Fostering steward leadership as a winning formula for companies, employees and society
Lee Su Shyan
SINGAPORE — Proponents of the concept of steward leadership are plainly driven and passionate about their cause. Former The Body Shop chief executive Jeremy Schwartz and Tata Consulting Services (TCS) Asia Pacific president Girish Ramachandran are among those determined to encourage companies to create a better future for all.
For them, steward leadership encapsulates a holistic way of running a business where employees, shareholders and the wider society all benefit.
At Stewardship Asia Centre, a non-profit organisation established by Temasek, chief executive Rajeev Peshawaria is also hard at work helping business leaders, investors and individuals put the idea of stewardship into practice.
Naysayers of steward leadership argue that the idea of serving employees and society cannot go hand in hand with making grubby profits.
Mr Schwartz disagrees and holds up Tesla with its near US$800 billion market capital as a prime example. By eschewing the use of fossil fuels and developing electric cars, it has sparked a revolution in the auto market. In contrast, Ford Motor, which has been around for more than a century, has a market value of US$55 billion.
On a smaller scale, he cites the example of working with British supermarket Sainsbury's in 2005 at a time when it was undergoing a business transformation.
Mr Schwartz said that "we could see in the future that young people and mums were struggling to balance exercise and eating healthily and children were not doing enough exercise." Sainsbury's launched the Active Kids initiative where schools could redeem vouchers for sports equipment or activities. Together with other initiatives, the number of consumers grew by six million over the next 24 months.
For Mr Schwartz who is now a motivational and leadership speaker, the lesson is that marketing efforts can benefit shareholders as well as the wider community.
When Mr Schwartz joined The Body Shop around a decade ago, the beauty brand which pioneered the use of natural ingredients was looking tired, with many competitors adopting similar sustainable practices.
He and the team spotted a global trend in 2016 for veganism and quickly made the majority of the 1,500 products vegan, a bold move that trumped bigger competitors. The team travelled to the Amazon region to source new ingredients. Such moves created income for local indigenous groups, took sustainability one step further and invigorated the brand.
In steward leadership's books, profits are a necessary part of the equation.
TCS' Mr Ramachandran says: "Profit is not a bad word. It gives you ownership as well as the responsibility to spend money wisely." TCS' parent group Tata Sons was among the earliest companies in the world to support the wider community, starting in 1892 with endowments for healthcare and education.
Now, every year, Tata Sons which is two-thirds owned by philanthropic trusts, pays out dividends to its shareholders, with the result that about US$200 million goes to charity.
TCS too, is keeping up the tradition of steward leadership, working, for example, with the People's Association (PA) in Singapore to help vulnerable communities. One initiative was a TCS-PA Empowerment Fund which aimed to provide individuals affected by Covid-19 with education, upskilling and reskilling opportunities. TCS also launched its Digital Acceleration Centre in Singapore in 2020, with support from the Economic Development Board, at the height of the Covid-19 pandemic to provide training and business opportunities for locals.
Mr Schwartz is convinced that steward leadership does not just have the positive result of boosting the bottomline but ensures the very survival of the company.
Among the most valuable companies in the US, Microsoft is one of the few that has been at the top for more than a decade. Mr Schwartz added: "That shows how the structure of a whole stock market changed dramatically. The next change will be around sustainability and around Gen X, who will have much higher expectations of leaders. Steward leadership reflects our expectation of leaders and is a reflection of the new skills they need to have."
That too is the view of TCS. COVID-19, which has disrupted millions of lives, has brought the idea of steward leadership to the forefront, Mr Ramachandran adds.
Millennials are looking for jobs with a purpose and with meaning, he says. Hence, one TCS aim for the wider community is to bring digital skills to at least five million youths by 2025.
But just as Rome was not built in a day, even devotees to the steward leadership cause also realise that it is fine to start small.
TCS, which is just one part of India's conglomerate Tata Group, is a behemoth in itself with nearly 600,000 staff worldwide bringing in US$6.5 billion of quarterly revenue at last count from its technology solutions. In Singapore, where it has been operating for 30 years, it has 5,500 employees, making it a relatively small cog in the wider TCS operations.
But Mr Ramachandran says "we can still build products and solutions that can make an impact."
Take an initiative that began as one to save electricity in the TCS offices and campuses in India. It meant turning off the air-conditioning during lunch when workers were out and then back on at much lower temperatures when staff returned but then slowly increasing the temperature. This graduated change slashed the utilities bill by as much as 10 per cent and also benefited the environment.
More than that, it morphed into a solution that is now sold to other customers to manage their utilities. Mr Ramachandran noted the technology is now able to help companies transporting fruit, such as strawberries in Australia, to ensure the produce is moved at the right ambient temperature all the way from the field to the supermarket.
Not just ESG and certainly not just E
It may have elements of the ESG framework but steward leadership has other facets to it.
Many companies focus primarily on the environment, but TCS says that while this is important — it turned carbon-neutral last year — it also looks at responsible sourcing as well as the development of its human capital, among other areas.
As Mr Ramachandran notes, it is about "how to put the interests of the community first, and then we put a business around it."
The next steps
Stewardship Asia Centre's Mr Peshawaria is encouraged by the increasing focus of ESG in business but adds that "while capital, incentives, regulation and reporting are all needed, they will be inadequate without sincere steward leadership."
He insists: "To meaningfully overcome existential challenges such as climate change and income inequality, we need more honest leadership action. In fact, we need steward leadership, which is the genuine desire and persistence to create a collective better future for multiple stakeholders."
Singapore companies and their leaders have made significant progress on the stewardship fronts, TCS' Mr Ramachandran says, but there is always more that can be done. He urges companies to move "beyond the mindset that only my kitchen has to be clean. Sustainability is not someone else's business."
He adds: "We have to create an eco-system and if we can just influence just another two people and they go onto influence others, we can build companies that are better for everyone."
The best insights into the benefits of steward leadership invariably come from the firms who have put it into practice and now they have the chance to relate their experiences.
Stewardship Asia Centre, INSEAD Hoffman Global Institute for Business and Society, global advisory, broking and solutions firm WTW and The Straits Times want to hear from businesses, whether it be large cap companies, multi-nationals, SMEs or social enterprises.
The SL25 initiative involves finding the 25 best stories of steward leadership excellence within the Asia-Pacific region with the results published at the end of November. The deadline for entries is June 30.
More details are available online but SL25 will recognise companies that have done well by doing good. These are the key stewardship values:
1. Interdependence: viewing the world as an interconnected system where your success depends on the success of others.
Example: Banyan Tree Holdings bought a polluted tin mine in Phuket to build their first resort. Founders Ho Kwon Ping and Claire Chiang hired former mine workers to plan more than 7,000 trees to detoxify the acid-ridden soil and polluted lagoons. The resort that opened a decade later in 1994 shows the win-win-win mentality for the environment, society and the company.
2. Long-term view: create sustained value for current and future generations.
Example: Pencil manufacturer Faber-Castell established its own wood supply by planting seedlings in a Brazil wasteland. With the use of renewable energy sources, its carbon emissions have fallen by around 26 per cent.
3. Ownership mentality: take proactive responsibility to make stewardship happen.
Example: Chinese brand Haier encouraged employees to become entrepreneurs and those with novel ideas could set up micro enterprises within the company. Nine years after implementation, Haier's profits had increased twelve-fold.
4. Creative resilience: develop innovative solutions to disruptive challenges.
Example: DBS embarked on digital transformation in 2014 by instituting systemic changes across the organisation.
This article first appeared on The Straits Times (6 June 2022).