Matthew Lesh: Woke organisations are letting their customers down

29 Jan

Matthew Lesh is the Head of Public Policy at the Institute of Economic Affairs and a Fellow of the Adam Smith Institute.

Unilever is a righteous organisation. It celebrates LGBT+ Pride, takes “urgent” action to address the “climate crisis” and refuses to supply Ben & Jerry’s ice cream in the West Bank. CEO Alan Jope declared a few years ago that “every Unilever brand will be a brand with purpose”.

The company’s latest purpose is sacking 1,500 staff. This comes after an embarrassing failed £50 billion bid for a division of GlaxoSmithKline, underperformance compared to rivals, and criticism that the conglomerate is distracted and lacks strategic direction.

“Unilever seems to be labouring under the weight of a management which is obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business,” warns Terry Smith, the founder of Fundsmith, a top-10 shareholder in Unilever. “A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot.”

So much for the golden child of “stakeholder capitalism” – the notion that businesses should focus less on profit for shareholders and more on environmental, social and governance (ESG) issues. This trendy idea has become even more prominent over the last few years, driven by those seeking to exploit the crisis for their pre-existing political ends.

We can perhaps call this Disaster Corporatism: opportunistic demands to redefine the role of the state and businesses. This is epitomised by the World Economic Forum’s Great Reset. The WEF not only wants corporates to be more involved in the affairs of state, in respect to ESG, but is also demanding the state becomes more involved in the affairs of business through industrial and innovation policy. Big state and big business working together for the good for humanity – or at least their version of it.

I argue in my new report, Capitalism After Covid, that Disaster Corporatism is a recipe for economic ruin that learns the wrong lessons from the Covid-19 crisis.

To start, governments bear substantial responsibility for allowing the virus to spread, from China’s early cover-up to Public Health England stymieing the expansion of diagnostic testing. Governments introduced lockdowns, that even if necessary at points were full of arbitrary, unnecessary and damaging measures.

We are now facing a lockdown-induced supply chain crisis and damaging inflation after expansionary monetary policy from central banks – the same central bankers that have been talking ad nauseam to talk about climate change financial risks and diversity and inclusion but seem to have dropped the ball on their central responsibility to keep price rises low.

Even if economic support measures and advanced vaccine orders were valuable, it hardly seems like we should be giving an A+ scorecard to governments for successful handling of the pandemic or demanding they intervene even more.

On the flipside, it is similarly absurd to use the crisis to suggest businesses should no longer focus on profit. Businesses which achieved immense profits by delivering their services, be it Amazon, Netflix or Moderna and Pfizer, ensured we were fed, entertained and saved millions of lives with vaccines.

In this respect, shareholder and stakeholder capitalism are somewhat a false dichotomy. Profit is socially responsible. A business that returns a profit to its shareholders can provide quality and value-for-money products to its customers, pay wages to its workers, procure from its suppliers, and pay taxes to fund public services. The entire point of the free market system is these mutually beneficial arrangements, with everyone acting in their interest, that make us all better off.

Diminishing profit helps nobody. Executives who pursue ESG goals are often just corruptly using their shareholder’s money for self-aggrandisement. The actual owners of companies – including our pension savings and institutional savers – expect a decent return, not solving racial inequality and climate change. A focus on “purpose” other than profit can, as the Unilever case demonstrates, result in those with a real stake being left worse off.

The oft-repeated justification for “woke capitalism” is that customers are demanding “purpose” driven companies. But this flies in the face of polling which suggests delivering a quality products and customer service is the top priority. It also misses the increasing role of regulators and legislation that is heaping pressure onto companies to consider non-financial issues – such as Financial Conduct Authority consulting on setting targets for women and ethnic minorities on boards despite admitting that there is “inconclusive” evidence that it improves outcomes.

“Woke” politics from the boardroom is also unlikely to prove successful on its own terms. Corporate branding exercises cannot make China reduce emissions or end racism. The inevitable failure to deliver on lofty goals risks making everyone unhappy. The political left complains companies are hypocritical and acting purely for public relations. While the political right gets annoyed about companies pursuing objectives with which they disagree.

The even deeper problem is what all this self-flagellation about profit does to our successful market system. Executives who diminish the importance of profit are sending a message to society that the business of business is immoral. In doing so they are undermining the case for market economies, the foundation for their enterprises and the source of our broader prosperity.

Businesses and governments should return to their traditional competencies, be it creating quality products and delivering profit to shareholders or protecting public order and delivering basic services. They should not seek to be everything to everyone, and in the process let us all down.

Clare Ambrosino: Why One Nation Conservatism can unite the country and win the Millennial vote

21 Aug

Clare Ambrosino is a Communications Consultant and was a Conservative Parliamentary Candidate in last year’s General Election.

It is a common perception that my generation, the Millennials (born between 1981 and 1996), also known as the Peter Pan generation, the Boomerang generation or the Me, Me, Me generation, are principally governed by their desire to live life hedonistically, and place their emphasis on personal pleasure and career rather than buckling down to a life of responsibility.

Certainly, a brief look at the social media profile of anyone born after 1980 (#guilty), will show a lifestyle of holidays, instagrammable rooftop cocktails and a catalogue of material purchases, as well as a penchant for photographing everything ever eaten in a restaurant. This has led many of our parents, who by the age of thirty were already married with kids and a mortgage, to roll their eyes and wonder when we are going to settle down to real life!

However, are Millennials really so privileged or is this apparent golden age of opportunity masking the simple fact that our parents, who received free access to university education and were able to buy a home with generous mortgages (sometimes as much as 100% of the cost of the house) shared fundamental values and a belief in society which we do not have?

After all, what better way to get people to buy into the values of a society if they literally buy a stake in it? Is it any wonder that young people today – the first generation unable to buy a home in decades – seem to want to spend as if there were no tomorrow? Could it be that precisely because the thirty some-things of 2020 are unable to buy their stake, that many have become largely disillusioned with traditional party politics, preferring instead the populist and single-policy movements?

Talking to my peers, it seems that many of them don’t see the relevance of traditional values or traditional politics to their lifestyle, and they prefer to live life in the now. They choose the fast hit of dating apps and fun over responsibility and deferred gratification.

Millennials were largely born into carefully planned, child centred families whose high ambitions, encouraged them to aim high and provided infinitely more affirmation than their parents had received. For decades they have enjoyed the lowest unemployment levels on record, and had access to opportunities and luxuries that previous generations did not have, brought by technological advancements and globalisation.

Yet, all is not as idyllic as it seems. Born into a fast changing and threatening geo-political landscape and with old certainties of growing up in question, younger people have become reluctant to commit to saving and planning for the future in the same the way previous generations did.

The twin towers, the war on terror, the credit recession, austerity, the tensions underlying the EU referendum and now, to cap it all, a deadly pandemic all wrapped up into a new recession and culture wars on the side. The lives of Millennials have been set against a backdrop of fear and anxiety, so that it is of little surprise that many, mercifully not all, have turned inward and do not buy into the values which are the pillars of society. ‘Peter Pans’ of both sexes prefer to burn the candle at both ends. They are cicadas, not ants.

The fact of the matter is however, that many, if not most Millennials would love to plan for the future and raise a family, but this is becoming increasingly difficult. According to recent ONS data, overall marriage rates are at their lowest on record, sinking by 45% since 1972, with the average age of marriage being 35.7 for women and 38 for men. High university debts make it difficult to save for the significant deposits now required by banks, and this has led to increased rents and inflated house prices.

Coming into Covid-19, the last standing pillar of stability for young people – that of employment – is now also at risk. This will naturally lead to an exacerbation of an already existing resentment towards the institutions and powers at play.

Now more than ever, the nation needs to be brought together as a whole and we need to make younger people feel that they have a voice which will be listened to. The fall of the red wall in the North was the proof that if people feel that they are being part of the conversation, they will respond. Too many people have felt excluded and unheard – excluded from the decisions of Westminster, excluded from the workforce, excluded from society itself.

The Prime Minister said last week that we can expect to have a “bumpy few months” ahead of us, and we have a “long way to go” until the UK sees a return to “economic vitality and health”. However, one of Britain’s greatest strengths is that its people pull together in a crisis.

The Covid-19 pandemic, whilst causing one of the biggest recessions in our economy, may become an opportunity to reset the way we live and work – the Great Reset, as it was called by the World Economic Forum. The UK should use this time to focus on its strengths as one of the world leaders in the AI and tech sectors, to generate new jobs for the young, retraining existing workers and pushing forward with the Fourth Industrial Revolution.

The UK should also pivot on the rising trend of working from home to encourage people to move out of the city and invest in rural and coastal towns, where homes are more affordable and new investment is much needed for the survival of their economies. What the government can do to encourage this, is to ensure there are favourable conditions for these opportunities to thrive, such as cutting edge broadband connectivity across our rural areas. Our education system too can follow the job demand, so that the community, education institutions and job opportunities are more closely interlinked.

It is always worth looking at the Democrats to see the future direction of the Labour Party. Esteemed Professor Niall Ferguson, in an article for The Atlantic in May 2019 entitled ‘The Coming Generation War’, correctly identified that the Democrats would start to use generational divides as a wedge issue for future elections. Certainly, this appears to be the central strategy in the impressive Democratic presidential campaign. Joe Biden has recently told a virtual town hall with young Americans that “young people have got a kick in the teeth”, effectively communicating how he feels younger voters’ pain.

In the UK, the Labour Party, whilst traditionally relying on the votes of younger people, has yet to articulate the generation crisis they find themselves in by offering any real solutions.

As Conservatives, it should be our priority to be bold and become the voice of this generation by providing a new vision to keep unemployment levels down, and keep the promise of a home owning democracy, which has served previous generations so well. We should allow young people to buy a stake in society and live by One Nation Conservative values. Now more than ever, young people should be reassured they have a stake in the future and nothing will encourage people to feel included as much as home ownership and stability in the workplace.