Survival Vs Sales

Survival Vs Sales

It is easy to draw cartoons of irate shareholders being congratulated for their ESG record while dividends decline. But it is going to happen – is happening already – and shareholders had better do more than laugh about it. They must appreciate that it is part of the price the human race is going to pay for survival. Not fair to make the thrifty pay for their prudence? Not fair for pensioners and others dependent on their dividends? Of course it’s not fair. Nor is the restriction on the small farmer who cannot burn out part of the forest to make his own survival plot.

It is not fair that those who have invested in supermarkets should suddenly find a decline in profitable lines and an overall reduction in consumption. Of course it’s not fair. Nor is the increased energy used by home deliveries. Five visits a week between suppliers and your home is a lot more energy than one visit a week by you to the supermarket. Fair is not the issue, Survival is.

The Financial Times rather simplified business game of allocating resources between achieving profit targets, saving the planet and long-term developments is well worth playing if you have a couple of minutes. Mind you, deciding the disposition of resources for the future of Unilever won’t be as easy as that. However, for all its lack of sophistication I shall use something like it to make very preliminary assessments of individuals’ ability to juggle the demands on their business resources to achieve results that will avoid the shareholders burning them at the stake.

What’s the solution to the insoluble problems for short-term and long-term priorities? Very contradictory, I would say. Consistency of purpose played a big part in my allocation of resources when building Cerebos Pacific Ltd. But so, of course, did adaptability. A clear Tree on the other side of the Field has been my mantra since I was thirteen years old but I have to admit that there was a period in my pre-Singapore years when I let such single-mindedness get in the way of opportunism. Anyone who tells you there is a formula is a charlatan.

This is especially true as the tools at our disposal develop and offer solutions we never dreamt of. Someone with a praiseworthy record of business school achievement asked me recently how much I thought he would have to change his model educational achievements to cope with today’s demands on business. I said ‘most of it’. Deeply held principles of trade and commerce are brought into question when the price of sustaining them may be the death of many millions.

The act of balancing a relatively simple profit objective with much more complex demands is political. Business people are at least as capable of sensible political judgment as professional politicians. Moreover business managers control resources politicians in countries with sizeable welfare commitments simply no longer have at their disposal. And investors are modifying their profit demands and looking for companies that regard survival as, if not vital, at least relatively important. That is a movement that will grow, albeit erratically.

If there is a note of cynicism in my last statement it is contra to my wish to be simply honest. Alas, our  education systems worldwide have been so growth focused that a balance between survival and increased wealth sometimes seems impossible. Now the voices of the young are being heard as well as those of the literate old. Their clamour for common sense may make an impact. Truly, it might be short-lived.  A technological solution to the forces of nature may also be possible. It is increasingly unlikely to be available before the planet heats up to the point of self-destruction.

If Planet Earth, the only known inhabited molecule in the Universe, is to be saved, it will be the creators of wealth, not the spenders of wealth, who do it. Wealth creators have the opportunity to direct priorities. Their normally hard-nosed business approach is what is needed for the discipline required to make and implement painful decisions. We may not always like these people but we sure as hell need them now.

Contrary to the example set by many western politicians at present, the job of someone voted to run a country is not to ask what his voters want but to lead, to set out the reasons why he is going in a certain direction and what are the benefits for the voters who have put him in power. Whether his electors agree with his choice will be demonstrated at the next election, not at the next referendum. Business people have to be elected, too, at the Annual General Meeting. Investors are already demonstrating their power in this regard.

In today’s world business people can, if they want to, lead better than most politicians.

If the planet is to survive, they’d better start doing so.