INNOVATIVENESS, INCLUSIVENESS, SUSTAINABILITY AND RESILIENCE: the new growth patterns

Whenever I am asked for a definition of sustainability/ESG, I say: “It is a change in the world model”. A world that needs to include environmental, social and governance factors in its traditional operations, which are predominantly economic and financial, for its own survival.

Al Gore, former vice president of the United States and environmental activist, said the same thing during a live broadcast in 2021: “The world is heading towards the 'sustainability revolution', a change in the magnitude of the industrial revolution, but at the speed of the digital revolution”. That’s it. The industrial revolution meant the transition to new manufacturing processes in Great Britain in the second half of the 18th century, influencing the entire world. The inclusion of ESG factors in business management, consumption, commercial rules, legislation, etc. represents, in my opinion, a movement that is just as deep.

Some facts lead me to think this way, and they are increasingly frequent and fast. For example, the creation of a regulated carbon market in Brazil (in progress); the new European Union rules, such as the CBAM, which will surcharge products imported into the bloc according to the carbon intensity of production; the pressure from investors and shareholders for the adoption of this agenda by invested and controlled companies; and so on.

As we are talking about a change in the world model, which actors have the most power to influence this change? Precisely those recognized and respected by representatives of the current standard. That's why I use these sources in my lectures and classes. And the World Economic Forum leads the way. Given its importance and seriousness, the institution plays a fundamental role in paving this way, and has been steadily doing so. In fact... thinking about this... its name should be changed, right? The Forum isn’t just? “Economic” anymore, and it’s been like this for some time now (thankfully)!

Considering this context, I received with great enthusiasm the launch of the report “The Future of Growth”, during this year's Davos meeting. It could have just been more material on the evolution of GDP, financial indicators, economic projections and so on. That’s not like that, though. The document proposes nothing less than a paradigm shift in the assessment of economic growth, with a multidimensional approach to complement and qualify traditional measures, based on four pillars:

INNOVATIVENESS, INCLUSIVENESS, SUSTAINABILITY AND RESILIENCE

?In the Introduction, the authors explain this: “The question is not whether the world still needs economic growth, but the extent to which the underlying nature of the needed growth is synergistic with other important priorities. This report presents a new quantitative framework to help complement traditional metrics and develop a more holistic view of the quality of growth.” This “to what extent” idea guides the conceptual framework of each pillar, which raises questions that we need to look into:

? Innovativeness: to what extent can an economy's trajectory absorb and evolve in response to new technological, social, institutional and organizational developments to improve the longer-term quality of growth?

? Inclusiveness: to what extent can an economy's trajectory includes all stakeholders in the benefits and opportunities it creates?

? Sustainability: to what extent can an economy's trajectory maintain its ecological footprint within finite environmental limits?

? Resilience: to what extent can an economy's trajectory withstand and bounce back from shocks?

?When reading the 2024 Global Risks Report, also from the World Economic Forum, we can unequivocally see that the maps that have brought us here will not be able to show us the way in the future. In the list of the top 10 risks for business over the next ten years, for example, there isn’t any risk belonging to the “Economic” category. The first four are environmental, followed by two technological ones.

That's what it's all about. A world that suffers from the extreme impacts of climate change, that sees all its beliefs being questioned by artificial intelligences, that fights against misinformation, that finds itself immersed in polarization and humanitarian crises. Is it possible to deal with this reality following the same old premises? Certainly not. Therefore, “The Future of Growth” deserves a calm reading, with clear lenses and active listening.

An interesting chapter of the document provides an analysis of 107 countries across the four pillars, aiming at being a guide that helps decision makers determine what “trade-offs they are willing to make and which synergies are most relevant to explore in their particular context”. Brazil obtained the following scores: 41.8 in Innovation (Global: 45.2); 55.3 in Inclusion (Global: 55.9), 56 in Sustainability (Global: 46.8) and 52 in Resilience (Global: 52.8).

If the Forum had only released the report, that would have already been a great service by itself. But the idea is to go further. “The Future of Growth” will serve as the basis for a two-year initiative of the same name that will promote dialogue between policymakers, business leaders and academics about how we can chart new paths for economic growth. It is a call to action, so that “leaders can critically reassess and recalibrate their policies for a new economic era”. Let this new economic era come, this change in the world model!