Since 2022, coffee company Starbucks has been embroiled in a battle against damaging reputational issues (predominantly in the US) thanks to what has been described by the Guardian as its “aggressive anti-union tactics”. It is a story Alison Taylor, clinical professor at NYU Stern School of Business, executive director at Ethical Systems, expert in sustainability, risk and responsible business and author of new book Higher Ground (which begins and ends with an analysis of the Starbucks situation), finds particularly striking. “It’s so fascinating because Starbucks is a leader on societal and environmental issues, including worker pay and benefits and worker treatment,” she explains. “And yet now it’s got this terrible reputation.” For Taylor, the story presents a perfect example (and cautionary tale) of how challenging it is for businesses today to do the right thing, manage their reputations and navigate the ever-evolving challenges and risks of a volatile global landscape. 

In Higher Ground: How Business Can Do the Right Thing in a Turbulent World, Taylor explores how the concept of business ethics is shifting and how leaders should respond to growing stakeholder expectations, including increasingly loud employee demand for company leadership to speak out on sometimes contentious societal or political issues. With many HR leaders involved in ESG and witnessing up-close the changing, often impossible to balance, expectations of employees around what it means to be a responsible business, her pragmatic advice around doing your best to make your business better before making commitments to improve the world at large is well worth heeding. 

Work. spoke to Taylor about the importance of grounding purpose in business strategy, how leaders can cut through the noise and how to respond when ‘it feels like everyone is yelling at you’...

Many leaders are struggling with changes in stakeholder expectations, particularly from employees, around how companies behave. What is driving these? 

There are three things. One is the rise of social media and transparency. It’s become harder to control the narrative or keep things like NDAs a secret. The rise of social media is driving a new form of accountability as corporations need to respond to stakeholder voices, but also leading to the rise of strategic leaking. Employees are willing to get together, form groups and take action on issues they care about. 

The second is the increased willingness we’ve seen in businesses to speak up on controversial issues. This didn’t happen 10 years ago – companies didn’t get involved. Now they are much more willing to, stemming in part from political frustration. And the third thing is the shift in values across generations – graduates under 27 don’t remember office culture before 2019. So organisational leaders are having to renegotiate what culture and leadership means. Expectations have risen and trust has diminished at the same time. 

And is this something that will ‘blow over’ or will it require a permanent change?

A lot of leaders are in denial, hoping this will pass if they carry on doing what they’ve always done. And there’s a huge amount of negative discourse over ESG and EDI right now. But the idea that these wider pressures over climate change, social responsibility, how workers are treated, inequality and corruption are going to go away is ridiculous. Companies have got trapped between two polarised visions. One is ‘go back to business as usual and drop all that woke nonsense’ – you can’t take that position if you want to attract anyone under 30. But the voices on the other side saying you need to solve every single stakeholder issue, meet every societal problem and say something on every issue are just as problematic. If you’re running a business today, it can feel as if there’s a chorus of voices yelling at you.

Purpose has become so central to business discourse, but it can feel like firms are overpromising. How should we talk about purpose?

It’s not a coincidence that the people who love purpose the most are branding consultants… You hear that purpose is about having a positive impact on people and the planet, making money by solving rather than causing problems, but that’s a bit naive. Every business creates both positive and negative externalities, and that isn’t changing any time soon. 

Having a purpose is about being honest and realistic about the problems you take on. It’s about grounding your values and your impact on human beings. It’s not a vacuous branding exercise. And it’s not enough to talk about the wonderful things you’re doing, hoping people won’t notice you are also causing problems, because every business in the world is causing problems. It’s a myth that there are ‘good’ businesses and ‘bad’ businesses. Unilever is a good example of what overpromising looks like, and the mood shifting. How does a soap company solve inequality? Now they have said they made too many vague long-term commitments and are dialling things back to be more specific, short term and focused on fewer goals. 

How can leaders manage expectations across diverse stakeholder groups?

Leaders have been seduced into overpromising, saying that things are always a win-win. It’s not convincing and it makes people more cynical than they were before. Everyone sounding the same makes us all glaze over and makes it hard to evaluate efforts, which is part of what has caused the current ESG backlash. 

We talk about businesses as if they are people: hypocritical, honest, trustworthy… But a business isn’t something with a brain. It’s a big, complex system. If you’re not thinking about how to connect the different elements of that system, you will end up looking like a hypocrite because you haven’t planned properly. It’s become more obvious now that leaders can’t take a stand on everything. I hope we are entering an era of restraint and realism, which is about less overpromising and more honest discussion. We need to stop treating responsible business as PR. 

When should leaders speak out on societal issues?

You need to ask several questions before deciding whether to weigh in. The first is: is this an ESG issue that is directly relevant to my business? So for a yoghurt manufacturer, for example, that might be the agricultural supply chain and animal rights issues. Something under discussed is what happens when CEOs speak up and a subset of employees don’t agree, which can lead to them feeling misaligned, quietly resentful or psychologically unsafe. Think about the aftermath of 7 October [the Hamas attacks on Israel], which led to Arab-American resource groups pushing for one thing and Jewish groups for another. Leaders need to involve employees in these conversations. We shouldn’t have top-down decision making – we need to invite employees to consider trade-offs. Involve the workforce like adults who can consider those trade-offs with you.

You write about how ‘bringing your whole self to work’ can foster unrealistic expectations. What do you mean?

I think the idea of bringing your whole self to work came from a positive place around psychological safety. But there have been consequences. Bring your whole self to work and it’s only a matter of time before HR is in your house. We’ve extended the notion of what an employer is responsible for, with mental health being the most obvious example. That has raised expectations about the problems work can solve. I think we need to rediscover professionalism. I would rather personally have the expectation that I behave in a certain way while I’m at work in exchange for having a personal life and privacy.

Companies and investors are searching for a link between ESG and financial performance. Does this exist?

ESG metrics and ratings are so immature. There are many reasons stock performs well or badly. A good ESG strategy means focusing on a few issues; it doesn’t mean ticking the box on your ESG score. The reality is the link between ESG and financial performance depends. Focusing on some ESG issues might help you manage risk or innovate, but in other areas doing the right thing will cost more and take longer. It’s about being strategic and focused. 

What is the role of HR in all this?

With my MBA students, I see a big appetite for a more empowered HR function that is more pro-worker, and a demand for HR not to simply parrot what senior leadership says or protect the company at the expense of the employee. There’s an amazing opportunity for people leaders to reimagine their role to become more strategic. In our accounting, we still treat employees as a cost, which shows that many of our assumptions and how we treat areas such as training, wages and motivation are arguably old fashioned.

What key message would you like leaders to take from your work?

Focus on the problems you can actually solve. Be realistic about the leverage you have. Treat human beings with dignity and respect and focus your ethical efforts on your impact on people. And before promising to make the world better, focus on making your business better.