BBC Sounds. Music, radio, podcasts. Hello, welcome to the podcast edition of The Bottom Line. It's an extended remix version of what went out on the radio with bits we didn't have time to include. Now, it is hard to keep up with everything that President Trump is doing in the US, but he and his close allies like Elon Musk couldn't have been clearer about one thing.
that they think the time is up for numerous practices that have become pervasive in the corporate world, most notably DEI, diversity, equity and inclusion. Now, it was a controversial press conference the president gave recently, the day after the plane crash in Washington, in which he speculated that DEI policies had hindered the recruitment of the brightest people into air traffic control.
The president's views and the fact that he won the election with the majority of the voters behind him seems to have led to a pretty substantial rethink on DEI in the US and indeed on some other ideas in the corporate world. It's been amazing. watching senior business folks in the US like Mark Zuckerberg pivot in their business practices to be more in line with the president's worldview. And we thought we should talk about this today.
DEI, for sure, but also ESG, Environment, Social and Governance Standards. Is that vibe shift that is apparent in the US, is it coming here? And with me to discuss this, I'm joined by three guests. Let us first meet Daniel Fellows, General Manager at Diversio. UK and EU. Diversio, I'm sure that is a meaningful part of the title of the company, diversity there, Daniel. Tell us what Diversio is, what you do.
So Laura McGee, our CEO and founder, started in 2019. She worked in McKinsey as a consultant. and worked with many business leaders who understood the value of change and why you need to invest in people and culture, but had no data to back it up. And, you know, the best decisions are made with data as well. So Laura started Diversio. It's now in 52 countries. So we go out and we collect data, both demographic and workplace data.
That enables you to use artificial intelligence to analyse, have you got a flexible culture? Is it an inclusive culture? People feel safe within their workplaces. And you advise corporates on their culture and how to change it or improve it? Absolutely. It can be corporates. It could be enterprise clients. To what extent is DEI, this very, very now well-used phrase or an acronym, to what extent has that been a big part of your business?
Yeah, it's been a huge part. But again, everyone has a different understanding, there's different layers, different nuance of D and I. OK, I want us to be really clear about initials. I said D-E-I, diversity, equity, inclusion. You said D and I, which sounds the same, but it's just... diversity and inclusion, correct? Yeah, there is no right, there is no wrong way. It could be D and I, D, E and I, or D, E and I, B, it depends. B?
Right. I think in the US, the debate has focused on the sort of DEI as the kind of the centre of... great political attention. Let me introduce my second guest, though, Erin Sahan, who's the former chief executive of the World Fair Trade Organization. Now is the business and enterprise lead at a group called Donut Economics Action Lab.
Tell us about donut. Well, firstly, it's not about pastries, Evan. It's about a donut that represents the two main boundaries that our entire economy and society have to live within. So on the outside, imagine... A big circle representing the planetary boundaries, the nine planetary boundaries. We must not transgress. And on the inside of the donut, imagine the social foundation, the essentials of life.
we all need, that society needs, livelihoods and energy and water and food, all the things that the economy has to produce. So it's a new way of envisioning the goal of our economy to get inside the donut, meet the needs of all within the means. of the living planet that we occupy. And am I right in saying it's a think tank? You produce reports and studies and... Essentially, we have a bit of a unique approach. We try to support people who have been...
moved by this idea of donut economics that my colleague and friend Kate Raworth came up with and wrote the book on. And we try to also provide them with materials and support and convening. So we try and sort of... activate people who are practitioners of donor economics in different realms. And I focus on the world of business and finance. Do businesses pay you to give them advice or do you...
We're very fortunate to be grant funded and we put everything we create into what's called the Creative Commons. So it's there for anybody to use and engage with. Would I be right in saying you're on the more progressive end? of the kind of political debates we're talking about towards sustainability and net zero? DEI, probably? Yeah, I mean, definitely. So the inside of the donut includes gender equality, includes social equity.
It includes political voice. These are things, by the way, the world's governments have agreed to in the Sustainable Development Goals. So we'd say that these are pretty universal as a goal. How we get there is where the debate starts to heat up. We're going to talk about where the debate is going.
I do want to introduce our third guest, Chris Turner, Executive Director at B-Lab UK. And Chris, I should say you very kindly stepped in at the last minute when your colleague Annie became unwell. So just tell us about B-Corps.
And B Lab. We did do a bottom line on this some years ago, but for new listeners. Of course. Thanks, Evan. Yeah, so B Corps are... businesses which have gone through essentially a kind of self-assessed process of going through and taking a look at the way that their business runs, the way that they treat their people, the impact that they have on the environment and on society, essentially. 9,000 of those around the world and there's over 2,400 of them in the UK.
And then we verify that assessment. So we do our kind of third party checks and make sure that they're doing what they say. So you're the certifying body of a certain standard of corporate behaviour. Yeah, that's absolutely right. Give us some names. Lots of companies that people would recognise from products that you find in supermarkets, like Innocent Drinks, for example, smoothies and juices, stores on the high street like Fatface or White Company.
majority of B Corps are B2B businesses. So the one... Business to business, yeah. Business to business, exactly, serving other businesses. So there's a huge range of consultancies and service providers, which are also certified B Corps as well. What is very interesting... is all three of you are in what I think on the bottom line we would have thought of as being the ethical business space. I would have said completely has dominated the life of this programme, in fact, which is not that far.
short of twenty years old of this movement of businesses trying to be a force for good to be inclusive to have belonging And it just feels like there's something massive going on over in the United States. So let's start with DEI. What on earth do you all work in this area? What do you make of what is happening in the US? Yeah, I think it's a very much...
watch and see um diversio has worked with a lot of our clients the last two three weeks talking to them literally and about what's happening yeah about what's happening the reset if you like the trump laws coming through how it could affect the business how it could affect their staff as well
Should they continue with what they're doing? Should they reframe what they're doing? And probably 80, 90% of our clients in North America are absolutely continuing to what they do. And that's split between people that are investing and going full steam ahead.
and the other folks are rebranding to people and culture and embedding that organization this is really they're dropping the letters dei for the initiatives they have in that area yeah it was kind of happening last year anyway but then obviously the last four weeks has happened
So, yeah, we are working with clients to help reframe what they're doing. Reframe what they're doing. Chris, what do you make of what's been happening over in the States? I mean, it's really disappointing seeing big corporations that lots of people admire. Rowing back from...
essentially DEI and initiatives and whether and it's not just what they're calling them but they're kind of rolling those things back so my overall take is it's really disappointing but it's a hugely complex picture where those businesses essentially are making those decisions I think largely based from a...
risk perspective. They see risk of political backlash. They see risk of litigation. Political risk, basically. If we're seen to be against the president and his way of viewing things, we might find ourselves... I do wonder whether any of you have rethought anything about DEI as a result of the pushback. Not everybody's rowing back. There's a few folks rowing back, which we saw in the inauguration, all standing in a line because it's in their political interest.
to do that as well. But also you had even met as diversity chief, Maxime Williams. She's staying at the company and her new title is Vice President of Accessibility and Engagement. That's kind of a reframing, isn't it? That's not necessarily rowing back yet. Well, I mean, they've done things like they've taken the tampon machines out of the men's toilets. Obviously, they're for... trans men, that kind of thing. Yeah, possibly a dilution of what they're doing as well.
To your point, I think you're personally constantly reviewing it and about how you're contributing as well. Well, have you been reviewing it? Or maybe Trump's got a point in his critique of you all that this has become a bit of a religion. Companies are doing it without thinking about the cost. and it's all got a bit silly. I don't know. I'm putting that to you as a sort of...
Well, I mean, I'd say that what he's probably noticed is just how fickle some of the corporate leaders are. People like Jamie Dimon, the CEO of JP Morgan, who just a couple of years ago, 2023, wrote to investors saying how great this is for the bottom line. now flips to the other side. Same with people who sign, you know, climate pledges, investors from Wall Street and beyond, as well as the corporate world.
you know, he could see that if he could get a few of them to turn, they'll all turn on, you know, on the dime. And that's, he's taking advantage of that. And it's undermining, I think, some of the broader efforts we've been making because it makes it all seem quite superficial. If they can just...
flip their point of view on just a little bit of a critique, then, you know, how strong was some of the stuff underpinning it? Yeah. Chris, I think, you know, DI or whatever you call it is a... i mean in the scheme of things it's it's a sort of it's a new corporate phenomenon and it's something that businesses are figuring out all the time and b corps
question what they do all the time because they're constantly trying to find better ways of doing things. So I definitely think there's kind of questioning within that, but it's in pursuit of a set of values and a way of seeing the world that I don't think is in question and which ultimately I think is still...
The direction in which business culture more broadly is headed, despite some of the rowbacks we've been talking about in the US. One of the things I have seen, which I think is interesting, is that an attack not just on the kind of practice of these things, but of...
on the industry that promotes the practice. Now, by pure coincidence, we have the industry represented here. You're all really in this kind of industry. Do you worry about what is going to happen to your businesses? I mean, Daniel, you're a consultant, really. With a lot of DEI expertise. I'm a general manager, thank you. Yes and no. I think it's very localised and very nuanced. You've got North America very much in the firing line.
I think within the UK and the EU, we are more protected by law and labour laws. We also have a number of guidelines, the ESRS guidelines, which have come in, which... Which are what? Essentially... ESRS.
companies have to report on different levels of whether it's gender pay whether it's equality within their companies as well the fines can go up to 10 million euros within the eu as well so that's not anything that's going away quickly so We are, I think, to an extent, call me naive, I don't know, but we are relatively ring-fenced against that, against companies.
It's your expression rowing back from everything they're doing. So no, don't worry at all for diversity of the future. For us, it's very, very exciting. Think of the available market in 2019 and think about where it is today. It's exponentially larger. So it's a great opportunity. Do you worry about the business? Well, I mean, I worry that we're losing credibility more broadly and not just on DEI and more broadly, because I think we spent the last couple of decades.
picking a lot of low-hanging fruit, the stuff that was quite easy to do, where there was an obvious business case, there was a cost saving to be had if you use less water or energy, there was a bit of a growth in ethical consumers, or there was a premium to be had in the market.
What I've seen, and I do a bit of teaching at Cambridge, I teach executives, and what I've seen is that the low-hanging fruit have been picked. And now we're at the heart of it. And as soon as things get hard, a whole bunch of people jump off the wagon.
because, you know, a lot of corporates, they move in packs. I've had lots of senior executives over the last 15 years tell me, look, I don't want to stand out on some of this stuff. I'll move together with the rest of the pack. And when the pack moves backwards, they start to move backwards.
But ultimately, I think we didn't see enough substance. You know, we sold them on this idea that this is going to be painless. There are no trade-offs. You're thinking sustainability in particular. Sustainability, like it's going to be great. Your job's going to, you know, you're going to get paid more in this new economy.
Everything's going to work out great for investors. They're going to have more returns. It's more money. It's win-win all round. And I think that it's becoming quite clear that's not the case. It's quite a messy picture. And I'm worried that... We're trying to get an outdated structure of companies from the 20th century to do things that they're not designed to do.
They're designed to extract maximum profits. And we're trying to do our best. I think a lot of people in space are trying to do their best with that structure. And the bit that's starting to feel more and more obvious to me in my work is that we need to redesign this thing. this corporate machine wasn't built for the 21st century challenges we now face and some of this stuff it's going to cost more it's going to take
greater risk. It's going to mean a bigger investment. It might mean lower margins for a while in order to pivot our economy so that we can survive as a society and as a species on this planet. And we've been spending too much time pretending like the outdated structure can get us there. Right. So, I mean, you're making two points there. One is that we need to redesign the...
if you like, the vehicles which are going to deliver it. But the other is that there was a lot of hypocrisy and over-promising, and that is perhaps causing some of the cynicism. And the backlash. But that is partly against people like you, Aaron. It is. It's partly about the profits of this new way of thinking. Yeah.
And part of the political mission for these guys is to cut you all down. I think Erin makes really good points, and I think there's a great deal of danger in trying to present a sort of... incontrovertibly positive future for every business in just trying to sort of meet some fairly arbitrary targets or do a few things differently. And I think that
That's what we're trying to do with B Corps, essentially, is to show that you can. So it can be win-win. Some businesses can do the sorts of things that Arinch is describing and thrive. Not every business can. Some need to be fundamentally redesigned. The bit that I would highlight, which I think is essentially the sort of secret source of B Corps...
is the fundamental shift that they make in their governance structures. So every B court makes a change to its legal articles in the UK, which means that they commit in those governing articles that they lodge with Companies House to essentially... advance the interests of a wider set of stakeholders so to balance the interests of people planet and profit which means essentially that they are not just signing up to a bunch of
arbitrary or a list of things. It's no sense in which it's a tick box exercise, but they're essentially kind of steering the governance of the business towards a set of aims which are there to benefit all of us. I mean, my argument would be we need to... what business is for, why it exists and our kind of social contract with business, what it owes to us.
And then the way in which a business lives up to those responsibilities, whether it's commitments to science-based targets, whether it's doing an optional certification like B Corp, whether it's doing something else is completely up to that business. And there will be a different...
option that is right for every business. I was surprised actually Nespresso is a B-core, is that right? That's right, yeah. The division of Nestle producing the coffee pods. Yeah. Because I've never thought of that as being particularly sort of... environmentally friendly way of delivering espresso shots to people's homes. First of all,
The B Corp certification is completely transparent. So everybody, if they're wondering how flexible it is, they can look at any B Corp in the world on our directory and see exactly how they score and where they pick up the points in our assessment. important thing to say um actually
There's one important thing to say about the B Corp assessment, which is essentially that one of the underlying principles of B Corp certification is ongoing improvement. So that counts for both us in designing the assessment that B Corp certify on. And there's a huge... update to that being published this year which will completely redesign how we do it actually and introduce some really rigorous minimum standards that every B Corp has to meet but that
principle of ongoing improvement also applies to b corps so b corps have to recertify every three years and so they have to meet our increased standards and ultimately therefore they are never resting on their laurels and indeed in many ways
The sort of purpose, the function of the B Corp community is in creating a race to the top. You're not worried, though. B Corp, the movement continues despite a backlash against these kinds of initiatives. It does. It continues. And, I mean, in the UK, we've seen enormous... growth. We've seen the B Corp community. I think it grew about 40% last year. And has it dried up since Trump became president? It hasn't dried up. Hasn't changed? No. I mean...
I think it's important to us, to what extent do we think what is happening in the US is coming to the UK? And what I think is interesting, and will be very germane to the question of whether it comes here. is the way business is heard and the way the herd moves. I just find it so fascinating.
Are business people really not capable of independent thought, of thinking these things through, working out what they think about diversity and what's good for their business or sustainability and coming to a conclusion? Does it have to be that a president says it and then...
the businesses all scuttle around following. I just, I find it very interesting that it's been such a politically led process rather than shareholder led or employee led or managerial class led. It's really, it's come from politics, all of this, hasn't it? It's a really good point. Essentially, I think what you're highlighting is that being a business leader...
is a really difficult job and it's getting more difficult in part because of the movement that we're a part of. I mean, business leaders are increasingly facing a raft of regulation, of reporting requirements, you know, which is just another...
set of obligations they have alongside the obligations they already have to their shareholders the obligations they have to their people to their employees the obligations they have to their customers and trying to ultimately solve a problem for them and I think a lot of what we're reflecting on here in terms of what's happening in the US is clearly some really...
pressing factors that business leaders have to consider which are leading to some of the decisions we've talked about and I think the interesting question about whether it is coming to the UK is thinking about well how does that equation change in the coming years in in the UK and I think our perspective is that in terms of there being a a pack moving with the pack or moving with the herd of other businesses there is a critical mass i think of businesses in the uk which are really committed to
DEI principles that essentially means I think that that pack will continue to move in a direction that we would all want to see. And I also think that culturally in the UK there has not been the same level of... opposition that has been created by essentially trying to turn what we're saying into some kind of ideology which it isn't but attacking DEI and this movement as an ideology.
I think is driving a lot of what you're seeing. It has happened here. And I've heard Liz Truss attack DEI, ESG, the acronyms, all of that. Liz Truss is not the political force in the UK that Donald Trump is in the United States. So, I mean, obviously there is...
a difference between the size of the right, if you like, in the UK. We have a massive majority Labour government. But I do wonder whether there has been put aside political developments in the United States, whether there has been already a... pushback against a lot of this in the UK. So the FCA, the Financial Conduct Authority, did try proposing DEI monitoring activities for companies under its purview. And the companies were like...
Give us a break. We don't want to do this. And the FCA did, in fact, press pause on it. I'm interested in that one. But also, just in general, I know companies have... begun to groan when they get another esg questionnaire from a company that says we're here to rate you for your shareholders and they're like we've already done 25 of these we don't need to do everybody's questions it's just a waste of everyone's time i mean have you
noticed already something of the backlash here. What I've noticed is that some companies who are skeptical of this find greater confidence in pushing back. Companies that might have done it maybe more silently or through corridors of power without the public knowing about it. Now being a bit more open.
But at the same time, I think there is a growing amount of companies, including companies that are B Corps certified, companies in other movements that are coming together and giving the opposing view. So I think the most useful thing we can do is see the diversity in the business world as well. are companies that are saying level the playing field we're doing some of this stuff we're out ahead
We need regulations. And others try to really pull back government action. Did you spot that FCA case, Daniel? Yeah, we did a roundtable a couple of weeks ago around financial services. And there is a lot, lot... much more of a spotlight, you know, sort of key compliance trends in 2024. We talked about the ESG reporting mandates, the CSRD Corporate Sustainability Reporting Directive.
compliance obligations in the EU. So whilst I agree with your point, people might delete the email when it arrives. Actually, that's going to be followed up by huge fines from a non-compliance perspective. reputational damage, regulatory scrutiny. From what I've been told, it's going to get a lot more restrictive, to your point, less, oh, it's nice to have, you're obligated to do this, and we will follow up this with substantial fines in the financial services sector.
if you don't start reporting more transparently. So, Erin, your position in this conversation is really interesting, because on the one hand, I think you're conceding more than the other two. But your response is, so we actually need to be more radical, more progressive and more honest. but also with the honesty attached. Well, I mean, and where I see great hope is ideas like steward ownership, which is like new ways of structuring...
Ownership models that protect senior leaders and allow them to invest in a company. Or employee ownership, which has risen by more than 30% per year here in the UK recently. There's a tax break for selling your business to your employees. All very interesting, but these are not part of the agenda. I think of the American right. I mean, I think they are just let the companies get on with it.
drill, maybe drill, and whatever they need to do. But these can transcend ideologies. That's the exciting bit. Employee ownership, for instance, has been embraced by centre-right think tanks. It's been embraced by parts of the J.D. Vance side. of the MAGA movement. Organisations like American Compass, who are part of the broader MAGA camp, the think tank in the US, they have embraced ideas of working more closely with unions. So I think there is something that can be transformed.
by taking advantage of the moment and the opportunities as well. We could redesign and restructure capitalism right here. Right, look, I want to draw this to a close. I want you to tell me what is in practice going to change. in the UK as a result of the backlash that we're seeing in the US and to some extent internationally against DEI and ESG? We'll start with you, Aaron. Well, I think, firstly, messaging is going to change, has already begun to change.
Corporates are more careful in signing on to big grand statements. They're more careful about... talking about what they're doing. So we had the era of greenwashing and now I think we're entering an era of green hushing where corporate leaders are just more careful in what they're saying. Chris. I think the first thing I would say is the role of a business leader.
that's going to get more difficult. It's going to keep getting more difficult as these pressures intensify. And as they try and navigate what, you see it playing out in the geopolitics as much as it is in culture, increasing uncertainty. And I think... Therefore, what you will see, and the word I want to pick up on that Erin said earlier on is honesty. I think in that more uncertain world, I think what we have to see happen within business is...
a more honest conversation about costs and decision making and what's behind those decisions. And in some cases, that's not going to go the way that we would like it to go in this studio. But I think, you know, the more that people are thinking out loud... about what's behind their decisions, the more that this is just a conversation that's happening out in the open rather than a sort of...
a war, whether a culture war of sorts kind of playing out. It will be really interesting to see if the sort of new subscriptions to your certification, Chris, if they tail off as kind of business just thinks. the new thing is to be thinking elsewhere than this kind of stuff. I mean, be really, really interesting.
Well, on that, Evan, I think one really interesting dynamic that we're, in the spirit of being honest, a really interesting dynamic that we will see playing out is, on the one hand, we have exactly the question you do about, well, what's going to happen to demand? this increasingly complex years ahead. And on the other hand, we're making our standards much harder because...
That's the right thing to do. That's what good looks like now. Expectations have gone up. Understanding of what good looks like has evolved. So we're not here to just up our numbers. We're here to provide a really credible kind of proof of concept for doing business in a better way.
away and if that means there are fewer b corps certifying that's fine by me okay last word daniel it's very difficult for me to trump your green hushing point as well but i think as i said at the outset i think dni has reached its level maturity whereby it is embedded in most companies
We'll move away from references to D&I, although it's less politicised in this country. It will definitely evolve into a people and culture and maybe we'll really, really stop focusing on training and education over a sustained period of time because... D&I and people and culture is not a process that you finish. It's a continual learning, almost like reinforcement learning, reinforcement engagement process.
We need to leave it there. Look, let me thank my guests. Daniel Fellows from Diversio, Erin Chsarhan from Donut Economics Action Labs and Chris Turner from B-Lab UK. Now, just to say at the end of this series... of the bottom line, we're proposing to gather a panel of great business brains, small panel, and put to them your business questions. for which we need your business questions. Do let us have them, bottomline at bbc.co.uk.
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