Industry in service of sustainable and inclusive growth

Like all crises, COVID-19 has sped up or accentuated certain recent but pre-existing trends. I have selected four:

1) Globalization, which – let’s not forget – has had many positive effects, has been squarely brought into question: logistics chains have proven to be weak; we have – rightly – become aware of our dependence on a certain number of strategic priorities, leaving us with the uneasy feeling of no longer being masters of our own destiny; and deindustrialization has become truly apparent, along with its effect on unemployment.

2) At the opposite end of the spectrum, there has been a resurgence in public power at the national level around the notions of public service and sovereignty, together with a deep aspiration to take back control from the inevitable march of globalization.  

3) The explosion in digital technologies which have irrevocably changed how we work, but which have also contributed to globalizing emotion, accentuating the instantaneousness of information, with the ability to switch rapidly from one topic to another, no matter how important. After weeks of constantly counting the number of COVID-19 deaths across all media outlets, we have moved on to the Black Lives Matter movement, which has spread in an equally impressive manner as the virus before it.

This reign of emotion and immediacy is defined by its focus on the short-term and – at times – simplification, even with regard to major issues, as opposed to the long-term represented by major economic and ecological changes.

4) And as a backdrop to all this, growing environmental demands, with a focus on health, wellbeing and protection of the planet.

It is therefore very clear that the post-COVID-19 world – the world we are already living in – will be more local, more digital and more sustainable.

If there is growth—which I am totally convinced there will be, even as others reject the notion—it can only be sustainable and inclusive.

Industry will be an important part of it; of that I am convinced. There will be no growth or collective future without an industrial renaissance. Industry will be a strong component of our future precisely because it must confront the major challenges of this new century. Demographic, ecological and health challenges, and an aspiration to live better: we will only get through the epic times facing humanity if they are accompanied by industry. Or they will fail.

This belief must, however, be viewed against several observations:

First observation: the public has a highly ambiguous opinion of industry. It is sometimes seen as outdated, polluting, objectionable and capitalistic. Yet, it is an extraordinary source of quality employment and makes a crucial contribution to our strategic independence.

Today and tomorrow’s industry means plants, research and innovation centers, technological equipment interconnected via numerous networks; it also means local employment; it is a crucial player in regions and local dynamism; and lastly, it means men and women working together to achieve useful outcomes.

Second observation: not all industry can be grouped under the same heading. The differences are vast in terms of:

-       environmental impact: trains vs. cars…

-       their relationship with employment, digitalization and robotization

-       logistics, with local industries manufacturing where they sell (such as Saint-Gobain on the building materials markets), and other industries whose products travel long distances and which are by definition more global

-       their dependency on and access to resources: do they need rare components or not?

-       their inherent sovereignty issues

-       their capacity for investment.

So there is no single solution to the future of industry. The rate and extent of its contribution to inclusive and sustainable growth will vary from one segment to another. We just have to accept this fact.

Third observation: industry is dependent on long time frames. When Saint-Gobain undertakes to achieve net zero carbon emissions by 2050, it means considerable efforts have to be made starting today, but with no short-term results. Unfortunately, some activists are not ready to hear about the effort and time frame required.

Industry cannot make these efforts and pull off this shift alone. Support and impetus need to come from the government, be it:

- funding for major projects

- positive incentives (direct subsidies or prices)

- disincentives, taxation, or even outright bans.

All this means redefining the relations between companies and the State—without forgetting the European level, of course—in order to avoid competition distortions, particularly with the introduction of carbon mechanisms at the border.

Given this context, an industry that serves inclusive and sustainable growth will need to become more digital, more local and more sustainable, while bearing in mind that these three changes are intrinsically interlinked: local production and distribution channels reduce environmental footprints and fight climate change, and digital technology facilitates this local production and ensures the success of the energy transition.

Taken together, they paint a picture of a more responsible and more inclusive model of capitalism through the creation of skilled jobs, especially for young people, and the revitalization of local regions.

This model is without doubt a response to society’s expectations, but for the company, it is also a source of performance and attractiveness.

I would like to conclude with a few words about an important topic: purpose. An inclusive company which combines growth with environmental and social progress, is, by definition, a company that has given itself a mission and a strong purpose.

To reflect on a purpose is to reflect on the company’s aim and its essence. It cannot be an empty shell; it has to adopt an integrated approach within a truly strategic framework, based on real, long-term commitments.

The support that Saint-Gobain teams worldwide have shown toward medical staff and patients during the crisis is a good example. When, without prompting, you pivot your industrial plant to manufacturing plasterboard partitions in order to build field hospitals and expand patient capacity, this is not just a translation of the company’s humanist values, it is a natural response to what is for Saint-Gobain its very essence: to help everyone live better.

Still, is it necessary to go so far as to inscribe this mission into the company’s by-laws, to speed up its transition to a more inclusive model? To me, it does not seem essential, and if we did, it may open the door to the risk of numerous legal disputes. So, there is little motivation for companies to do so, and I doubt that many will. There are other factors coming into play that will shake up the rules of the game, over and above the evolving attitudes of investors and sustainable finance. I am thinking about the growing demand from employees for meaningfulness in their work, especially the younger cohorts. I am convinced, therefore, that companies that want to be attractive and successful will adopt an inclusive and sustainable growth model.