfpeck, Bobby Charles and Flight of the Conchords. Check out our website at Sea Change to stream or download the show or subscribe to our podcast. Visit our archives there to hear from Bill McKibben, Van Jones, Paul Hawken and many others and tune in to Sea Change Radio next week, as we continue making connections for sustainability. For Sea Change Radio, I’m Alex Wise.