How to profit and be responsible: Exclusive Q&A with Andrew Banks and Nicholas Bernhardt
Written on the 27 June 2019 by Paris Faint
Andrew Banks and Nicholas Bernhardt believe that when running a business, profit and corporate responsibility aren't mutually exclusive.
Granted, it is becoming harder for companies to ensure their supply chains aren't buying into an ethical nightmare, particularly given the mountains of fast-inflowing data related to overseas suppliers.
New modern slavery laws in Australia put the onus on them to make sure their goods and services are coming from reputable suppliers.
Whether it's making sure no children are involved in supplier workplaces, carbon footprints are low, businesses meet certain cultural diversity thresholds or any other concern, businesses are held to account by the public over their corporate social responsibility (CSR).
Even critical information can easily slip through the cracks.
This is why former investment banker Nicholas Bernhardt created Informed 365, a big-data Software as a Service (Saas) platform that helps companies easily stay accountable to their obligations for CSR.
Informed 365 is currently the only company in Australia providing a customisable service in the CSR tech space.
It enables organisations of any size to collect their supply chain insights and focus on areas of concern including climate change resilience, greenhouse gas monitoring, diversity and working conditions to help them make more responsible and transparent decisions.
Companies that are turning over an annual revenue of $100 million are now required to report on their supply chains under the Federal Government's Modern Slavery Act, and Bernhardt's platform is cracking into that market.
During its startup process, Informed 365 quickly caught the eye of investor Andrew Banks who is best known for an illustrious career in HR recruiting and as one of the 'Sharks' on Shark Tank.
The two are now partners and aim to grow the startup in targeting the growing supply chain market which is on track to reach $19 billion in 2021.
Business News Australia sat down with Bernhardt and Banks to find out more about Informed 365 and its place in the international scheme of CSR.
What is the Informed 365 platform in a nutshell and what are the problems it is trying to solve?
BERNHARDT: The problem we are trying to solve is that most organisations have a lot of data, but they don't have meaningful data. They don't visualise it. They collect data and it sits in silos. The challenge we saw was to visualise data, make it more meaningful and allow organisations to make better and more informed decisions.
We focus on three specific areas; one is supply chain management, which is heavily driven by the modern slavery act. The other aspects are climate change resilience and also tracking any environmental or social footprints such as greenhouse gas impact, gender equality or Indigenous reconciliation. It is a heavily focused IT platform that helps companies get transparency in the CSR space, that is us in a nutshell.
Where did you identify the need for Informed 365 and what was the startup process like?
BERNHARDT: I thought there was a lot of time and effort corporates spent on consolidating spreadsheets, bringing data together and not really having any insight to that data. A lot of the data was actually incorrect, and we saw is that pretty meaningful and often not very good decisions were made based on data that wasn't as good as it should have been. That was the trigger to create a business that focused on transparency and visualisation in the data space.
Historically companies have tended to opt for cheaper supply chains, but this can be fraught with ethical danger. What do companies need to do in order to ensure that they are completely responsible, but also profitable?
BANKS: Profitable and responsible. There is no conflict at all between the two. I think that profit and purpose are definitely not mutually exclusive, but some businesses do find them easier to align than others. I quote probably one of the most prominent capitalists of our time, Mr Larry Fink of Blackrock, who manages a cool $6 trillion. When he turns up at a shareholder meeting, people take notice. If you look at his January 2019 letter I think it encapsulates where we all have to go.
We can't leave CSR to governments alone and we can't even leave it to not for profit organisations, it is everybody's job to make sure their businesses line up around sustainability and around producing constructive things. Fink's letter Purpose for Profit is really what attracted me to Nicholas, because if ever there was a business that had a purpose and clearly has the ability to scale and make a profit, its Informed 365.
BERNHARDT: I think what businesses need to do is literally start the process of getting transparency within their supply chain. It's quite amazing to see even very large organisations not really knowing where their products and services come from.
With the big data capabilities that we have these days, that's the first step - to start gathering data, cross checking it, validating it. Then obviously engaging with the more challenging and risky suppliers. Problem solving by setting out, 'this is how I want to work with you, and these are the ethical, social and environmental aspects that you need to focus on.' It is about transparency, collaboration, profit and purpose. I think those are the aspects which are absolutely critical going forward.
Andrew, at what stage did you come on board with Informed 365 and why did you decide to invest?
BANKS: The concept of Informed 365 started a few years ago, and then I think Nicholas had either seen me on Shark Tank or heard about me somehow and he was very proactive in approaching me. When I asked him what he did, it didn't take long for me to say, 'let's have a meeting and hear more'. With Morgan and Banks, Talent2 and even Monster when I was based in the US, I had a lot to do with supply chain management.
I had done some HR work and recruiting in an area where the current solution to giving the CEO of an ASX top 100 company any transparency was to engage a firm of consultants, usually chartered accountants. They would probably charge a couple hundred thousand dollars and produce a very comprehensive document on a supply chain, but as soon as the document was produced it was already outdated. This was a huge amount of expense and a large gap. Why couldn't you in this modern, digital, Software as a Service world have a situation where suppliers are constantly feeding their data into a platform? Why can't you use various tools and algorithms including AI to search the web for press releases and any sort of specific data feeds in relation to CSR, and then have a dashboard of your supply chain? It just seems to me a logical way of going about things.
Is there anything you think Australian businesses can learn from American businesses in terms of CSR, or even vice versa?
BANKS: I think its very company specific, but the general answer is that both countries have a lot to learn from each other. There are some great things happening in CSR in America, some companies are doing some amazing things, and of course in Australia. But there are also laggards in both countries doing nothing and haven't cottoned on to the idea that your customers and staff want you to be involved in a company that yes, is making money and being prosperous, but also making a difference in the world.
It's a changing attitude. I think there are a lot of businesses out there who are using tools like Nicholas' that can skew whatever they do around the things they know are positive and make a difference. It's not rocket science, but I think it's so overlooked in both America and Australia by many companies.
Looking at the near future for Informed 365, where to from here?
BANKS: I expect to see it in the United States and in Europe, as well as Australia and Asia. We already have a lot of interest coming out of China, a significant player in that space. It is paving the way for helping people realise that for a fairly limited investment they can have that peace of mind. I'd only add that life is amazing and we can't wait to talk to more customers. Since we have launched in the media a few days ago, we have had some CEOs of some very prominent businesses reach out to us. We are very excited and on a roll here.
Author: Paris Faint