Otherwise "we risk losing our license."
The days of businesses single-mindedly concerning themselves with one mere financial metric or another are over, says the leader of an insurance giant.
Tom Wilson, CEO of Allstate and chairman of the U.S. Chamber of Commerce, the nation’s biggest business lobby, spoke on a panel to an audience of top execs at Fortune’s CEO Initiative conference in New York City on Monday. (You can view a recording of the event here.)
“There’s no reason corporations have to exist in history,” Wilson said, mentioning that companies derive their right to conduct business from society at large. “To the extent we don’t live up to their expectations,” people can revoke those rights, levy harsher taxes, summon more regulations, or, in a bleaker scenario, change the corporate framework entirely.
During his session, Wilson cited a 2016 Deloitte study which found that approximately nine-in-10 millennials agreed that “the success of a business should be measured in terms of more than just its financial performance.” He warned, “if we don’t get about it, we risk losing our license.”
“We need to be a force for good,” Wilson said.
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Hamdi Ulukaya, founder, chairman, and CEO of yogurt-maker Chobani, who also spoke on the panel, said that when he set out building his business, buying a closed Kraft Foods factory in upstate New York in 2005, his first priority was looking after the people in the company—paying above minimum wage, for instance—and then improving the community of which they were a part.
The first department Ulukaya created at Chobani, he said, was for “community engagement.” The project he is most proud of, he said, involved developing a baseball field in a local town that would rival the diamonds in Cooperstown, N.Y., home to the National Baseball Hall of Fame.
Businesses’ first focus should be on “the community of the people in the company, and then you can widen it after,” Ulukaya said.
“We slept on the floor together, we drove trucks together, we worked together,” Ulukaya said of his relationship with the workers at Chobani. Wishing to give them a financial stake in the business, Ulukaya last year granted staff 10% of the shares of the company, as noted Fortune’s Adam Lashinsky, who moderated the session.
“Everybody in this company who helped me to build this company needs to be a partner of this company and they need to share in the success of this company,” Ulukaya said about the decision.
Wilson noted that public companies often hold up “shareholder demands” as a way to avoid taking on greater social responsibilities. “I think that’s an excuse,” he said.