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CEO Daily: Thursday, 16th August

This morning, Fortune releases its second annual Change the World list, highlighting 50 companies addressing global social problems as part of their core business strategy. Take some time to read through the list here; you will be inspired by what you find.

 

We started this list last year as a counter to the rising skepticism against business. Capitalism is clearly under attack these days, for a variety of reasons I discuss in my editor’s note here. Yet a growing number of businesses, like those on this list, are making intentional efforts to prove the profit motive can be harnessed to alleviate some of the world’s most persistent social ills. Integrating societal needs into corporate strategy “has moved into the mainstream and is growing exponentially around the world,” write Michael Porter and Mark Kramer, who are pioneers of the “shared value” movement and are Fortune’s partners in compiling this list. “Companies are moving beyond often fuzzy notions like sustainability and corporate citizenship to making meaningful social impact central to how they compete.”

 

The best companies always have put purpose at the center of their business strategies. But with business under attack, their numbers are growing. Also this morning, we are also releasing a new series of videos, done in conjunction with the Aspen Institute, in which CEOs talk with Susie Gharib about their efforts to lead with purpose. You can find the videos here, and they reflect the passion of a new generation of business leaders. “Fundamentally, a business that isn’t doing good for the world will not be successful over the long run,” says Blue Apron’s Matt Salzberg, who is helping farmers grow the ingredients he needs for his meal kits without using pesticides.

 

None of this is to suggest that capitalism doesn’t have excesses, or that companies don’t make mistakes, or that the needs of people don’t sometimes get trampled in pursuit of profit. But capitalism remains the world’s best hope for creating shared prosperity. And business, at its best, is a powerful tool for taking on the most intractable of problems. Fortune’s hope is that by highlighting the best, we raise the standard for all.

 

More news below.

 

Alan Murray
@alansmurray
alan.murray@fortune.com

Top News

Fed Doves Still Have the Upper Hand

There’s still a pretty clear majority at the Federal Reserve against raising interest rates, it would appear from the minutes of the last FOMC meeting that were published Wednesday. Policymakers still appeared unconvinced that inflation was moving sustainably back towards 2% (an impression reinforced in the markets by more disappointing results from retailers yesterday), and the suspicion that there is still more slack in the labor market than a headline jobless rate of 4.9% suggests. The minutes expressed great “uncertainty about the trajectory of inflation” and confidence (complacency?) that there would be plenty of time to react if it did pick up. The dollar took a dip below 100 yen for the first time since 2013 after the release, creating further headaches for Japanese policymakers and for speculators who are using borrowed yen to fund ‘risk-on’ trades elsewhere in global markets. Fortune

Target Locks Itself in the Bathroom

Target appears to be paying the price for parading its political correctness a little too proudly. Shopper traffic fell for the first time in over two years in the three months to June, at least some of which appears to be the result of socially-conservative shoppers avoiding it after it waded into the transgender bathroom row. Sticking by its principles is expensive: it’s now spending $20 million on single-stall bathrooms to counter suggestions that its bathroom policy could facilitate sexual assaults. Bathroom issues aside, the company also saw an eye-catching 20% year-on-year drop in demand for Apple products, while the sale of its pharmacy business to CVS also appeared to hit performance. Fortune

Iran Prisoner Plot Thickens

When is a ransom not a ransom? And when is it just ‘part of a broader normalization of economic relations’? The Wall Street Journal reported late Wednesday that U.S. officials had refused to let the aircraft carrying a $400 million debt repayment in cash to Iran take off until a Swiss air force plane carrying three freed Americans had confirmed its own take off from Tehran. The synchronization suggests they were coordinated closely enough for it to be a ransom payment in all but name (especially to those who share the WSJ’s instinctive lack of sympathy to the current administration). Officials have claimed that the two actions were conducted through different channels. That may be stretching a point, but the debt repayment does at least have a clearly defined place in the broader process of lifting sanctions on Iran. A scandal on a par with the Reagan-era Iran-Contras epic, it most certainly isn’t. WSJ, subscription required

China Slowdown Hits Nestle

Nestle said “significantly” slowing growth in China was chiefly responsible for a disappointing second quarter, in which it extended its three-year streak of missing organic growth targets. That could be a blow to more people than Nestle, given that China is relying on pent-up domestic demand to carry its economy through a rebalancing away from excessive investment in industry. The Swiss company continues to be hobbled by the strong franc, but said that deflationary conditions across the world had compounded its pricing problems. It said organic sales growth, which slowed to 3.6% in the first half, should still match last year’s 4.2%, due partly to the rebound of its Maggi noodles business in India. Fortune

Around the Water Cooler

’To Be Concluded Next Week’…?

One of the media world’s most closely-watched soap operas could soon be coming to an end. Viacom’s controlling shareholder, Sumner Redstone, is close to reaching a settlement that would see chairman and CEO Philippe Dauman leave the entertainment giant for good, according to the LA Times and The Wall Street Journal. The Times reported that Dauman could receive a golden parachute estimated at $85 million. But there are still obstacles in the way: some of Dauman’s fellow directors want to stay on the board for longer, and there is still opposition to Dauman’s plan to sell 49% of Paramount Studios to a (likely Chinese) investor. Fortune

Cisco Trims, Rather Than Slashes

Cisco’s round of job cuts turned out to be less apocalyptic than rumored. The networking giant said it would cut ‘only’ 5,500 jobs, rather than the 14,000 reported by the website CRN, as it adapts to the challenge of a changing landscape. Money saved on the cuts will be plowed-back into priority businesses such as security, Internet of things, collaboration, next-generation data center gear and cloud, Cisco chief executive Chuck Robbins said on the earnings call. That apart, Cisco’s quarterly earnings came in around 5% higher than expectations, perhaps relieving the pressure for more aggressive cost-cutting in the near term. But further restructuring still looks likely in a world where legacy IT providers see the Cloud suck away demand for their pricey, proprietary hardware and software.   Fortune

U.K.  Still Defies the Doomsters

Time to rethink the foretellings of doom or just another head fake? The pound sterling surged by over 1 percent against the dollar after U.K. retail sales data for July blew past expectations with a 1.5% monthly gain that more than offset a 0.9% drop in June. Annual sales growth rose to 5.4% from 3.9%. To the Brexiteers, it’s proof that the world doesn’t end when a handful of politicians swap desks. However, anecdotal evidence suggests that sales were also boosted by tourists using the 10% drop in sterling to enjoy themselves a bit more on their vacation. The opportunistic exploitation of one of those brief windows when London is only ‘outrageously expensive’ rather than ‘insanely expensive’ still doesn’t seem like a durable source of prosperity for the U.K. as a whole.  FT, metered access

Vive l’Emploi!

Crack open the champagne and don’t stint on the foie gras. France’s jobless rate fell below 10% for the first time in four years in the second quarter, sliding from 10.2% to 9.9%, according to the latest official data. It’s the lowest level since just after Francois Hollande took office, and suggests that his recent labor reforms, despite being diluted after bitter resistance by striking unions, are having some effect: the youth unemployment rate fell more sharply than the overall rate, indicating that employers are more willing to take on entry-level staff. It’s still unlikely to be enough to rescue Hollande’s ratings in net May’s presidential elections, but a sustained labor market improvement until then will at least slow the momentum of Marine Le Pen’s National Front. The Guardian