Can Business Save the World?

This was one of the “easy” questions posed to me in my recent visit to the World Economic Forum. Here you have some of my thoughts.

Photo by Frederick Tubiermont on Unsplash

Earlier this month, I had the opportunity to visit the World Economic Forum, and to speak about the role of business and business education in today’s world. One of the questions posed to me was: Can business save us?

For some, that’s like asking a pickpocket to look after your wallet. For them, big business and its apparent reckless pursuit of profit are to blame for most of the world’s current ills. I would argue differently. For me, corporations can and must be part of the solution.

I am optimistic about our ability to resolve the challenges of our times. Human history has shown that we are innovative and industrious, capable of producing a world which in many ways – life expectancy, poverty, employment – has never been better. The fact that we have been so adept at solving so many of the problems faced by previous generations should give us the strength and hope to resolve those of the next generation.

But the great challenges of the 21st century are even more complex and require a global approach. They require agreements and cooperation, and governments and multilateral organizations obviously have an important role to play here. And this is also where I see the role of business as crucial.

I was heartened to see the Business Roundtable, which groups the 200 most influential U.S. corporate leaders, recently abandon its stance on the preeminence of shareholder value. For more than two decades, the Roundtable’s mission had read: “The paramount duty of management and boards of directors is to the corporation’s stockholders”. All other interests were “derivative”. Over the summer, the Roundtable rewrote its mission to contemplate the interests of customers, employees and suppliers, along with the communities in which they work. “Each of our stakeholders is essential”, the new mission reads. “We commit to deliver value to all of them for the future success of our companies, our communities and our country”.

Solutions will not appear overnight. Business models and strategies cannot be changed easily since many stakeholders must be taken into account. But that should not be an excuse to postpone action. Businesses can establish social standards, they can start taking concrete measures to limit their impact on the environment, they can invest in research and development, they can seek ways to improve the communities in which they operate. To be more specific, here are two examples of how businesses can help:

-         Businesses can establish policies to sustainably grow agricultural products which convert to de facto global standards.

-         Businesses can invest resources in research that often far outstrip what some emerging countries can do.

Large corporations are in a particularly good position to do this, and their actions will have an impact that goes far beyond what an individual and, even sometimes, a country can do. They can also serve as examples to companies and institutions that are smaller and enjoy fewer resources. In particular, leaders must realize that this gives them a responsibility towards others. Exercising this responsibility requires spirit of service and the desire to work for the common good. Organizations such as the World Economic Forum and we, educational institutions like IESE Business School and others, can act as platforms to accelerate change. As a business school that shapes leaders, we are committed to impart these values – exemplarity, integrity, spirit of service - in our classrooms as the core ethos behind everything that we do.

Obviously, adopting a multistakeholder view of the firm cannot be a tactical solution in order to increase benefits or social standing; this would be a fraud. Taking this view needs to be aligned with the true purpose of the corporation. The company and all those who work there should understand this purpose in a profound, almost intuitive way. And establishing an underlying purpose that remains constant over time is what best prepares companies for the future.  

Companies are an important part of the solution. If they have a purpose and are committed to deliver value to all stakeholders, which is easy to say but not as easy to implement, then I am certain that yes, business can save us.

#global #capitalism #AWorldtoChange #socialimpact