Season 4, Episode 141 : Michael Solomon

Will Richardson 00:04
Welcome to the Green Element Podcast, where we meet business leaders, innovators, transforming their operations to be more environmentally and socially sustainable, and in the process help you on your journey of sustainability. I'm your host will Richardson. Today we are speaking with Michael Solomon from Profit Through Ethics, which delivers Responsible 100. Profit Through Ethics is an organization that is helping businesses to balance the pursuit of profit with the health, wealth, and happiness of everyone else. Michael has over 17 years of experience in innovation and entrepreneurship in responsible business. He recently completed a seven month stint as UK enterprise director for the FinTech for good startup Kogo. And he was fellow on Zinc's Mission Three. Michael, welcome.

Michael Solomon 00:54
Thank you very much, Will.

Will Richardson 00:55
What was it that started your journey into business ethics?

Michael Solomon 00:59
There's a there are a number of versions of this. I am for the sort of one to two minute version. I was a little bit late into education. I mentioned that to you went to university to do economics and finance as it turned out, and graduated at 28. And I did a little bit of banking, just enough to realize that was not for me, as intriguing though that was. Then I went into financial publishing because that was the first opportunity that came up when I moved to London and I ended up liking financial publishing. Although we did lots of really dull things like debt, equity, global custody, banking technology, and created these journals on websites and wrote about these things and had people have advertised around that did the odd event. It was fine, and I actually quite like being a salesperson. This is a strange place that hired me to be on the editorial team and then said, Actually, the job is on the sales team and I just sort of shrugged on day one and did it. But it was a bit of a strange place and somebody came in and said, "Look, CSR is the new thing. We need to create a journal for CSR". And I got the long straw, the short straw, depending on how you look at it, and was going to be the publisher for this this new media brand or CSR media brand. And I looked at it and I [said] "Yep, I'll do it. Or what is that - CSR - what?" and did some research and ended up with these glossy brochures from these big banks and these big oil companies. And I scratched my head, I just thought maybe I've missed something as some sort of joke that I'm playing on me or business is playing on me, or these businesses are playing on everyone else. I find a glossy brochure from a big bank or a big oil company talking about how great they are, how responsible they are to be somewhat lacking in credibility. It really did perplex me for a period of time and I realized this is this is how businesses, certainly big businesses, do CSR. This is 19 years ago, not 17 years ago. And what I proposed to my bosses was that we couldn't help these companies to do this, I really was not interested whatsoever but I was intrigued by the idea of credible CSR, and creating a credible CSR media brand, where the businesses had to prove that this is not some sort of exercise and greenwash. We didn't have the term we'll use the term greenwash 19 years ago, I think it's sort of 10 or 12 years old that term. But the time we knew what it was, and that let's not do that, let's have a credible space for businesses that want to do this in a way that they are seeking to be trusted. They're not seeking to sell us some green credential, it's rather dubious, they're going to be serious about what they're communicating. And the business of the financial financial publishing company that I work for never really got that and at the time, I thought, I don't have any sort of commitments that prevent me from doing this. I really like this idea. I'm going to quit this job and I'm going to pursue this myself and I'll give it a year or so and I will see where we get to. 19 years later, we are essentially consultants that have worked with hundreds and hundreds of businesses and work with NGOs and campaign groups, with this pretension of being entrepreneurs and creating some means of productizing what we do so we can look after hundreds or 1000s of businesses rather than 10 or 20 or so that we work with on a one to one client basis. The process that we go through, it's something that always appears to be replicable, and therefore scalable. And so we've worked with businesses, we've pushed them to do really CSR meaningful CSR and we've always looked at how to do this so that at a greater scale, and that is of a consultancy.

Will Richardson 05:10
And have you found over the years that the conversations have changed? Ie, when you're looking at CSR and an organization, looking at supply chain and looking at the details of the supply chain, have you have you noticed that the language from your clients has changed?

Michael Solomon 05:30
I think the challenges are the same. More businesses are talking about CSR sustainability impact purpose. And more parts of the business, more functions within the business are aware that this is probably important, and we should be doing something. I think the challenge is pretty much the same: how do we how do we do all this stuff in a meaningful, relevant, credible way, in a useful way, and still be a profitable business? This is still the number one challenge, because there really are powerful incentives to do glossy CSR reporting, to greenwash, to do a few good things perhaps, but then the temptation is to overblow that and how you communicate and do the equivalent of glossy CSR report. People have been bombarded with these messages about how great businesses are forever, ever since businesses started advertising and telling them how great they were and people have always been a little bit dubious about that somebody was trying to sell me something he was talking about how great it is, you need to take that with a pinch of salt, and businesses talking about social, environmental or ethical, you need to take it with even bigger pinch a pinch of salt. I think this is one of the big challenges: overcoming those powerful drivers and incentives to greenwash, to overstate what you do, and to put your effort and resources into the perception [of] winning the battle or the war in perception, get people to think we're responsible, that's more important than actually operating in a responsible way - those challenges persist now as they have done over the last 19 years, as far as I can tell.

Will Richardson 07:23
It's interesting you say that [because] we had a company on the podcast a couple of weeks ago that sell washing up liquid, and dishwashing detergent, etc. And one of the questions I asked them was, because he was saying that there's no real difference between them and Ecover, and I was saying, why is it that you don't shout about your sustainability credentials? And interestingly, he said something very similar to what you've just said, it's much better at concentrating on how we can actually better the ingredients and put the money into making the product rather than shouting about how [sustainable it is]. And he said "If you actually look at the ingredients between a organization that says that they are really, really green, and one that doesn't, there's actually not much difference in the ingredients".

Michael Solomon 08:21
And so I'd be interested to find out what his strategy is to, to compete and with his with his superior product because you have to communicate that somehow and differentiate if that's if that's a better choice from an environmental perspective and an eco [product], then I'd like to buy that, not Ecover. But how do I find out about it? So, you know, it's really difficult. It's really difficult, as I said, these drivers and these incentives are such that most businesses won't want to talk about it, especially if the NGOs and Extinction Rebellion and Greta Thunberg et al are putting increasing pressure on on everyone to explain where they stand because of the environment. If we need to do something, we need to say something. And what we've observed is that lots and lots of businesses will be selective about their overall impact, [they] may want to talk about circular economy, or they may want to talk about diversity in the workplace, they may want to talk about human rights and supply chain. And these are all incredibly important issues. But it doesn't mean to say that there's nothing to talk about when it comes to, for example, the culture of the organization or the engagement of the employees or tax, no taxes and - incredible! I met the founders of the Tax Justice Network when they were getting going 14- 15 years ago [who are] incredible, heroic people that, with a reason [highlighted] that tax as a responsibility issue got onto the front pages of the newspapers, not just the Guardian, but also the Daily Mail and right wing press, because it's an issue of fairness and plenty of shopkeepers of small businesses, owners, owners across the land that are angry. These huge giants can put profits out of overseas and get away with a paying their tax in the country where they heavily using the infrastructure and skilled workforce, etc. Taxes is a really, really important issue. And John Christensen was making these points at a conference when I met him 14 - 15 years ago, and he was right. And that's become an incredibly important issue. And now, President Biden's talking about taxation which is quite interesting to set international rules. But my point is that all of these issues are really important. And I don't think we've helped ourselves by essentially allowing a business to define those things that wants to talk about, and not talk about the things that doesn't want to talk about. The result is: business's want to put themselves in a good light, positive light, and they want to talk about the good things that they do and the tendencies to overplay that, to ignore some of the challenges and the things they do badly. And people are cynical and skeptical of businesses that claim that they're responsible, and there is this real apathy and cynicism, and I don't have power, I don't have agency as a consumer, I cannot identify, therefore support the genuinely good businesses at the expense of the bad ones. So those businesses that the money you've suggested that's better than the COVID, you know, how do we identify and support and reward it and give it incentives to go further and further with these better and better formulas for his product?

Will Richardson 11:59
I guess the pure virtue that they were on our podcast kind of says that they're obviously recognizing what you've just said. They wouldn't have been, because they asked to come on it. I mean, the capitalist system in which businesses operate make it difficult for ethics to be at the top of the agenda. Do you think it's possible that we can tweak the system to ensure that businesses can operate profitably and ethically? And if so how?

Michael Solomon 12:27
Yeah, I guess that's the sort of the holy grail or the North Star for us. I think it is possible, and we'd like to be catalyzing that relationship. I think, you know, as you said that the name of the businesses is Profit Through Ethics Limited. We changed it to that name, almost exactly 10 years ago, just over 10 years ago, having spent nine years working with businesses to try to get them to do meaningful, credible, real CSR and to actually look at difficult problems and think about how to respond better and perform better as an organization sitting down with the NGOs and the campaign groups to really thrash these things out, and having some success in getting businesses large and small to do that. Not all of them stopped, because the CSR reporting did that the same time, but we found that we were doing some really useful, interesting work, and we were doing it on a range of issues. And we're working with businesses that were prepared to be accountable on a range of issues. But what we found is that never seem to last, and even the best businesses, often the tendency was to sort of revert to this cherry picking and being highly selective and not doing anything other than glossy CSR reporting. Is that because we've had a few difficult quarters, and the budgets have been slashed? Is that because this new CEOs come in and he doesn't have this vision about this sort of sustainable fair future, like the old one that was jettison? You know, we just seen this happen that Danone. And it's been happening for for many years, that what the CEO believes in matters, and that can set the strategy and the path forward for the business. So there were a variety of reasons where we were very disappointed to realize that even many of the businesses that we work with, we could get them to do something exciting and meaningful and brave, one year and then the next year, they weren't there and they were reverting to the glossy CSR reporting. And it occurred to us that this is only ever going to happen at the margin. It was only going to be a selective, an add-on, a nice-to-have, when times are fair for many, many, many businesses. The only way for this stuff to be central and to be important now and next week and next month and next year and in the future was if it was about profitability. That's a fundamental belief for us, such that we changed the name of our business. If you can make genuine responsibility, improve your profitability, and a lack of responsibility, destroy, diminish your profitability, then the world can change, then we can get onto the trajectory to a fair, livable, sustainable future. And I think it has to happen at that level, there has to be about profitability. And and until it is, I think it will just be something that happens at the sidelines where businesses overplay what they do. They continue to operate in ways where they're offloading costs onto people on [the] planet, they're exploiting vulnerable groups. That's what their business model does. That's what it relies upon. It's legal, or it's customary. It's what we've always done. That's how we make our money. It's for the next generation of executives to work out how the business can produce its widgets without doing that stuff. But for us, that's what we do, as I say this legal customary, we're going to offload and we're going to exploit and we'll do some Glossy CSR reporting over there and everybody's going to suck it up, because everyone's used to greenwash and this is the way the world works. This is the way the business works. And we'd like to stop the bus and get off but nobody can because, as I say, this is the way the world works and that feels to be really scary place. I don't have a power and influence as a consumer, as an employee, as an investor. As much as I'd like for business to compete in a race to the top but not in a race to the bottom. How do we how do we make that happen? I think that is possible that we can coordinate in a way that real responsibility does promote profitability.

Will Richardson 17:10
What do you do in order to accentuate that? To practice what you preach?

Michael Solomon 17:17
How we work with businesses is we say, here are a range of issues that that are important. Let's work out which ones are the most important for you. And we've looked at 50, 60, 70 different issues over the years. And even the biggest businesses cannot get their arms around all of those. So you know, if you're a large business and maybe 10, or 15, or 20 issues can be priorities, if you're a small business, maybe it's just three or five. But that's job one, which of these issues and I mentioned, tax and employee engagement, mental health and well-being in the workplace, how you treat your customers, charitable giving, animal testing, community impact, whistleblowing, board effectiveness. If there is some dimension to ethics or responsibilities, important for the business, if it impacts on wider society then we want to look at it. So we we've worked on all these different issues, and we have a process whereby we help a business work out what his priorities are. And then having done that, we help to find out how it currently performs and we we say "here all the things that make up organizational culture, here are all the things that make up mental health and well-being in the workplace" and help them get a sense of these issues, better understanding these issues and better understanding of how they perform. And we do that on their top three or top five or top 10 issues or how many priorities they selected. And we have this very simple approach to scoring. We say are you: "is your performance on these issues - it's either poor, or okay, or good, or excellent?" And we have different ways of approximating how they perform. So those are our initial steps. What are the priorities? Tell me more about this issue. Tell me more about what your business does. How is it currently performing? Is that poor, okay, good or excellent? Now looking at our scores on 10 different issues, I can see where we need to invest our precious finite resources to improve . If you're poor, on an issue of priority issue, that is where you need to invest your resources to improve. Pursue good and excellent in due course, well and good, but don't be poor on critical issues. First, that's what you need to work on. So this is a process of prioritization and performance assessment and working out an improvement plan and then what you need to do to make those improvements to get from poor to okay, and maybe from okay to good or excellent beyond that. And for the next year, we'll look at another 5 or 10 issues, or we'll eradicate poor across all our priorities, and then we'll work out where we can be good or excellent. Sometimes improvements are pretty straightforward. There's no real risk, there's no great cost. Did you know you can do X, Y, and Z? This is what another business that we've worked with has done, and it's gone from poor to good pretty quickly. Sometimes, you know, there's improvements can be made easily. Sometimes - not sometimes - businesses are persisting with poor performance on one of their critical issues because they don't know how to not do that and still get their particular widget out the door at the right price and quality.

Will Richardson 20:39
Many businesses are using SDGs as a driver for what we're talking about now. In your opinion, is that the correct approach?

Michael Solomon 20:52
If that's a framework. We have a framework B Corporation have a framework, they have a survey, donut economics is a framework. And I think they're obviously there are rationales for using a framework, pick the one that's best for your business, pick one that's going to help you actually improve on these critical things. And ideally, where there's improvements [this] can benefit your business commercially and financially. I think that's a critical bit here. And one we don't shy away from and I think one what sort of distinguishes us somewhat do it, because it's the right thing to do, and do it because it's going to be best for your business. So as I say, that's a framework, we've looked closely at the SDGs 17 goals, 169 targets within those 17 goals. And what we discovered was, and tried to map those to the 50-60 different issues that we looked at over the years. You know, is there is there is there a clear mapping? Is there a clear relationship with our list of 50-60 different things and what's in those 17 goals? And we found that that wasn't very easy to to link, the two. Our issues have been developed over many years, because businesses have said "this is what we need to look at because the NGOs have said this is what businesses need to look at". And they become hot topics for those reasons, they bubble up, we need to do something on modern slavery, because the government's just passed a law to force us to create modern slavery statements. And that's where we've been demand-led in terms of the issues that we've looked at, from both the businesses and the NGOs. When we analyze the 169 targets within the goals, we found that about a third of them were relevant to businesses, we found about another third could be relevant to businesses, depending on what sector those businesses operated in. And the remaining third were very much about government policy, and not something that businesses could impact particularly well. That said I know lots and lots of businesses are looking at their 17 goals and thinking about which ones are most relevant to them and doing doing useful things. But they're also, I feel, many businesses that are not doing that in a very joined up way, and perhaps using it as a framework for greenwashing as opposed to a framework for improving their operations.

Will Richardson 23:28
You've got a very amazing list of clients, from Burberry, Nationwide, Grant Thornton, Linklaters, The Guardian, amongst others, they're all large companies. Is that a barrier? If you're a smaller organization, can you use your framework?

Michael Solomon 23:47
Yeah, in many respects, we sort of prefer the smaller organizations. At the moment, we've had a really weird few years where things have not gone particularly well for us. We, as I said, we'll always be looking to create this product. And in 2015, we set out to build a platform to enable us to do all the work that we've been doing with businesses in a structured, ordered automatable way. And that didn't really work and in fact, failed slowly over a number of years and ended up in a legal dispute with web developers. And we never delivered on our promises to businesses so that's caused a lot of problems. And there's been a few years of hiatus in many respects. And when we've come back recently to think about how we would put this all together in a way, in a better way, if we're going to do that again and we pretty much decided that they will, because this seems to be the need there to help businesses to do this better and to benefit themselves as a result. So those businesses you mentioned were all guests of our clients. They all participated in roundtable meetings and that was something that as our digital products didn't materialize, we did more and more of and we ended up doing 57 of these roundtable meetings in the boardrooms of the biggest businesses in the UK and anywhere really. Those were our clients and they invited in those businesses that you mentioned, and many others, to participate in the roundtable, to participate in the workshop. And some of the clients that we had looked at, looked at a range of different issues, dozens of different issues, and assessed themselves against this sort of CO created scorecard of poor, okay, good, excellent. And we did tax transparency, a number of times, we did modern slavery, a number of times, we did diversity and employee engagement and mental health and work life balance and living wage and charitable giving and dozens of different things we looked at in this environment. It occurred to many participants representing big businesses and small businesses, that this is a worthwhile way of understanding this particular issue and as the head of tax, we had the Global Head of tax - and the biggest corporations that there are in from big banks - come and sit around the table with the, as I mentioned, the Tax Justice Network, and the people that they inspire, and led in many respects. The tax campaign is from Oxfam and Christian Aid, Action Aid, all sitting around the same table discussing tax and the 'poor, okay, good and excellent' of tax. And they benefited, I think that the two sides had much more respect and time for each other than they ever imagined they would do. And we did some useful work in thinking about 'poor, okay, good and excellent'. What was possible for a business, operating in a competitive landscape where there are pressures to compete in a race to the bottom, rather than the race to the top? How can we as NGOs and campaigners encourage and enable the businesses to perform better? A lot of those businesses realized that was good and useful work. A little bit scary, but it all worked out just fine. And perhaps the head of function, the head of procurement, for example, might come along next time and participate in the roundtable when we're looking at human rights and supply chain, and other heads of functions from these enormous organizations could benefit as and when we looked at different issues. But we never quite worked out how to persuade lots of large companies to sign up as clients rather than just dip their toe in the water on the issues that suited them at the time or suited the senior executive at the time. So packaging up what we did was challenging. And we didn't want it to be just an events company, just do that the roundtables, we wanted to help the business do the work, if we can diagnose a problem, if we could diagnose that they are poor in this critical issue. We wanted to help them improve and to make the changes in the business to get to okay and beyond. So there was various different functions that we fulfilled to various different standards, as we didn't quite get this digital product to market. So fast forward to 2021, or fast forward to 2020; I had a particularly important meeting just before the first lockdown in the CEOs office. [It] is one of the FTSE 25 companies, one of the biggest 25 companies in the UK and I took somebody from Extinction Rebellion, and that person is no longer with Extinction Rebellion because they became increasingly militant, in some respects; nihilistic and don't want to work with businesses anymore. And this person was very much a business guy and a brand person, a brand strategist, who has done lots of great work and continues to do so but not with Extinction Rebellion anymore. In March last year, he was a representative for them. We went to the CEOs office, we spent 90 minutes there and we had a good discussion and the upshot was that this huge business does accept that the climate crisis is an incredibly grave crisis. And that biodiversity crisis could be an even bigger problem than climate [change], and that we have human rights disasters all over the world and inequality is out of control and that we've got [a] mental health epidemic and all these things are huge, huge problems. And while that business may be changing, maybe improving, the rate of change is not remotely adequate for scale of the problems that we have. So they turn around, they said, okay, we accept that how do we be more radical? Tell us what to do so that we can change quicker and faster, and be more radical. But as much as we want to be radical, please tell us how to do it in such a way that it's also doable for us, for a FTSE 25 with 10 million customers and 10,000 employees. "We can be radical, if you can make it doable for us" so over the last year and a bit, we've been working on the best version of Responsible 100, based on everything that we've learned, and all the experiences and all the relationships we've developed. We have been working on the radical but doable version, and we are testing it now with smaller businesses. And I [am] very glad to add new user testers into that group of companies that are helping us to create the radical doable version of Responsible 100. We have always worked with big and large and medium sized companies. We're working also with a branding company called ABA design, fantastic specialists business purpose, who are helping us to work out how to communicate what we do, and how to present ourselves in the market, and all those sort of things. And we have these conversations about whether we should be targeting certain sectors or certain size of business. And we probably should, because you can't boil the ocean and provide a service for all businesses of all sizes, we appreciate that. Unfortunately, we have attracted all sorts of sizes of business and from all sorts of sectors over the years and having something that works for everybody is kind of what we've stumbled across. From a launch or growth point of view, we probably will be a little bit more selective. And we're particularly interested to work with more smaller companies right now.

Will Richardson 32:20
Moving into the kind of operational side of your organization, the environmental management, its carbon footprinting. What is it that you guys do to help reduce your environmental impact?

Michael Solomon 32:33
Well, we've historically looked at environmental issues through a couple of related issues. Obviously, emissions, greening the supply chain is something else we've looked at, circular economy, transition to a low carbon economy was something that a lot of big businesses wanted to explore on their part in the transition, and critical and endangered species and habitats. We've looked at eight or nine different environmental issues. As I mentioned, as we were discussing with this large company last year, biodiversity may be an increasingly important critical issue alongside climate [change]. So what we want to do is make sure we're covering all the things that matter, and that we're working with NGOs, and campaigners, and think tanks and academics and government and people that are passionate about these. The best experts tend to be very passionate about their subject, so that we can help businesses explore them. We don't have all the expertise, we're sort of [a] jack of all trades, we know a little bit about all these different topics and we rely on experts, hence my interest in what you guys are doing, and your how-to guides and your best practice guides because that's probably 'the good' and 'the excellent' for these these issues. It's easy to identify 'poor', 'okay'; we know this is an important issue and we're doing some good things, even though we're still doing some bad things. 'Good' tends to be when we're mostly doing good things and we've mostly eradicated the bad things. And excellent tends to be with a net positive. We're an exemplar on this, we're doing really well. So our job is really mapping the issue, mapping the players and the experts, and helping businesses to explore these things, if they're priority issues for them to explore and find out how they perform and to improve their performance if they're performing poorly on something that's critical. So that's what we do in and around the environment ourselves. We're a handful of people using laptops and our impact is low. We are supporters of Business Declares, we will footprint our organization, we will set a target for getting to zero, net zero or real zero. And you and I will debate that, again, I'm sure. But of what we do as an organization, our impact is very slim. Our opportunity here is to help businesses to navigate this stuff, work out which of these environmental issues are critical to them, work out how they perform, work out how to improve if they need to be improving.

Will Richardson 35:36
Okay. And finally, is there any advice or learning that you'd like to share with anyone listening to this podcast? One piece of advice that you could give?

Michael Solomon 35:46
Ah, put me on the spot there, Will. I think I'll take you back to some of those sort of North Star thoughts or philosophies or beliefs that we have. Your job as a business is to get your product or service out the door at the right price and quality, at the right time and place, ahead of your competition. And that's hard, it's always been hard. And it will always be hard to do that. And doing that and having the best possible social, environmental, ethical performance at the same time is harder still. I think my advice would be to, you know - one of the things that we suggest is that you spend 98% of your time and effort and bandwidth and resource on getting your product or service at the right price and quality. And 2% invest 2% of your bandwidth and resource into doing this stuff as well as you possibly can. We suggested that would be the optimal balance. And if you'll invest that 2% with us, we'll help you deploy that in the most efficient and effective and rational way. But don't lose sight that the best businesses are here today and here tomorrow.

Will Richardson 37:02
And that's really good advice, really pragmatic, and a really sensible approach and resonates very much with with me, as I'm shouted at by the marketing team quite regularly. Why aren't we shouting about this? Well, let's just do it. People will learn from us people learn that you've done it. And that's actually more important, practice what you preach. Michael, thank you so much for joining us today.

Michael Solomon 37:25
It's been my absolute pleasure. Thanks very much for having me and for your great questions.

Will Richardson 37:29
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