Interconnected: The relationships explored

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Engaging with government

How governments choose to use their power and invest their money has a huge impact on society. Their policies, on everything from education to infrastructure, health to employment, dictate whether a society thrives in a thriving environment. 

Governments set policy, regulation, taxes, incentives and tender contracts to achieve their objectives. Decisions made here have a direct impact on business and society.  For business, it’s about a two way dialogue, with government looking to sustain a thriving society and achieve economic growth, and business wanting to stay in business and maintain competitiveness.

Achieving common goals 

Events including the launch of the Sustainable Development Goals and the Paris Agreement on climate change have brought governments together in a new way, moving local actions to a global stage. Together these cover 17 major world issues driving an agenda centred on dignity for all and leaving no one behind. Facing world challenges in a coordinated and unified way, could move the needle on these issues which include poverty, decent work, climate change, clean water, access to energy and much more.

Government will look to business and society to help them achieve Global Goals, not by donating funds to useful projects (although this no doubt would be welcome), but by reviewing their activities and behaviours to identify and manage where they make a positive contribution towards the government agenda and society, and where they don’t. 

Future impact

In future, it may not be enough for business to reduce its negative impact, this new government agenda may drive an alternative approach in which achieving an impact that’s net positive becomes the new norm.

What CEOs say

Business recognise that government is a key stakeholder and has a major influence on their operations and activities:

In the 19th Annual Global CEO Survey, 69% of CEOs say government has a high or very high impact on their business strategy and 79% of CEOs are concerned about over regulation being a threat to business growth. In our SDG engagement research, Make it your business: Engaging with the Sustainable Development Goals, 71% of business leaders say they are already planning how they will engage with the SDGs.

Thriving society in a thriving environment

People have expectations about the society they want to live in. Peace, safety, food, access to energy, education, fair treatment, work, access to goods and trade are all quite basic requirements. Achieving them helps to create a thriving society.

These expectations go hand in hand with the environment. People want to breathe clean air and have access to clean water, they want land for their crops to grow and to support their animals. When land use changes, air is polluted, water is scarce, or land is contaminated, it is society that suffers.

People look to government to provide the right conditions to protect society and the environment and enable it to thrive.  They hope / expect business to treat them fairly too.

But it’s not all one way. Society provides the votes, the employees and customers. The environment provides the land, the resources, the water and the air. CEOs are aware of their business dependencies – without customers, there is no business; with non-compliance comes fines and closure; without workers revenue declines. 

What CEOs say:

Results from the 19th Annual Global CEO Survey, reveal how CEOs feel about these issues:

Society has an influence on business strategy. 90% of CEOs say their customers and clients have a high or very high impact on their organisation’s strategy; and 51% of CEOs point to employees as a big influence. 84% saying they are expected to address wider stakeholder needs.

Society will shape its business in a new way and they’ll need to adapt.  27% of CEOs say that currently their customers seek relationships with organisations that address wider stakeholder needs, but this rises to 44% over the next five years. 

And what about the environment? 80% of CEOs say they are making changes to minimise social change and environmental damage.

Business a positive force

Business doesn’t operate in isolation. Business shares infrastructure, land, resources, people, energy, water etc with society and other businesses alike - the connectivity and interdependencies are important and so need to be managed well.

Business operates in an ever changing environment and must keep pace – it’s no longer just about profit or about shareholders, but meeting the needs of a wider groups of stakeholders too. Keeping in step with the expectations of government and society is a must. 

It means there is more pressure on CEOs as business models change to embrace not only a wider set of stakeholders, but alternative approaches to doing business eg. the rise of the Circular Economy and the Shared Economy, Inclusive Business and Impact Measurement.  There is much more to consider than traditional financial metrics, inputs and outputs.

What CEOs say:

Results from the 19th Annual Global CEO Survey, reveal how CEOs feel about these issues:

  • 76% of CEOs say business success is about more than just financial profit.

  • 82% of CEOs say they prioritise long term profitability over short term gains.

  • 84% of CEOs said that they are expected to address wider stakeholder needs.

  • 72% of CEOs they report on non-financial matters as well as financial.

 

CEOs are widening their perspective and outlook – they recognise they are operating on a wider stage where their actions are visible and they’re accountable for their own behaviour and that of their company.

Contact us

Louise Scott

Director, Global Sustainability, PwC United Kingdom

Tel: +44 (0)7734 958 942

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