Offering his own Good Counsel, Freshfield’s David Rouch extends arguments made in The Social Licence for Financial Markets.1“At one level, a firm’s success is defined by its goals — what outcomes the firm values,” Rouch writes. But such success can be achieved only within a wider reality. “Those who pursue goals that ignore social and natural reality eventually fail,” Rouch contends. Changes in workplace expectations, investor priorities, and regulatory demands form part of the social and natural reality within which firms must operate. This raises a thorny management challenge: “what is the balance between financial goals and goals related to the wellbeing of others?” Rouch asks. [Read the article here]
Banks and other financial firms need to engage with both sorts of goals, and their associated motivations, in their work on culture and risk governance. Demonstrating genuine and consistent care for ‘people and planet’ has become essential to recruiting and retaining staff, Rouch advises, a majority of whom appear to share such values. This must inform a firm’s work on culture, purpose, sustainability. Some may attempt to give lip-service to these values and goals, while sustaining cultures of short-termism and self-dealing, and while operating with scant regard to stakeholder interests. These firms risk losing their “social licence” to exist, Rouch warns.
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