It is one thing to have a corporate culture based on asking forgiveness rather than permission, and another having a toxic corporate culture seemingly devoid of respect for people and even the rule of law. One is brash and entrepreneurial, and the other exploitive and abusive. If ride-hailing were gold and silver (which, to the shareholders, it is to the tune of $70 billion), the headlines Uber has been generating could just as easily have applied to the California Gold Rush. How much progress has there really been since 1848?
There are plenty of articles and reports on the misdeeds of Uber and its leadership team that are within easy reach of the mighty Google, so I will not recap those. They have been at war with taxi and limousine hegemony globally, but also at war with decency and diversity.
So, why does this matter from an ESG perspective? Uber, even as a private concern, is still answerable to its stakeholders – its owners, its board, its employees and contractors, its customers, the governments and agencies that set the regulatory environment in which they operate. Daylight is the best disinfectant, and a series of public reveals from drivers and home office employees changed perception from a company that stands for Libertarian ideals of commerce to one that simply flaunts rules and abuses human capital out of a sense of permissiveness and privilege.
It has been too easy to turn a blind eye when those in governance positions are benefiting from a ballooning valuation, but the brand and enterprise value are under direct threat when stakeholders expose and reject these behaviors. Thousands upon thousands of people are said to have deleted the app from their smartphones, and competitors have sprung up whose defining attribute is not some new innovation or pricing scheme, but that they are not Uber, care about their drivers and eschew the “tech bro” culture. There is a strong “big-E” Environmental case to be made for Uber around efficiency, resource sharing and capacity utilization, but they failed spectacularly at the S and G.
Today we see the end of the Founder/CEO’s tenure as the operational head of the company, the leadership ranks have been decimated, board member David Bonderman (interestingly, a Partner at TPG, a private equity firm that has a strong commitment to ESG principles) has resigned for misogynistic behavior in the board room, and the now-humbled company broadcast an email announcing a mechanism for tipping drivers through their app. The rising chorus of stakeholder voices changed the trajectory of the company.
What we observe is the power of alignment between creating and defending value and good environmental, social and governance practices. These corporate behaviors were unsustainable and not only reflected poorly on the enterprise but also ultimately threatened its value. Is Uber a reformed company? Not yet. But, a trajectory of improvement can point to opportunities in private and public markets, created through stakeholder engagement, which upgrade a company’s ESG profile and with it the company’s value and growth potential.