Change is inevitable. Everything changes, always. This statement feels truer than ever before.
Record temperatures and extreme weather events, a devastating pandemic, rampant inequality, and low levels of trust in government – the ground beneath our feet is shifting.
Scanning the news in the morning is often not that uplifting. Yet I also see great new initiatives and ventures arising, new ways of collaboration coming to the forefront.
Edelman’s recently published Trust Barometer shows that a failure to lead has made distrust the default in society. According to the report, nearly half of all those surveyed distrust government leadership and media (42% and 46%, respectively).
CEOs and executive directors are now expected to be the face of change
On the other side, businesses and NGOS stand out as the most trusted institutions at 61% and 59%, respectively. It serves to reason that CEOs and executive directors are now expected to be the face of change. In our shifting paradigm, I believe businesses and NGOs can be the stabilizing force, competent and effective drivers of positive change. Complementing government.
In spite of the social and environmental challenges we face, I believe we are on a path of growth. Where others see things falling apart, I see the way being cleared to rebuild our systems in a new and healthy way. The time for incremental action has passed. We as a society have been tasked with creating new standards, a different system.
Where others see things falling apart, I see the way being cleared to rebuild our systems in a new and healthy way
Our economic system as it exists currently is too often focused on short-term gains at the expense of long-term sustainability. Where once we focused on creating value, we now seek to find gains by cutting costs. With that, the original definition of value creation has changed towards creating efficiency. A very different way of looking at value and one we should not want to pursue any longer.
In a world where the top one percent of households globally own 43 percent of all personal wealth, while the bottom 50 percent own only one percent and the richest 1 percent cause double CO2 emissions of the poorest 50 percent, it’s clear that the old ways no longer work.
We need a form of capitalism that prioritizes the long-term, and human and environmental rights.
To make the shift, we need leaders who have the courage to step out of the rigid belief system of what business should be. Somewhere along the line we have all together – often with good intentions, sometimes not – created an unequal system. Unequal for the planet and unequal for the people living on this planet.
It is time that we take responsibility for the full impact of our actions. We need a form of capitalism that prioritizes the long-term, and human and environmental rights.
In his latest report, Blackrock CEO Larry Fink highlights the importance of assertive action in the face of our challenges:
Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not “woke.” It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper. This is the power of capitalism.
Mutually beneficial relationships. The word mutual comes from the Latin word mutuus, which means ‘borrowed or lent, reciprocal’. It means that with everything we do, we should give back to the farmers, the workers and the earth.
Are we returning what we borrow? Are we truly living up to our responsibilities?
I believe in the power of markets, but I also believe that we need a shift in how we consider the true costs of our activities and their impacts. We, and nobody else, create that market and define the rules to abide by. Global challenges require a system of trade that is inclusive and sustainable, not driven by the relentless pursuit of efficiency and short-term gain. Business for the public good relies on long-term thinking and a wider definition of ‘shareholder’.
We need a shift in how we consider the true costs of our activities and their impacts.
I like to believe that everything that is happening in the world now, is progress in a different form. As if that what is happening urges us to move forward. None of us can tackle these challenges alone, we can’t rely on individual choices to change the world. We need change at scale and the only way to do that is with multistakeholder alliances where we can test and learn together, what positive change looks like.
At IDH, this is what we call progress. And we see it every day, companies and brands, NGOs and activists, investors and governments coming together to innovate and create new definitions of trade. It is about being open to sharing and growing and committing to a new form of business.
This message is not just for businesses, governments or NGOs, it’s even more important for the shareholders, holding the system in its grip. It is time to loosen up, make a different kind of profit. Create the financial space so that businesses can explore new possibilities that acknowledge our shared humanity.
Our future – and our shared value and prosperity – depend on it.