The World Economic Forum (WEF) opened at Davos in a gloomy atmosphere. World leaders are pressured to address climate change and social unrest. Customers increasingly state their preference for value-driven brands. To remain sustainable, corporate leaders are forced to reinvent themselves by offering public value.
Last year, global financial and political leaders looked at the future with optimism. Many of them considered they had succeeded in managing the financial crisis. They convinced that the return to economic growth would be lasting. However, the premises of the social crisis in Europe and of the political crisis in the U.S. were already in the background. Year after year, ahead of the World Economic Forum in Davos the global NGO Oxfam had reminded us of the deep social fracture that makes our world so fragile. Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, did mention that economic growth would not be sustainable without restoring the social contract. But most of the conversations focused on the future of education and of Artificial Intelligence (AI).
At the opening of today’s Forum, the tone was quite different. In his introductory remarks, Schwab acknowledged that the new economy has already disrupted industries, and negatively impacted millions of workers. He suggested creating “new global norms, standards, policies, and conventions” to increase value creation and safeguard the public trust. Schwab added:
“We need to move from a narrative of production and consumption toward one of sharing and caring.”Klaus Schwab at Davos on 22 January 2019
A NARRATIVE OF SHARING AND CARING
Ahead of Davos, in his annual corporate governance letter, BlackRock CEO Larry Fink underlined the overarching importance of purpose as a driver of “sustainable, long-term growth and profitability”. “Society is increasingly looking to companies, both public and private, to address pressing social and economic issues”, Fink wrote.
And Fink continued addressing the CEOs of the multinational companies he invests in: “One thing is certain: the world needs your leadership. As divisions continue to deepen, companies must demonstrate their commitment to the countries, regions, and communities where they operate, particularly on issues central to the world’s future prosperity”. These are other words for what we call public value creation.
This year conversations in Davos lead to a clear conclusion that companies need a different type of leadership if they want to remain sustainable and address the needs of society and the environment. Today’s endemic lack of trust towards governments, the media and business clearly drives populism. Technology disrupts our economy. Climate change and poverty will soon turn into gigantic disruptions for all. Business leaders have no other choice but to reinvent themselves and think in terms of systemic change. This is what the WEF calls Globalization 4.0.
Driven by technology and artificial intelligence, this revolution is already impacting on education, transportation, communication, production, distribution and energy. People’s aspirations are likely to follow with requests for a full circular economy and genuine public value. In his letter to CEOs, Larry Fink mentions the Deloitte Millenial Survey 2018, in which 63% of millenial workers said that the primary purpose of business should be “improving society”. Clearly, public value is seen as key to successful business, a clear answer to customers who threaten to “abandon” their brand and to new reputation risks.
In July 2018, the World Business Council for Sustainable Development (WBCSD) showed that over 40% of the 250 surveyed global companies had integrated the Sustainable Development Goals (SDGs) into their strategic thinking. This often creates corporate challenges and the need for new business models.
Resources are becoming scarce. Welcoming 9 Billion people by 2050 aggravates this challenge. A competitive business view can no longer provide the impact needed on the environment and society. Worse, it can no longer offer a sustainable corporate strategy. The magnitude of today’s challenges forces corporates to think differently. At stake is their survival. Instead of a linear and competitive business, the solution lies in a circular and collaborative approach.
SUSTAINABILITY AND COLLABORATION
So far, sustainability strategies have often been kept competitive. Most of the participants of our Public Value Labs prefer to be the only ones from their industrial sector attending the Lab. A multi-stakeholder approach is often welcome, but corporates acknowledge the high competition existing in the field of sustainability. They are still quite far from fully reinventing themselves…
Yet, almost all industrial sectors are in the process of creating “initiatives” to address the current environmental and societal challenges. These initiatives represent a community of shared interest and, ultimately, shared purpose. They are often multi-stakeholder projects, comprised of corporate, public, and civil society experts. They focus on shaping solutions to a shared challenge. This is the space we need to watch, as such initiatives could help leaders reinvent themselves for good.