Nearly two and a half years ago in Feb 2020, I wrote about the former Federal Treasurer dismissing the notion of a national wellbeing budget in this piece on why ‘Wellbeing Makes Economic Sense’.
Fast forward to today, and a National Wellbeing Budget is back and will be implemented by the new Labor Government and Federal Treasurer Jim Chalmers (who was the shadow Treasurer when it was proposed). See more in this article in the Sydney Morning Herald last week, titled 'Treasurer to measure ‘wellbeing’ pay-off from economy in first budget'.
This highlights both the pace it takes to influence progress, as well as, more optimistically, the fact that this discussion is not going anywhere and only continues to grow in focus through the pandemic, growing climate concerns, cost of living pressures and inequality – to name a few.
Why does this matter to the business leaders of today?
The business sector has been taking the lead with respect to considering their impact on wellbeing and ESG factors (Environmental, Social and Governance). For example at Be Well Co, we are seeing more and more demand in measuring organisational and employee wellbeing in recognition that a company has both a duty of care to its people as well as a business imperative, given the proven links between wellbeing, talent attraction and retention, productivity and innovation.
But many Board rooms are still lagging behind, just like many governments still don’t look beyond GDP to measure progress and effective use of public resources.
Why is it the case that businesses are still held accountable mainly to the core anchor of financial performance?
A little trip back in time to 1962 when Friedman famously said in his book Capitalism and Freedom, ‘There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.’
Since the dawn of capitalism, we have operated businesses largely to this theory – to maximise profits and shareholder value. I am not disputing that the world has gained a great deal from past periods of economic growth. But it is no surprise that there have also been many adverse effects of this obsession with growth; to the point that investors, consumers and stakeholders are demanding change and a broader focus than this single paradigm.
I began my career as a Chartered Accountant and financial auditor. Some people ask how I made the move into ‘wellbeing’ and how the two relate when it comes to reporting on business performance. For well over a century the world has relied on the accounting profession for assurance on financial measures so that critical decisions on the flow of capital and use of scarce resources can be made. What was inspiring to me in my early career, was a broadening of this focus to include reporting on a business’ impact on people and the planet.
Originally coined Triple Bottom Line Reporting in 1994 by John Elkington, many companies expanded their annual statements beyond financial measures. Since then a number of global initiatives have taken off, such as; IFRS International Sustainability Standards Board, the Global Reporting Initiative (GRI) and the Dow Jones Sustainability Indices, to name a few. A growing number of companies are also aligning to the UN Sustainable Development Goals as well as becoming B Corporation certified.
The key message to leaders is not to bury your head in the sand. This is not a 'fad'. In the not too distant future it will be a must for all Board rooms and CEO’s to provide transparency on what their organisation is doing to sustainably and positively impact social, environmental and governance structures, as well as performance. Those who are not taking active steps now to consider these factors will no doubt lag behind as there is growing data to support the growing expectations of customers and shareholders.
From a measurement perspective, I have seen the natural evolution from financial accounting into wellbeing and impact reporting. I wish to see the same rigour applied to the latter as we have for the former (just think how many accounting standards there are for a reason!) We need to avoid ‘Impact and Wellbeing Washing’ where non-scientific and meaningless metrics are applied. After all, our key decisions about the future of this world rely on it!
Join our upcoming webinar to learn how your organisation can reliably measure employee wellbeing | Well Measured: Not all wellbeing measures are created equal.
3 Aug | 2 - 3PM ACST