22 November 2011 13:02 [Source: ICIS news]
LONDON (ICIS)--Chemical companies must make fundamental changes to their growth strategies to operate in a way that is of genuine value to society rather than blindly adhering to conventional “shareholder value”, a leading consultant said on Tuesday.
Businesses that have a narrow definition of success based purely on financial metrics and short-term performance will not help the world solve its problems of increasing inequality and civil unrest, according to International eChem chairman Paul Hodges.
Hodges believes companies must move away from the idea of cutting costs and waste in order to give enormous bonuses to the CEO and board.
In a video interview, Hodges said: “What’s worked in the past isn’t working today: look at all the societal problems we have. This is very urgent indeed: we can’t afford for the whole world to be taken over by the Occupy Wall Street movement, but it will unless companies become more responsible.”
Companies need to re-evaluate their entire raison d’etre, he said. “We must ask ourselves: 'What am I really here to do? Am I really just here to make large amounts of money or am I here to do something for the benefit of society?' That’s what we all came into the industry for and we’ve lost our way in recent years.”
In chapter seven of the free ICIS/International eChem New Normal eBook, Hodges highlights the new philosophy of “shared value” put forward by Harvard University professor Michael Porter, who says that companies "continue to view value creation narrowly, optimising short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their longer-term success".
In the chapter, Hodges highlights examples of companies that have achieved rapid growth by adjusting their portfolio to create new ranges of products that benefit society in innovative ways.
Indian industrial group group Hindustan Lever is selling sachets of soap via a network of 40,000 rural women. The initiative contributes to improving hygiene and is also an opportunity for the chemicals industry because of the polymers used in the sachets.
Chapter seven of Boom, Gloom and the New Normal – How Western Baby Boomers are Changing Global Chemical Demand Patterns, Again is now available free to download. It is co-authored by Paul Hodges, chairman of International eChem, who writes the ICIS Chemicals and the Economy blog, and John Richardson, director, ICIS training Asia, who writes the Asian Chemical Connections blog.
ICIS and International eChem have also launched a training course aimed at helping companies to become a winner in the New Normal.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections