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Good morning.
Will the crisis make business better?
That’s the question I asked Martin Whittaker, in this week’s edition of our podcast, Leadership Next (listen here). Whittaker runs an organization called Just Capital, whose job it is to measure and rank companies on how they are living up to their obligations to society. Lately, they’ve been tracking how companies are responding to the coronavirus crisis. (You can find their tracker here.)
Before the novel coronavirus jumped to humans, there was clear movement for change in the world of business. It had been building for more than a decade, and had its most obvious manifestation when the Business Roundtable changed its statement on the purpose of a corporation last year to make clear that companies serve various stakeholders—employees, customers, the communities they operate in, the natural environment—as well as shareholders. “Shareholder primacy,” Fortune and others contended, was dead.
But what about now that the crisis has hit? The pandemic delivered an unprecedented shock to the economy, making financial performance an existential imperative for many companies. Moreover, a historically tight labor market—which gave talented young employees unprecedented power to demand better pay, benefits, and social responsibility—has overnight given way to unprecedented unemployment. So will the new push for purpose likewise give way to the age-old scramble for short-term cash?
“We are seeing companies, for the most part, react quickly, especially to the needs of their workers and customers,” says Whittaker. “In some cases, like in retail and in hospitality, layoffs are inevitable. But it’s a question of how they do it.”
Whittaker, who has being watching companies along these lines for 20 years, says he has seen steady movement over that period, away from pure shareholder metrics, and toward non-traditional measures of performance. “It started with the environment,” he said, “but now has moved on to other social issues. Companies are stepping up. “
“Is that seriously going to go back to the way it was?” he asks. “I don’t see that happening.”
There are a number of reasons for Whittaker’s optimism, which he explores in the podcast. Let’s hope he’s right. But, he adds, “if we do go back to the old way, we are going to have real problems. This is a moment when we really should reflect on what new normal we should create. You cannot grow the pie if people just don’t think the system is working for them.”
There’s much more meat in the podcast—including Whittaker’s views on executive pay. Other news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Boris Johnson
British Prime Minister Boris Johnson is in intensive care following a worsening of his COVID-19 symptoms. Foreign Secretary Dominic Raab is temporarily in charge now, though it's unclear to what degree—the U.K. does not have clear succession rules, and for now Raab is only officially in charge of the country's coronavirus response. Cabinet Office minister Michael Gove says Johnson does not currently need a ventilator, though he has received oxygen support. Reuters
Trump and 3M
President Trump's standoff with 3M has ended "very happily," according to the president, after the company agreed to import 166.5 million respiratory masks from abroad (mainly from China) over the next three months. Trump had been furious that 3M was exporting its U.S.-made N95 masks to Canada and Latin America—now the company will continue to do so. Fortune
Markets surge
After the Dow and S&P 500 rose more than 7% yesterday, Asian and European markets followed, albeit less enthusiastically. The Nikkei 225 and Shanghai Composite both rose around 2%, and the Stoxx Europe 600 rose 2.4% at the start of the day. U.S. futures indicate a similar bump is coming. Wall Street Journal
Luxury support
The French luxury giants LVMH and Kering have changed their minds about tapping into a state support scheme for their workers during the coronavirus crisis. The rethink followed the decisions of rivals Hermes and Chanel to avoid using public funds (meant to keep fragile companies afloat) out of "national solidarity"—LVMH and Kering are owned by France's richest and third-richest men, and suddenly their stance was looking pretty outrageous. Financial Times
AROUND THE WATER COOLER
Basic income
Spain's government says it will soon introduce a universal basic income—and remember, UBI isn't just for the coronavirus crisis; it's for life. Economic affairs minister Nadia Calviño: "We're going to do it as soon as possible… So it can be useful, not just for this extraordinary situation, and that it remains forever." Business Insider
WhatsApp limits
Facebook-owned WhatsApp has again moved to limit message-forwarding as it struggles to fight the scourge of fake news. The app will now only allow a user to forward a message to a single chat at a time, if the message has already been forwarded more than five times. The move doesn't stop mass forwarding, but it does make it less frictionless. Guardian
Frequent fliers
What happens to your frequent-flier status and miles during the coronavirus pandemic? As Fortune's Rachel King explains in this run-down, some carriers are extending 2020 statuses for another year or two, without the need for re-qualification. Fortune
Gaming messages
The British government has started using in-game advertising to push the "Stay at home, save lives" message. The motto is showing up on in-game banners in Dirt Rally 2.0, and will appear at the start of the game when people play titles such as Sniper Elite. Here's Toby Evan-Jones, business development chief at Dirt Rally maker Codemasters: "We came to realize that technology within our games, which enables the remote updating of banners within the virtual environment, could be repurposed to assist with the coronavirus communication effort." Ars Technica
This edition of CEO Daily was edited by David Meyer.
