Businesses should play public good role

8 August 2006

Huge majority of New Zealand decision makers believe businesses should play public good role

New Zealand decision makers overwhelmingly expect businesses not only to generate the highest possible returns for their investors - but also contribute to the broader public good.

Only 10% of business, professional and government decision makers believe businesses should focus solely on providing the highest possible returns to investors.

Some 86% of 400 decision maker members of a new nationwide online research panel, ShapeNZ, say generating returns to investors, while balancing with contributions to the broader public good, best describes the role businesses should play here. Some 3% answered don't know.

The New Zealand Business Council for Sustainable Development, which operates ShapeNZ to help the public influence policy proposals, says the New Zealand executives are accurately mirroring the views of their counterparts in 16 other countries.

Results of a McKinsey Quarterly Survey of 4,238 executives in 16 countries, taken last December, found 16% of executives said they believe in focusing effort for highest returns only, while 86% believe in generating highest returns but contributing to the general public good.

Some 46% of executives in the international survey also said they believe there is room for considerable improvement in anticipating social pressure and 75% believe CEOs should lead this.

Some 400 of the 480 New Zealand decision maker panelists, including managers, proprietors, self employed, professionals and government officials, responded on the business role question between July 27 and August 8. The survey is still running. It carries more than 20 questions quizzing New Zealanders on issues ranging from whether they believe climate change is happening, to a range of climate change policy options, to their views on energy security, government performance and the perception and role of business here.

Business Council Chief Executive Peter Neilson says the first decision maker result from the panel indicates that executives here, as elsewhere, believe business is a key driver for an improved community.

Some still held the view that businesses, in the words of one respondent, "have a responsibility to deliver a return to their shareholders and value to their customers, anything else is a 'nice to do' not a 'must do'."

Some organisations in New Zealand strongly argued that business had no role in "social engineering" and should concentrate on maximizing profits. "They're clearly out of step with executive opinion," Mr Neilson says. "No business is immune from social and political influences and this survey confirms decision makers here are wise to that. Their investors will probably be grateful for that – and profit from it."

In qualitative responses, decision makers supporting a wider role for business say:

"Being socially responsible and making money are not mutually exclusive". "Happy shareholders, staff and customers mean a happy community and the business grows."

"Businesses should be 100% accountable for their actions."

"Research shows companies with a core purpose beyond profit outperform those who simply focus on shareholder returns."

"The concept (of business operating to increase the welfare of the whole society) has been well and truly forgotten in the current culture."

Mr Neilson says the evidence internationally was that the smart money was already moving to sustainable investments, through which businesses did the right thing for society in using the latest technology to overcome energy, clean water, climate change and other challenges.

The Business Council's members jointly employ more than 55,000 people and have annual sales of $33 billion, equating to 28% of the country's gross domestic product.

It believes sustainable businesses are profitable, while taking care of the environment and people.

The ShapeNZ panel is being used to inform its major research projects and the policy advice provided to decision makers.

The Welcome Survey, in which the business role question is posed, is still running at www.shapenz.org.nz

Panel membership is free.

ENDS

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