Halla Tómasdóttir, CEO of Sir Richard Branson’s social purpose nonprofit The B Team, talks about the role directors need to play.
The decades old notion that profit is the sole driver of corporations and directors need to only care about the bottom line is becoming an anachronism, maintains Halla Tómasdóttir, the CEO of The B Team.
The question we should be asking today, she stresses, “is how to make business the driving force for economic, environmental and social progress that benefit all stakeholders.”
Can you provide an overview of B Team and what the ultimate goals are; what are the expectations from corporate leaders?
The B Team believes a new formula for leadership is needed if we are to successfully
navigate the many challenges the world now faces, from the existential climate crisis, to the crisis of inequality and the eroding trust in society. We need bold and brave leaders, willing and able to transform their practices by embracing a social purpose and by leading holistically in line with the principles of sustainability, equality and accountability.
The B Team is and always has been focused on global challenges.
In terms of the U.S., we certainly have seen impact from our leaders operating in the country and beyond. We’ve had a strong group in the U.S. from Marc Benioff to Arianna Huffington to David Crane. New leaders who have joined us in recent months include Hamdi Ulukaya, founder and CEO of Chobani, who has been relentless in his support for immigrants, migrants and refugees, a group that currently makes up 30% of his employees. Emmanuel Faber, CEO of Danone, is another remarkable B Team leader who recently turned their U.S. operation into a B corporation, measuring performance against planet, people and profit objectives. And, of course, Indra Nooyi, former CEO of PepsiCo, whose leadership demonstrated how leading with values catalyzes value. We also have substantial partnerships with U.S.-focused organizations leading the way on the most pressing issues of our time.
The B Team was co-founded by Sir Richard Branson and Jochen Zeitz, and includes
Leaders Oliver Bäte, Marc Benioff, Sharan Burrow, Kathy Calvin, Bob Collymore, David Crane, Christiana Figueres, Mats Granryd, Arianna Huffington, Dr. Gro Harlem Brundtland, Dr. Mo Ibrahim, Yolanda Kakabadse, Isabelle Kocher, Guilherme Leal, Andrew Liveris, Dr. Ngozi Okonjo-Iweala, François-Henri Pinault, Paul Polman, Mary Robinson, Ratan Tata, Hamdi Ulukaya, Zhang Yue and Professor Muhammad Yunus.
What drove The B Team’s co founders — Virgin’s Richard Branson and former Puma CEO Jochen Zeitz — to form the nonprofit?
The B Team was founded in the belief that the private sector can, and must, redefine both its responsibilities and its own terms of success. Richard and Jochen, along with a group of business and civil society leaders, collectively agreed that
“business as usual” was no longer an option and together they set out to catalyse a movement where business would become a driving force for social, environmental and economic benefit. B Team Leaders have since encouraged each other as well as others to embrace courage and do what is right, not just for profit but also for people and the planet.
How did you get involved?
To me, everything I have done in my career comes together in The B Team. Coming
from Iceland, a country that leads the world when it comes to gender balance and punches well above its weight when it comes to sustainable solutions, I studied in the U.S. and started my leadership career in corporate America. There I became passionate about the power of principled leadership, but also faced the downside of corporate cultures where short-termism has taken hold.
I returned to Iceland after a decade in the U.S. and after being on the founding team of a new university, I was asked to become the first female CEO of the Iceland Chamber of Commerce. I surprised many when I later decided to leave that high-profile position to make an honest attempt at working from a better set of principles
as an entrepreneur myself. I co-founded an investment firm that ended up being one of the few that survived the infamous financial meltdown in Iceland.
Surviving Iceland’s meltdown made me even more fierce about using my voice and values to make a difference in this world. At this turning point for both my career and for the world, I was looking for examples of the principled, courageous leadership I felt that moment called for. Seeing leaders like Paul Polman and Indra Nooyi modeling a better way of doing business for both the planet and its people, inspired me to boldly continue my own quest to empower and inspire authentic, gender-balanced and principled leadership. On a mission to make a meaningful difference, I ran for president of Iceland a couple of years ago. Fortunately, I came in second, as I frankly can’t imagine a more important quest than the one The B Team is on.
Why do you think we need an organization like The B Team?
We are running out of time on climate (change) and we are in the midst of the biggest humanitarian crisis since 1945. The global economic model is broken and so is the social contract. Natural capital destruction is now set on an irreversible path. And the ever-widening inequality gap is marginalizing people in all parts of the world who no longer trust the world’s leaders to do what is right.
Amidst this complicated landscape, many business leaders are still pursuing the incentives of short-term financial profit over long-term, sustainable benefit. That mindset is however no longer the view of the talent CEOs must attract, nor of their customers and other stakeholders.
To spark the action needed to shift this perspective, leaders need courage and community. That’s what “The B Team Leaders” are for each other — a community that supports each other in becoming more courageous in tackling these challenges and to find ways to release the incredible potential that resides in empowering all of humanity. (The B Team Leaders — including 28 business and civil society leaders, 9 of which are on the organization’s board — set strategy and lead working group initiatives.)
They aim to model a better way of leading and advocate for the system change necessary to create the world that society both wants and needs. Through collective action, we can embed more courage in the C-suite and the boardroom at the scale and speed needed to solve these challenges in our lifetime.
What role do you think corporate boards can play when it comes to bolstering environmental, social and governance (ESG) issues? Are you working directly with boards?
Corporate boards have been slow to embrace the transformative leadership these
times call for. The most recent NACD Public Company Governance Survey shows that only 24% of director respondents considered it important or very important that their board improved oversight of ESG matters in 2018.
This is in sharp contrast to what the workforce, customers and increasingly shareholders now expect from their leadership — greater accountability. Boards must embrace a longer-term view and broader criteria for success that will ultimately benefit all stakeholders. We are actively working with CEOs and board directors to discuss what kind of leadership and principles we now must embrace if business and society is to thrive. For most leaders, this is a journey and it is important to create “bold spaces” where they can be candid about the challenges they face as well as help each other see what is possible. I no longer meet many CEOs or board directors opposed to this, but many seem to suffer from what we call the crisis of conformity. They are unable to find the courage to act against the sameness that brought us to this critical time in history and unwilling to take the risk required to start doing what’s right across the board.
I am incredibly proud of the personal and professional courage The B Team Leaders
have shown to go beyond single-issue leadership. Take for example Marc Benioff, co-CEO of Salesforce. He is a strong climate leader who designs all his buildings to be carbon neutral, but he also actively engages in issues around LGBTQIA rights and equal pay. Marc also considers trust to be Salesforce’s most important asset and recently created a new role in his organization to focus on the ethical and humane use of technology. That’s true holistic leadership. There’s no denying that such leadership is producing outstanding results when it comes to growth, talent attraction and the bottom line.
What are the three most pressing issues The B Team is focused on?
The B Team is focused on issues that cross our B principles of sustainability, equality and accountability. We know there is no future beyond planetary boundaries, no equality without justice and respect for human rights and no trust without transparency and responsible leadership. Holistic leadership across all three B Principles simultaneously can ensure a just transition and a new social contract that serves all of humanity.
We are working on forward-looking principles to advance equality and human dignity in a changing world of work. We are driving net-zero emissions by 2050 so that we may deliver upon the greater ambition the Paris Agreement calls for from the world. And in doing so, we’re making sure that this necessary transition is just. We are fighting corruption and advocating or responsible tax behavior, protection of civic rights and transparent ownership of companies. Working together, The B Team Leaders are aiming to spark private sector commitment to carry out a new vision for the future of work, one that empowers workers and communities, across their regions and the world.
Many directors believe their main fiduciary responsibility is to shareholders, and not to society at large. And boards can be held responsible if a company’s bottom line suffers because of actions they’ve taken. How would you suggest boards move to bolster ESG issues given this reality?
Really courageous boards could take a look at what Danone just did, and become a B corp. But all companies should start by measuring and reporting across ESG issues.
Larry Fink, the CEO of Blackrock, challenged us all a year ago in stating that this will become the norm within a few years, so boards should get started and aim to be considered leaders on this front. Even if you don’t embrace the moral case, you should understand both the risk involved as well as the opportunity. There is great material risk in ignoring climate, no matter what business you are in. Something like 30% of assets are no longer insurable because of climate change, and all organizations directly or indirectly are dealing with extreme weather and erosion of our natural environment, to name just a few.
Ignoring social impacts is also short-sighted and also carries both material risk and opportunity. Around 900 executives have lost their jobs due to #MeToo — boards cannot ignore the fact that they are ultimately accountable and companies won’t be able to attract and retain talent without embracing inclusive values. Boards could take a look at what Just Capital is doing in understanding the values held by U.S. citizens and mapping them against corporate performance. Increasing demands for transparency, algorithms and big data already allow talent, customers and investors to choose companies based on their ESG performance. This is a movement that will accelerate very fast and ignoring it is not smart business. It also means that with such information being readily accessible, corporate reputation matters more than ever before.
It is time for the private sector to recognize and manage around the most critical asset a company can own, and that is its trust and reputation. Corporate accountability goes beyond an operating boundary and the lines of responsibility far extend beyond what many boards expect. The best boards will put their employees to work on finding solutions to guide companies through this transformative time and do less harm along the way.
The B Team was founded in 2013, and some critics have derided the group for not making any real headway since then. What would you say to those critics? What strides has the organization made thus far?
There’s no denying the enormity of the challenges we all face and that these transformations take time.
The B Team is honest in recognizing the fact that even the most courageous leaders around don’t have all the answers. What is crucial, though, is that we learn and grow from our actions, own up to our missteps and stay focused on our long-term goals. Of course, we can’t do that alone. We need to partner with other business leaders, civil society pioneers, policymakers, activists, communities and more.
Since our founding, we’ve kept this collective effort at the heart of our work. Whether it’s working on the ground with policymakers and civil society leaders to ensure an ambitious Paris Agreement at COP21 or bringing tax professionals, investors and civil society leaders to the same table to develop and agree to a set of responsible tax principles, we’ve been able to cultivate a community that both supports each other and challenges each other to do better. This approach informs everything our Leaders do from championing efforts to end workplace violence and harassment to helping make open company ownership a new global norm together.
While we can acknowledge these accomplishments, we know there’s much more to be done. At this defining moment, we’re continuing to help catalyze the leadership and action it calls for — we hope at a critical mass.