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The State and Direction of Inclusive Capitalism
Table of contents
Executive summary 4
Introduction: The role of business in creating an inclusive economy 6
Influence strategies: The influence strategy landscape 11
Targeting of companies 16
Factors of success to date 18
Gauging measures of effectiveness 22
Primary goals in the future 24
Opportunities for cooperation 26
Ten years hence 28
Appendix 1 32
Appendix 2 34
Contacts Saïd Business School Deloitte Consulting, LLP
Professor Peter Tufano Tony Siesfeld, Ph.D.
For further information about Peter Moores Dean Director
this report, please contact: Saïd Business School Monitor Institute, a part of
University of Oxford Deloitte Consulting, LLP
Park End Street 200 Berkeley Street
Oxford OX1 1HP Boston, MA 02116
UK USA
peter.tufano@sbs.ox.ac.uk tsiesfeld@deloitte.com
2 THE STATE AND DIRECTION OF INCLUSIVE CAPITALISMOrganisations included in the study Contributors (alphabetical)
1. Academy of Business in Society (ABIS) Richard Barker (Saïd Business School, University of Oxford)
2. American Sustainable Business Council (ASBC)
Mary Johnstone-Louis (Saïd Business
3. Aspen Institute: Business and Society Program (Aspen)
School, University of Oxford)
4. B Lab
5. B Team Colin Mayer (Saïd Business School, University of Oxford)
6. Big Innovation Centre: Purposeful Company Project (PCP) Pradeep Prabhala (Social Impact
7. Blueprint for Better Business (BBB) practice, Deloitte Consulting)
8. Business and Human Rights Resource Centre (BHRRC)
9. Business for Social Responsibility (BSR) Noah Rimland Flower (Social Impact
practice, Deloitte Consulting)
10. Business in the Community (BIC)
11. Caux Round Table (Caux) Theodore Roosevelt Malloch (Saïd Business
12. Center on Business and Human Rights: New York School, University of Oxford)
University, Stern Business School (NYU Stern CBHR)
Tony Siesfeld (Social Impact practice, Deloitte Consulting)
13. Center for Sustainable Business: New York University,
Stern Business School (NYU Stern CSB) Peter Tufano (Saïd Business School, University of Oxford)
14. Circular Economy (CE)
15. Coalition for Inclusive Capitalism (CIC)
16. Committee for Economic Development (CED) Description of research methodology
17. Committee Encouraging Corporate Philanthropy (CECP) The authors of this study are a team of researchers
18. Conscious Capitalism (CC) from Saïd Business School, University of Oxford, and
19. Dejusticia the Social Impact practice of Deloitte Consulting, who
20. Demos were supported by a grant from the Ford Foundation to
21. European Fund for Management Development (EFMD) conduct research on forty non-governmental organisations
22. Focusing Capital on the Long Term (FCLT) active in the space around inclusive economies.
23. Forum for Sustainable and Responsible Investment (US SIF)
The project was conducted in two phases. Phase
24. Global Impact Investing Network (GIIN) One consisted of desktop research drawing on public
25. Global Reporting Initiative (GRI) information from a variety of sources, including
26. Globally Responsible Leadership Initiative (GLRI) organisational websites, Factiva, and Guidestar. We
27. Humanistic Management Network (HMN) fashioned a template profile for each organisation,
28. Institute for Human Rights and Business (IHRB) including its vision and mission, core activities,
29. International Corporate Accountability Roundtable (ICAR) leadership, funding, and influence strategies.
30. IO Sustainability (IO)
In Phase Two, we developed a nine-section questionnaire
31. JUST Capital
that permitted the research team to personally interview
32. Main Street Alliance (MSA) the head of each organisation. The template profile was
33. Martin Prosperity Institute (MPI) also sent to each organisation to be checked for veracity.
34. Oxfam Great Britain: Economic
Justice Programme (Oxfam) Working from the desktop research and interview
35. Small Business Majority (SBM) transcripts, the research team synthesised and
36. Sustainability Accounting Standards Board (SASB) analysed all the material and compiled this report.
37. Tomorrow’s Company (TC)
38. United Nations Development Programme: Growing
Inclusive Markets Initiative (UNDP GIMI)
39. World Business Council for Sustainable
Development (WBCSD)
40. Yunus Social Business (Yunus)
41. Zermatt Summit for Humanizing Globalization (Zermatt)
Acknowledgements
We extend our thanks to the 40+ founders, Thanks are also due to the research teams
CEOs, and heads of organisations we at Deloitte, Shreye Saxena in particular,
interviewed in the course of this study. for their essential contributions to the
Your insights, willingness to reflect, and project. We thank Neeraj Dhanothia for
input are crucial to our research. We also his work on graphs and charts. Views
thank the personal and support staff who expressed in this report are those of the
made our interviews possible, even in authors, except when otherwise noted.
the face of significant diary constraints.
WWW.SBS.OXFORD.EDU 3Executive summary
Inevitably broad, and open to a wide range We also learned that no single definition
of definitions, the term ‘inclusive economies’ of inclusive economies prevails among the
nevertheless serves as a powerful sensitising organisations researched. We identified
concept to ‘high road business.’ This study is five dimensions of inclusion that resonate
the result of months of research and individual with organisations in this study: economic
interviews with heads of non-governmental inclusion, human development, social inclusion,
organisations seeking to promote more environmental sustainability, and political
inclusive economies. Through a variety of inclusion. In interviews, organisation heads
strategies, the organisations included in this expressed general agreement that the term
research seek to influence business leaders includes the first two dimensions, economic
as well as asset owners, asset managers, inclusion and human development, particularly
and consumers to do business that does in addressing the core challenges of poverty,
right by society. This report sets out the inequality, and quality of life. Emphasis on the
world from these organisations’ point of latter three dimensions was more dispersed.
view, their diagnosis of what the role of
The effectiveness of these organisations
business should be in society, of what stands
to date has centred on influencing others –
in the way of business playing that role, and
from education and boardroom agendas to
what is necessary to achieve change.
global scenarios, legislation, standards, and
From this research, we learn that the benchmarking. Organisations working in
organisations in this study (“the organisations”) this field frequently target senior leaders of
typically seek to influence business behaviour global publicly traded firms, without regard to
by shaping the ideas of thought leaders, industry. Several organisations target particular
educators, and senior executives. We issues but not generally with a sector focus.
identify a landscape of eight key influence
These organisations’ future goals often
strategies pursued by the organisations we
emphasise extending their global reach
researched. We designate the three most
(current activity is focused on the United
prominent influence strategies as “core”:
States and Western Europe) and achieving
convening/networking leaders, research/
financial sustainability for their efforts. The
thought leadership, movement building/
organisations also intend to influence business
community organizing. In addition, we identify
education, cultivate leaders, and generally
five “supporting” influence strategies: acting
aim to set the conditions for long-term
as an incubator for the development and
capitalism. Many interviewees expressed
dissemination of new standards/organisational
that demonstrating that ‘inclusive capitalism’
forms, providing advisory services, working via
works is one of their main objectives.
business education, via public engagement,
or through policy/advocacy. Few of the Cooperation among the organisations in the
organisations sampled emphasise changing study was not a natural state of affairs. Yet,
external incentive structures through there does appear to be potential for developing
regulation; most take an inside angle by greater alignment at the level of systemic goals.
pursuing change within companies. In spite of competition for funding and influence
among these organisations, they share a great
4 THE STATE AND DIRECTION OF INCLUSIVE CAPITALISMdegree of mutual respect and admiration, and
largely appear to be pursuing complementary
work. Opportunities for building relationships,
sharing information, and developing common
language exist. That work could potentially
build the capacity of these organisations
and others in the field while simultaneously
making a strong case for the overarching
goals that their work is helping to drive.
Organisations expect to see significant Figure 1: Influence strategy landscape
progress within the next decade towards
aligning public and regulatory demands with
inclusive economic aims. They anticipate they
will be operating in a context that is friendly to –
or might even demand – work towards inclusive Network/Convene leaders
economies. The organisations point to the
role of data, new tools, and norms in shaping
the strategic context in which they operate. Research/
Several note with concern the ‘overly dominant’ Thought leadership
role of capital markets in the economy in
recent years. These organisations hope that
‘mainstreaming’ will see the metrics and tools Movement building/
for evaluation of business performance on Community organising
issues of inclusivity become both standard and
routine as paradigms centred on philanthropy Policy/Advocacy
and corporate social responsibility (CSR) give
way to inclusive economic approaches tied to
Incubate new standards/
core business activities and performance. Organisational forms
Business education
Public engagement
Advisory services
WWW.SBS.OXFORD.EDU 5Introduction:
The role of business in creating
an inclusive economy
What is the role of business in creating an inclusive economy?
The role that business plays in society, and the expectations about the
role it should play, has shifted dramatically in recent years. Called to
a higher purpose, or sensing that externalities can only be ignored at
their peril, many businesses are increasingly open to the notion that
they have a responsibility for creating a more inclusive economy.1
Means to achieve a higher purpose the effect of such actions could be.12
Organisations with missions to incite Figure 2 lays out a basic range of the
businesses to act in a more inclusive, just, purposes of business. The first three purposes
fair, sustainable, conscious, pro-social, or relate to ‘basic’ duties owed to ‘voluntary’
responsible fashion have proliferated. The participants in the enterprise: customers/
variety of these adjectives demonstrates the clients, workers, and capital providers. 3
range of behaviours that such organisations
seek to promote. They also embrace a range While the first purpose, delivering excellent
goods and services to customers or
clients, is ostensibly the reason for the
existence of business – and the historic way
‘Shareholders are one part of the economy that businesses described why they exist
only; stakeholders are the economy.’ 2 – it is sometimes forgotten in discussions
of the ‘higher purpose’ of business. Yet
of influence strategies, reflecting different organisations that do not deliver excellent
diagnoses about the factors that lead firms goods and services (relative to the prices they
and their leaders to adopt ‘high road’ business charge) cannot succeed in the long run, at
practices. The Ford Foundation has its own least in the absence of market distortions.
definition of an inclusive economy: one For certain types of organisations – mutually
where opportunities abound, standards
of living increase for all, and prosperity
is widely shared. In this research, it was 1 Summary statements at the opening of each section
not atypical for interviewees’ descriptions are the conclusions of the authors of this report.
of inclusive economies to mix actions 2 In this Report, pull-out quotes are
and outcomes, i.e., the ways in which from research interviewees.
business should act and the vision of what 3 Firms also have contractual relationships with
suppliers of goods and other counterparties. These tend
to be defined by a set of contracts, upheld by norms and
the legal system. We do not discuss those in this report.
6 THE STATE AND DIRECTION OF INCLUSIVE CAPITALISMowned firms and cooperatives, as well as Figure 2: A range of ‘purposes’ of business
some privately held enterprises – the second
purpose, relating to the duties to workers,
is as important as the first. Some of the Deliver Provide Deliver
organisations in our study have explicit aims excellent livelihoods returns to
to encourage businesses to devote more goods and and meaning providers
services to employees of capital
resources and attention to supporting this
purpose, specifically seeking to change
business behaviour regarding pay levels,
working conditions, equality of opportunity in
Do no harm: Do good:
the workplace, human rights, and workplace Impose no Produce
health and safety issues. Employee-centric negative positive
purpose has become a concern for increasing externalities externalities
numbers of firms. In our research, for example,
JUST Capital has a broad mandate, but seeks
to make companies aware of the extent
to which current public opinion demands
changes to the workplace. Similarly, the hazard or conflicts of interest, the purposes of
MPI has conducted compelling research delivering excellent products or an excellent
on how improved employee conditions workplace can collide with shareholder
are linked to stronger financial returns. interests. Furthermore, if today’s share prices
do not reflect long-term value, then these
interests can further diverge. Concern about
‘short-termism’ and the impact of quarterly
‘Companies need to look at what’s
reporting was repeatedly cited by organisations
in the long-term interest of the firm, as a barrier to the pursuit of inclusive capitalist
community, and society. It’s only over a ends. Most of the organisations in our
longer timeframe that it becomes clear research exist in part due to their belief in
that there’s convergence of those interests.’ these shortcomings of the naïve shareholder
capitalism model. Some explicitly seek to
maintain a focus on value, but reframe it as
long-term value, such as is the case with FCLT.
The ‘shareholder or ownership capitalism’
model implicitly assumes that proper The three ‘basic’ purposes of business
management of the first two activities lead outlined in Figure 2 reflect duties owed to
to greater ‘enterprise or firm value’ which voluntary parties to the enterprise: customers
will naturally be reflected in share prices (for ostensibly choose to purchase goods, workers
publicly traded firms.)4 However, there is a lively to work, and financiers to provide credit and
debate about whether advancing the interests capital. Standard theory suggests that failure
of customers, employees, and creditors will to deliver on the promises made to these
naturally increase the share price or value parties would lead to free exit – customers
of the enterprise or firm. In cases of moral no longer purchasing goods, employees
and contractors moving to other jobs, or
capital providers pulling out their funds.
4 This ignores the roles of lenders or creditors. These Free exit is viable if there is competition in
providers of financing demand returns as well. Overly
product markets, labour markets, and capital
simplistic models assume that these are simply fixed so
increases in enterprise value automatically lead to higher markets to ensure that these promises are
shareholder value. Very real conflicts of interest between kept. This competition works if customers,
creditors and shareholders arise, especially when managers
who control the activities of the firm represent the latter.
WWW.SBS.OXFORD.EDU 7workers, and investors possess both the to engage with the firm – limiting noise or
knowledge and ability to exit – to purchase environmental pollution, which can affect not
other goods, to move jobs, or to pull out only contemporaries but also future generations.
their investments. Information, agency,
Affirmative duties to society include a variety
competition, and free exit go hand in hand.
of avenues for corporate action. These
Various institutional mechanisms, public and
duties do not typically involve promises
private, exist to provide consumers, employees,
to existing customers, employees, and
and investors with information to determine
whether to exit and to enhance competition.
Put another way, these mechanisms
address ‘failures’ in the product, labour, ‘Business is about human purposes…
and capital markets. These include: Every attitude which tries to suggest that
• Mechanisms to inform stakeholders about business is somehow separate from the
existing activities with the firm: examples human activity in the whole of society
include Consumer Reports/Which and is perverse... And it’s perverse because
more generally the consumer media actually it leads to bad financial outcomes.
(consumers), Glassdoor (workers), or the Let alone it’s perverse because it leads to
investment advisory and management
bad social outcomes.’
industry as well as the financial press
(investors). Governments often mandate
publication of certain types of information
investors. These can include devising new
in the form of disclosure regulations.
business practices to address chronic issues
• Mechanisms to help stakeholders negotiate (such as climate change), taking actions to
terms with the firm: examples include encourage suppliers and society to address
labour unions, employment lawyers, gender wage gaps or sex trafficking and
investment managers, brokers, and advisers. forced labour, supporting education and job
training for non-employees, or philanthropically
• Mechanisms to enhance competition and supporting direct service organisations.
exit, such as anti-trust/competition laws,
or ease of switching rules in banking. How are firms encouraged to adopt ‘higher
purposes’? There are many actors in the
The last two purposes in Figure 2 are inherently economic, social, and political systems that
‘high road’. ‘Higher purpose’ relates to duties surround business who have the potential to
not only to parties that directly interact with exert positive influence. (See Figure 2 for a
firms, but also to society at large. In broad map of the actors and their relationship to
terms, these duties reflect negative prohibitions one another.) Governments can discipline
(do no harm) and affirmative duties (do good). firms with respect to negative prohibitions
Negative prohibitions subject business to through laws and regulations, such as child
certain ‘rules of the game’ including laws labour or pollution laws. If government
against criminal behaviour, laws against were the only actor to nudge firms to higher
exploitation of children, laws against false purpose, then simply following the law would
statements or advertising, and laws against suffice to get firms to act in the appropriate
impure food or drug products. Some negative manner. However, laws and regulation vary
prohibitions are framed by self-regulating by jurisdiction and business influences them
organisations such as industry associations or through lobbying. As a result, many of the
codes of conduct. Negative prohibitions can organisations studied judge that laws and
also demand that firms not impose negative regulations tend, for the most part, to define
externalities on parties that have not chosen minimum norms of behaviour, or less. Yet
8 THE STATE AND DIRECTION OF INCLUSIVE CAPITALISMnotably, only a few of the organisations studied basis. Other models of influence target
have strong advocacy and legislative arms. educators (as is the case with the EFMD
or ABIS) or via media (CIC and the GIIN).
To complement governmental action,
markets can nudge firms to act differently. Other organisations focus their attention
The primary ‘markets’ discipline firms with directly at corporate managers and boards,
respect to product, labour, and capital market seeking to change behaviour directly through
behaviour. These same markets can be informing business leaders and supporting
leveraged to nudge firms to higher purpose their attempts to seek higher purpose. For
by encouraging consumers, workers, and example, BBB’s closed door sessions with
investors to incorporate these objectives in their CEOs and Chairs seek to inform and nudge
shopping, workplace, and investing decisions. corporate executives and boards directly.
Indeed, many of the organisations interviewed
This indirect influence model is central to many
attempt to directly influence senior business
of the organisations we have studied. While
this research did not include organisations
that primarily exist to mobilise consumers,
CIC seeks to influence asset owners and ‘The role of business is to advance
asset managers to ‘invest in businesses that
human prosperity within the
are doing the right thing’. SASB develops
and disseminates tools designed to increase
boundaries set by nature.’
transparency into business’ impact on social,
environmental, and governance concerns. CC
intentionally frames itself as a ‘movement’
leaders – CEOs of publically listed companies
seeking to raise concerns about the purposes
in particular – to further their aims.
of business with a range of stakeholders.
Through a strategy of ‘iconic influencing’ and In summary, the organisations interviewed
the use of high-profile business leaders, the for this research seek to help business see
B Team aims to create ‘positive peer pressure’ ‘doing good’ as a duty as well as a practical
among CEOs and business decision-makers. possibility. To be effective, such efforts
must be commensurate with success in
This influence strategy uses a firm’s reputation
the eyes of business’s core relationships,
to motivate change. Firms (along with
i.e., with customers (price), employees
individuals and products) have reputations,
(salary or benefits), and investors (return
which are beliefs held by stakeholders
on capital). In some cases, the standards
about the firm acting in a certain way. In this
used by these stakeholders to evaluate
case, organisations attempt to influence the
businesses are changing, placing a greater
actions of consumers, workers, investors,
emphasis on the importance of ‘doing good’.
and governments by having them adopt new
models of ‘good’ behaviour, and then judge In Figure 3, we set out the ‘ecosystem’ of
firms against these higher standards. In some actors with various points of leverage over
cases, organisations target specific actors, the development of more inclusive forms
while in other cases they try to influence of capitalism. Many businesses today face
behaviour broadly through shaping the ideas fundamental challenges to their most basic
of thought-leaders and educators. Written operating models. Organisations emphasised
reports, rankings, large public forums, awards, how often a call for ‘high road’ business may be
and naming/shaming activities influence viewed as superfluous in the face of pressure
the thought-leaders who influence opinion. to emphasise relationships with consumers,
The majority of organisations interviewed employees, or capital in order to survive. While
pursue most of these actions on a regular economic systems are in flux, organisations
WWW.SBS.OXFORD.EDU 9Figure 3: The actors who can create a more inclusive capitalism
The Context Setters
LABOUR UNIONS CIVIL SOCIETY
The Suppliers
CAPITAL
Boards KNOWLEDGE
Asset Owners/ Science/
GOVERNMENT Managers MEDIA
PROCURERS Capital Markets
The Core Research &
Development
Business
INDIVIDUALS
Customers BUSINESS
LEADERSHIP
Contractors
Employees
SUPPLY CHAIN
BUSINESS PROFESSIONAL SERVICES PHILANTHROPY
ASSOCIATIONS Law
Accounting
Consulting
REGULATORS
COMMUNITIES (NATIONAL AND
INTERNATIONAL)
No single actor has the ability to independently The Suppliers: These actors provide three
drive capitalism in a more inclusive direction, key inputs for business – capital, knowledge,
but many actors have significant leverage and professional services. They typically
over relevant economic, social, and political have less latitude to change their practices
systems. We depict those actors here in than the Context Setters, but their direct
three rings, a stylised view of an ecosystem relationship with business leaders gives
rapidly transforming for the 21st Century. them great potential for influence.
The Context Setters: These actors have the The Core: At the heart of inclusive
ability to change the operating context for capitalism is the relationship between
business. Their actions may not directly produce business leaders and individuals, the latter
inclusive business practices, but they can in their roles as customers, contractors,
create pressures towards greater inclusivity. and employees. Changing the tightly-
These actors typically have greater latitude in constrained choices of these three groups
their choices than those in the inner two rings. is the ultimate goal of any work to shift
capitalism in a more inclusive direction.
10 THE STATE AND DIRECTION OF INCLUSIVE CAPITALISMInfluence strategies:
The influence strategy landscape
What are the influence strategies driving the work of these organisations?
‘Inclusive capitalism’ can be understood as a potentially powerful idea
in search of a theory. The organisations interviewed for this research are
compelled by a variety of strategies for achieving systemic influence, but
specificity around mechanisms leading to change is often underdeveloped.
They do not comprise a business-to-consumer movement, but a business-
to-business movement, in which organisations seek to influence business
directly. Many organisations pursue a ‘top-down’ approach to change
through which they seek to influence individual business leaders or networks
of leaders – frequently CEOs of publicly listed firms – in order to catalyse
change in organisations. Definitions of inclusivity abound, and organisations
also turn to a wide range of other terms to describe the aims of their work.
The organisations interviewed for this across the group: convening/networking
research seek to make progress on a variety leaders, research/thought leadership,
of environmental, social, and governance and movement building/community
challenges. Most seek to transform markets organizing (See Figure 4). In addition to
or engage in new approaches to economic these core three, we identified five supporting
activity and corporate behaviour. For many influence strategies with traction among
institutions, ‘inclusive capitalism’ is nested organisations in this space. These include:
among a set of associated vocabularies ranging acting as an incubator for the development
from ‘responsible business’, to ‘equitable and dissemination of new standards or
capitalism’, to ‘inclusive growth’. Despite organisational forms, providing advisory
a broad recognition of the importance of services, and working via policy/advocacy,
inclusive economies, there is surprisingly public engagement, or business education.
little consistency on the term or the scope
of its definition (See Appendix: Definitions of Influence strategies: The core three
inclusive economies). At their core, however, A majority of the organisations researched
most organisations interviewed share a focus embrace an influence strategy that hinges on
on addressing the deficiencies of solely two drivers: convening/networking leaders,
prioritising returns on capital at the expense frequently senior leaders in listed firms, and,
of other stakeholders and concerns. relatedly, research/thought leadership,
In this section, we present the influence typically targeted at these same leaders (as
strategy landscape, a typology of the diversity opposed to, for example, consumers or the
of influence strategies pursued across general public). Organisations often also turn to
organisations in this field. We identify three a third influence strategy, movement building/
core influence strategies that are pursued community organising, as an important
aspect of their work. Most organisations
WWW.SBS.OXFORD.EDU 11Figure 4: The influence strategy landscape
Core influence strategies:
Network/Convene leaders
Research/Thought leadership
Movement building/Community organising
Supporting influence strategies:
Policy/Advocacy
Incubate new standards/Organisational forms
Business education
Public engagement
Advisory services
interviewed articulate some important role through which business leaders are given ‘the
for policy, regulation, and government, but courage to act’. The idea motivating the ‘peer
only a handful seek to directly engage effect’ is that by surfacing and normalising
government policy as a primary means to discourse around inclusivity and responsibility
accomplish their aims. Many organisations among peers, individual leaders feel it is
expressed a desire to engage more effectively appropriate in turn to direct their firms towards
with government, a crucial Context Setter. these ends. In this vein, many organisations
emphasise the ‘power of example’, whether
A strong assumption shaping the
through parlaying the ‘respect and influence’
organisations’ influence strategies appears
of specific, well-known business leaders in
to be that ‘ideas matter’. It is also assumed
society, or via best practice examples to inspire
that leaders will be able to affect change in
other businesses towards practical change.
their organisations as a result of exposure
to powerful ideas and networks. Hence an What can be observed about the core three
emphasis on thought leadership prevails, influence strategies embraced by many of
and the most commonly pursued influence the organisations interviewed? First, they are
strategies among the organisations rely on strategies primarily focused on influencing
some form of influencing senior leaders. As business directly. Among the organisations
the director of one organisation described, researched, influence strategies centred on
‘Inside every Chief Executive there is a consumer pressure, regulatory structures, or
human being trying to climb out… our job... engagement with other civil society groups
is to create circumstances in which they are less common.51Second, the organisations
feel… committed to make a change.’ typically seek to influence business and
society primarily by targeting leaders of
Multiple organisations emphasised the
importance of impacting on ‘individual leaders’
worldview, knowledge, and attitudes’. Many 5 Organisations engaging alternative influence
convene groups of leaders or seek to develop strategies exist outside the sample of those interviewed
for this research. Examples of alternative influence
leaders’ networks in hope of instigating strategies within our research sample include, but are
what one organisation called the ‘peer effect’ not limited to, Oxfam, ICAR, BHRRC, and IHRB.
12 THE STATE AND DIRECTION OF INCLUSIVE CAPITALISMcorporations, often those that are publicly held. processes of manufacturing such as with CE.
There are important exceptions to this In each case, such organisations aim to
tendency to work with publicly held firms, in promote an alternative to ‘business as usual’
which organisations work intentionally with through specific tools. In most cases, such
privately owned or family firms. At least two paradigms currently represent a ‘market within
organisations, CIC and FCLT, embrace an a market’. Though many of these organisations
influence strategy that emphasises asset work with the world’s largest companies,
owners, under the hypothesis that when they offer an alternative mode of operation
investors demand change towards inclusive outside the mainstream of core business. The
economies, firms will respond. In general majority of these would argue that this is a
terms, organisations in this study work through temporary phenomenon and that the tools
‘top-down’ influence strategies characterised they offer can and should become a standard
by an emphasis on convening very senior feature of business practice in the future.
business leaders, who then are intended
to influence their firms and industries. This
approach is both strategic and, crucially for
some organisations, manageable. Where
resources are scarce, some organisations have
‘If you get the rules of the game right,
opted to focus their efforts on key events, such it’ll lead to better outcomes. The holy
as gatherings of CEOs, rather than attempt to trinity is a strong standard that has
spread their influence more thinly elsewhere. industry buy-in that is then captured
in a regulatory mechanism with
Influence strategies: The supporting five civil society support behind it.’
The pursuit of change through influencing key
leaders with powerful ideas, and supporting
these with advocacy whenever possible, is
prevalent. Following this approach are three In order to grow new initiatives and paradigms,
influence strategies that appear with relatively an incubator is often necessary. The incubator
equal frequency among the organisations approach is aligned to organisations that seek
interviewed: incubation and/or dissemination to promote new standards or organisational
of new standards or organisational forms, forms. Yunus, B Lab, and CE, for example,
provision of advisory services, and influence via make important investments in piloting and
business education, public engagement, and scaling initiatives that work in their way of
policy/advocacy. These strategies are typically operating. Such organisations also typically
in support of the first three, but form a primary provide advisory services to business, with
influence strategy for some organisations. the aim of helping to adopt their principles
Organisations active in the development/ and practices. Advisory services are pursued
proliferation of new standards or organisational by some organisations that work through
forms might describe their work as ‘systemic’. a leader engagement/thought leadership
As one organisation summarised, ‘this is model as well, and represent an important
not about trying to teach individuals how to income stream for a subset of organisations.
behave in [an economic] system that doesn’t An influence strategy focused on business and
work, it’s about providing an alternative management education is present among a
system in which to operate’. This can be handful of organisations including ABIS, GRLI,
accomplished through the proliferation of data EFMD, and Aspen. These initiatives emphasise
or standards such as SASB or JUST Capital, the role of education in proliferating norms
through the promotion of new organisational about business behaviour, as well as the tools
forms such as B Lab or Yunus, or via shifts in
WWW.SBS.OXFORD.EDU 13available to managers seeking to promote at least one interviewee expressed interest
practices conducive to inclusive economies. in pursuing work in private equity. Similarly,
several interviewees mentioned the, largely
All organisations interviewed rely on public
untapped, potential to work with boards,
communication and media in order to
suppliers, and employees towards inclusive
disseminate their work. However, public
economic ends. One interviewee emphasised
communication did not represent the core
the important role that business plays in
driving influence strategy for any single
setting social norms, suggesting increased
organisation interviewed. Some, such as
attention to advertising and messaging.
the BHRRC, publicise their findings about
companies with an eye towards the general Finally, one organisation signalled the need
public and other civil society actors, but for increased attention to how business is
this was atypical among the group. Most situated within wider systems of governance.
organisations interviewed have relatively They note that individual companies, however
limited resources available with which to large, in fact often wield relatively limited
engage via social media, mainstream media, influence over the systems in which they
or traditional PR vehicles. This combined with operate. Instead of identifying ‘good companies’
their focus on business rather than, for example, and ‘laggards’, this organisation therefore
consumers, means public communication advocated analysis of how companies operate
typically formed an ancillary rather than within systems, including in light of the
core aspect of their influence strategy. civil society and public institutions they sit
alongside. Such a perspective inevitably moves
In summary, the organisations interviewed
to the role that business plays in governance,
for this research tend to enact change by
and ‘how good governance can be created
seeking to influence individual leaders of
in sectors, and bad governance avoided’.
companies, or groups of company leaders,
with their ideas. Their capacity to provide Figure 5 illustrates the relative number of
practical guidance on how to implement organisations pursuing the eight influence
change towards inclusive economies is limited, strategies. Organisations were asked to
though some organisations do offer advisory identify just one primary influence strategy,
services to business. Approaches to change but could designate multiple secondary
from ‘the outside in’, i.e., seeking to influence influence strategies for their work. Full detail
business through consumers or public policy, of responses is provided in Appendix 2.
are less commonplace. Perhaps in part due
to their organisational capacity, but also due
Consider:
to their conviction in the power of their ideas,
organisations tend to lean heavily on thought • Are there other influence strategies
leadership as a means of achieving influence. that should be reflected here?
Those organisations proliferating new standards
or organisational forms, or gathering new types • What evidence exists about the efficacy
of data, operate under a different change model of the strategies being pursued?
to those who take a thought leader approach.
The field in which these organisations operate
is also home to various sources of change
that are often underexplored - what we call
the ‘dogs that don’t bark’. The approach of
working with leaders of large, public firms
appears to be well established. Some work
with asset owners is also present. However,
14 THE STATE AND DIRECTION OF INCLUSIVE CAPITALISMFigure 5: The influence strategy landscape (see Appendix 2 for detail)
The influence strategy landscape
Methods of promoting inclusive capitalism
Network/Convene leaders 10 23
Research/Thought leadership 9 26
Movement building/Community organising 8 7
Policy/Advocacy 6 13
Incubate new standards/Organisational forms 4 15
Business education 2 13
Public engagement 1 18
Advisory services 1 7
KEY
Primary strategy (one/organisation)
Secondary strategy (multiple/organisation)
Network/Convene Leaders 1023 33
Research/Thought Leadership 926 35
Movement Building/Community Organizing 87 15
Policy/Advocacy 613 18
Incubate New Standards/Organisational Forms 415 19
Business Education 213 15
Public Engagement 118 19
Advisory Services 17 8
WWW.SBS.OXFORD.EDU 15Targeting of companies
Do organisations target specific sectors or industry areas?
No. Organisations working in this space frequently target senior
leaders of global, publicly traded firms, without regard to industry.
However, there are important exceptions to this trend.
A A review of targeting strategies reveals three
primary features. First, organisations rarely ‘Listed companies can be exemplars, but
pursue a strategy of targeting particular sectors being listed actually makes it harder.‘
or industries. Second, many focus their efforts
on large, publicly listed companies, often Our research also identifies at least three
those which are consumer facing. Third, it is important exceptions to these findings.
common for organisations to target specific First, a subset of organisations intentionally
functional areas within large firms, most pursues work with privately held and family
typically individual CEOs and their immediate firms, instead of or alongside efforts to
senior leadership teams. As the head of one engage listed companies. The head of one
organisation described, ‘We are looking for organisation shares the experience that
personal commitment from visible leaders’. ‘exemplars’ can often be found outside the
Several organisations articulated that they listed company sector, including within
feel key individual leaders are best placed ‘family owned, employee owned, and private
to catalyse ‘a movement’ both within their equity owned businesses at their best’,
own organisations and among their peers. concluding that, ‘listed companies can be
exemplar, but being listed actually makes
it harder’. There appears to be a potentially
‘[We target governments] because significant distinction between the influence
where public goods aren’t being strategy of a majority of organisations who
addressed… we’ve seen a consistent emphasise work with listed companies and
failure to see [our efforts] go to scale.’ a minority who focus on non-listed firms.
Second, some organisations engage in a
degree of sector-based targeting, either
No organisation studied articulates a seeking to work with sectors that have
specific, standalone emphasis on board particularly high visibility (CE), that face
members. A small handful articulates an especially complex challenges (BHRRC),
emphasis on suppliers to large global firms. or that they feel have particular leverage
Emphasis on customers or broad-based over other sectors (CIC). Third, a minority of
public outreach is also rare, as is activity organisations engage non-corporate entities
with small and medium-size enterprises. including business schools (EFMD) and
16 THE STATE AND DIRECTION OF INCLUSIVE CAPITALISMgovernments (Oxfam). Overall, targeting In summary, organisations do not engage in
strategies focused on other civil society sector or industry targeting to a significant
entities or on governments and multilaterals extent. Several organisations framed
are not characteristic of these organisations. themselves as seeking to build a movement.
As the head of one organisation described with
Finally, several organisations target particular
regard to their targeting strategy, ‘Like any
issues. For example, Oxfam stresses
movement at the beginning, it’s a combination
women’s economic participation and how
of being opportunistic and strategic’.
economic inclusion can benefit the very
poor, particularly in rural and conflict-prone
areas. Oxfam also features a distinctive
‘Like any movement at the
beginning, it’s a combination of
being opportunistic and strategic.’
Who are you targeting?
• We target CEOs of large
public companies. Consider:
• We are looking for personal • Where could additional targeting
commitments from visible leaders. occur within this space?
• We target individuals running • Could organisations in this space
large enterprises. seek opportunities to consider:
• Our audience is [CEOs] of • Targeting boards
Fortune 500 companies. • Targeting suppliers
• We are targeting the number one • Collaboration on work with senior
person in companies, the CEO. leaders of publicly listed firms
• Our flagship event is our CEO summit. • Engagement with private,
non-listed firms
• Engagement with SMEs
focus on public goods. The BHRRC focuses
• Engagement with
on labour rights, natural resources, and
government/multilaterals
support for human rights defenders working
in perilous contexts. The CE targets the topic
of shifting processes around product design
and manufacturing. The work of the MPI
features a particular emphasis on quality jobs.
Because the organisations reflected in this
research share important features in terms
of their approach to targeting, they may
compete for engagement by the senior
leadership, and CEOs in particular, of listed
global companies. It is possible that this
phenomenon could contribute to a sense of
competition between organisations, rather than
fostering collaboration towards shared aims.
WWW.SBS.OXFORD.EDU 17Factors of success to date
Why have organisations been effective at bringing about change to date?
On the question of demonstrable success, interviewees’ responses varied
considerably. Underlying those responses were three things: first, ‘success’ can
simply mean steps taken in the right direction, as opposed to attainment of some
ultimate goal; second, there are often difficulties inherent in attempting to measure
success, with one effect being that success is illustrated anecdotally, rather than
measured at a macro level; third, there is a limited amount that the interviewee
organisations can do to ‘be successful’ because so much of their work depends
on factors not directly within their control, not least the activities of others.
On the first factor – success in the form of pragmatic, the challenge in such an approach is
instrumental steps – an illustration comes from in knowing whether real, net progress is being
one organisation which notes ‘there are no made: for example, is evidence of success in
final victories, there are no final defeats, there one area outweighed by setbacks elsewhere?
are only steps.’ For that organisation, evidence Is success sustained or via a step approach?
of success is sought in inputs (activities that
suggest positive outcomes, such as growing
corporate responsiveness to allegations of
abuse) rather than outputs (in the form of
‘We stay focused on the long-
some measure of whether abuse is overall
an increasing or decreasing phenomenon).
term game of systems change.’
Likewise, for another organisation, success
is interpreted by means of incremental steps
On the second factor, the difficulty of
towards some final end: ‘it’s on the level of
measuring success, the problem was implicit in
participation … the extent to which they’re
many of the interviews while addressed directly
promoting the idea to their employees, the
in others. For example, one organisation found
extent to which they have product, service
that: ‘describing our impact is really tough.’ In
solution, innovation in place... we, we
general, there is a direction of travel towards
don’t have specific measures of, metrics
the development of metrics, but whether this
of, potentially revenue that is restorative
is ‘real’ or wished-for is difficult to tell. This
and generative, for example, at this stage.’
contrast can be illustrated by continuing the
While sensibly, and to a degree unavoidably,
prior organisation’s example where, on the one
18 THE STATE AND DIRECTION OF INCLUSIVE CAPITALISMhand, ‘we do have, and we have developed • Business education: ‘The latest
a variety of tools that allow companies to accreditation standards from both AACSB
measure circularity’ yet, on the other hand, and EFMD... now reflect the language and
there is the qualifying statement (common the proposals of the Fifty Plus Twenty vision.’
across interviewees) that ‘it’s very early, this
• Boardroom agenda: ‘If you look back to
is a very early stage of development.’
our early work with the original 1995 RSA
… there are numerous Chief Executives
and people then or now who said that
‘[Success means] setting out a report was put in front of our Board and
we used it as a basis for the refreshing,
sensible and manageable route the renewal of our own agenda.’
ahead for all stakeholders.’
• Global aspirations/targets: ‘We did a lot
of work on this and our leaders agreed
to it and they very much pushed for a
small number like Mary Robinson, Paul
A related issue is the attribution of successful
Polman, and Richard Branson, and the
outcomes. Another organisation, for example,
position we announced was net zero
noted that short-termism is now ‘in the
2050…that was way ahead of what others
water’, which is a measure of successful
were saying, so the concept of going
influence. Yet the caveat ‘we’re not the only
net zero was not on the lips of business
ones responsible,’ suggests a difficulty in
leaders…and then throughout the year
attribution. This is an issue that varies across
we then progressed that, we then got our
interviewees, according to whether (at one
companies to follow suit, we got ten of
end of the spectrum) the organisation has a
our companies to commit to the coming
product, service, membership, or similar impact
net zero 2050 in their own operations
that can be measured in terms of its adoption,
and we’re developing that network.’
as opposed to whether (at the other end) the
organisation is simply part of a broader social • Legislation: ‘The 2006 Companies Act
movement or just another pair of hands in a with its revamped issued directive, that
collective labour enterprise. The latter end of all happened and I was contacted soon
the spectrum might be characterised as the after the large companies report was
‘Unilever-type problem’ – it is possible to buy-in published by the people leading the review
to the Unilever model, even to use it as an in to the Gladstonian system of company
illustration of the success of any given NGO’s law and how it needed to be changed.’
model, yet Unilever cannot be claimed by any
one organisation as its own success story. • Creating standards: One organisation
emphasised the importance of large-scale
On the third factor, control over successful corporate adoption of their approach.
outcomes, there was a common theme in
an appeal to ‘influence others’ as being a • Enabling collaboration/learning/
measure of success. This is related to both benchmarking: ‘We set the CE100
of the issues above, because influence can up as a programme whereby we bring
be described as an instrumental step, the together large corporates, university
effectiveness of which is difficult to measure. players, academics, emerging innovators,
In practice, influence can be sought through and governmental regional bodies,
a number of channels, with respect to which and each of those four groups are
the interviews were rich in illustration: supported through the platform and
what we do is we provide learning
programmes remotely to the members.’
WWW.SBS.OXFORD.EDU 19Figure 6: Thirty five most frequently used words in research interviews
All of the above speak to different ways of
contributing to a collective enterprise. In some ‘We are a non-market participant
cases, the contribution was defined in ways creating a high trust environment
that are relatively narrow and have a clear focus.
for key stakeholders and influences.
In others, an explicitly coordinating, action-
oriented role was set out. Oxfam, for example, This is why we are effective.’
described collaborative research, which then
led to an agreed roadmap with stakeholders,
in other words a wide-ranging process of interviews contained refreshing reminders
understanding and then influencing others. that the journey lies ahead with respect to
successful outcomes achieved so far, as
A final point might usefully be made. Success one new organisation acknowledged: ‘I’ve
to date in this space is nothing in comparison got to disappoint you because we’re still
with the potential success to come. The early in that.’ While recent activities have
yet to bring inclusive capitalism into the
mainstream, there are many indications
that society is arguably now at a tipping
’What you have to do is establish point where that mainstreaming is now
the truth about an issue. That possible, creating substantial opportunity for
drives everyone together.’ these organisations to achieve progress.
Organisations interviewed for this research
20 THE STATE AND DIRECTION OF INCLUSIVE CAPITALISMFigure 7: Range of media mentions for organisations included in this study
6856
7000
6000
2000
1654
1800
1547
1600
1400
1137
1200
1000
800
451
447
600
399
399
315
292
257
236
400
188
162
131
137
105
45
55
60
61
65
68
98
200
42
45
23
22
17
13
15
16
11
0
1
2
4
0
Media Mentions since 2010
Source: Factiva
of a system simultaneously. The absence
‘We’ve been successful because we of effective coordinating mechanisms or
accepted standard definitions of success in
promote [our work] on the basis
this field presents an on-going difficulty.
of an economic rationale.’
tend to share a challenge: when gauging Consider:
success, how to know what to measure? • How best can organisations turn
A good ‘theory of change’ will name the
moderate or incremental success into
intermediate outcomes expected as a result of
sustained and scaled-up success?
an organisation’s activities, and will articulate
how these intermediate outcomes contribute • What are the true measures
to the global impact the organisation seeks to of success in this space?
make. For many of these organisations, such
a theory of change is nascent, or relies on
the organisation performing an intermediary
function that is difficult to track. Systematic
change of the sort most of these organisations
pursue occurs over the long term, and
requires interventions at multiple levels
WWW.SBS.OXFORD.EDU 21Gauging measures of effectiveness
How do organisations measure their effectiveness and success?
Effectiveness and success are measured in relation to the goals of the
organisation and its process of effecting change. This was sometimes
done by reference to formal metrics but usually not, and many
organisations encountered serious hurdles in developing metrics.
Organisations are seeking to effect change in schools are frequently mentioned as key
the way in which business is conducted and parts of the process of achieving change, and
are looking for evidence that this is occurring. evidence is sought that they are adapting the
In some cases the measure of success nature of their curricula and making inclusive
comes from the ultimate goal – the adoption business a key part of their courses.
of sustainable policies, the treatment of
Effectiveness is sometimes measured in
employees as individuals not assets, the valuing
terms of formal metrics. These take two forms.
of people in organisations, and investment
They firstly relate to the organisation itself. For
policies of institutional investors that shift from
example, some organisations record the size of
short-term profits to long-term value creation.
their membership and the extent to which they
have attracted particular types of members,
for example large as well as small companies.
‘Measurement continues to be a very How financially sound is the organisation? Is it
complicated and complex area, and succeeding in putting itself on a firmer, longer-
it’s also one that we find extremely term basis? Is it moving from loose networks
to a more structured formal arrangement?
difficult to get resources behind.’
The second form of effectiveness is in relation
to the goals of the organisation (as against the
organisation itself). Examples include the level
In other cases, the focus is on the process of
of its success in promoting creative rather than
promoting change – engaging business leaders,
routine jobs and the number of jobs that are
policymakers, and thought leaders in adopting
becoming available in the relevant area, such
practical goals such as zero net emissions by
as in ‘conscious businesses’. In some cases,
a particular date or evidence of ‘ripples’ that
organisations measure success in terms of the
something is occurring which can be traced
number of policies that they have influenced
back to the activities of the organisation.
and their ability to alter discourse in desired
Has there been an increase in activity and
directions. How many speaking engagements
investment in the relevant area? Participation
have they received? Are they asked to
of large companies is often regarded as critical
participate in policy debates and contribute to
to this. Education and the role of business
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