We live in a complex, challenging and changing world.
Who amongst us can look around and say that the world today is the world we imagined for ourselves?
Just three years ago in 2015 the UN Sustainable Development Goals were unveiled, followed shortly by the historic Paris Agreement. Together, these two new frameworks ushered in a sense of renewed optimism in our capacity to address pressing challenges, not only in the business world, because they offered sound opportunities for development on a more sustainable footing – one that considers not just economics, but the environment and social needs as well.
And yet that sense of optimism has since been overshadowed by global events and our world today feels more fractured than before.
The effects of climate change have moved from the screens of scientists’ computer simulation models into reality, playing havoc with the weather and world around us. Trust in our institutions and political leadership continues to fall. Popular votes have allowed extremism to come back to the fore in many countries, while recent protests showing that social unrest is rising.
At the center of these issues lies a major fault line, one which has already been recognized by leaders such as Paul Polman, outgoing CEO of Unilever and Chairman of the World Business Council for Sustainable Development (WBCSD) from 2014-2017.
In his time at Unilever and WBCSD, Paul’s formidable leadership has reimagined the way business can and should be done. He is a leader who foresaw a global agenda and began to shift the company under his control to a new way of doing things.
Paul’s guiding credo has been that the current economic system is based on an outdated model that serves only a few, rather than the many. It incorrectly focuses on short-term profits ahead of anything else.
Business as usual is no longer a viable option.
Paul knew it. As a champion for sustainability and ethics in business over many years, he has often said that there is no business case for enduring poverty and runaway climate change. At Unilever he has worked tirelessly to introduce a new, purpose-led business model that serves all the company’s stakeholders and shareholders and takes responsibility for its entire value chain. He helped create a new narrative that is more inclusive, brings more trust in business and speaks to the many. In his wider role he has been a member of the High-Level Panel that helped design the Sustainable Development Goals or SDGs.
The sustainability agenda is becoming increasingly complex - it's no longer just about emissions reductions, reputation or jobs. Rather, it's about all these aspects at the same time. Business must take a leading role in the transformations that our key economic systems will go through.
Now more than ever, we need more people like Paul – people who are champions of positive, collaborative change in the business world.
And there is hope.
The way that business approaches sustainability is changing rapidly, as new opportunities and challenges emerge.
By working together, business can rally for transformative, systematic change in a much more powerful way. Using the SDGs as its compass, business - as the engine of the global economy - has the capacity to shift the world’s trajectory, and by working with governments and partners around the world can address the social inequity and environmental catastrophes that we have created.
Paul recognized this possibility and worked hard to achieve it. He was a key part of the Business and Sustainable Development Commission (BSDC), which brought together more than 25 leaders from business, finance, civil society and international organizations between 2016 - 2018, to make a compelling case for companies to align with the Sustainable Development Goals. The Commission’s flagship report, Better Business, Better World, shows how sustainable business models could unlock more the USD $12 trillion in new market value, and create up to 380 million jobs by 2030.
But ultimately, none of the changes the world needs will go to scale fast enough unless we change both the course of business and the capital markets. We need to ensure that the cost of capital for any business or asset is determined by the full picture of its financial, environmental and social performance.
There is a wealth of initiatives, frameworks and literature that show that this change can happen and is happening. New standards introduced by the Taskforce on Climate-related Disclosure (TCFD), new ways of considering risk in COSO’s Enterprise Risk Management framework.
And lighthouses of this new leadership can be found in all corners of the world: in Unilever’s purpose-led business model; in the recommendations of the Taskforce for Climate-related Financial Disclosures (TCFD), in Kering’s integrated reporting; in IKEA’s Planet, People, Positive strategy; NRG’s sustainable energy vision, or in Safaricom’s Transforming Lives mission. We see it also in the new financing structure that banking syndicates are putting in place to deliver lower interest rates to businesses like Danone, Philips and Olam if their future environmental, social and governance (ESG) targets are met.
All these and many more are shining their light on a new model of integrated capitalism that aims to provide a better world for all. It’s clear that in the future, every business must be able to explain its vision, how that will contribute to a flourishing society, what it will do to get there, and how it will transparently report its progress.
This amounts to a looming change in the scope of fiduciary duty. All businesses and investors must recognize that environmental and social results are the new tangibles. In simple terms the value of a business can no longer just be based on its financial risks and performance but will see the cost of capital calculations being based on the integration of the financial, social and environmental performance.
We must create a new forward-looking language to report on them. And we must hold every business, every executive, and every board accountable for their contribution and impacts.
This is a new call to action. It’s critically important that this call to action moves beyond the world of sustainability and penetrates the mainstream itself.
For many years Paul has been one of the guiding lights of sustainability in business and a champion of change. Now it’s time for many, many others to take up the call and ensure that sustainability in business is transformed into sustainable business, across the board.
As Paul said at the 2017 WBCSD Council Meeting in Mexico, change like this can be uncomfortable, and it should be uncomfortable. Company leaders must embrace the discomfort and move forward.
Because that is the only way that we can collectively achieve what is needed to ensure that all societies can flourish around the world. Only by taking an integrated approach can we create a future that is the way Paul imagined it can be – one that is socially, environmentally and economically successful.
“I am a prisoner of hope” often says Paul, quoting Archbishop Desmond Tutu, when asked about whether his actions would make a difference. The truth is that we must all remain prisoners of hope to champion the changes needed to save the world.
Thank you Paul - from your friends at WBCSD and the many you have inspired along your journey. We will no doubt hear much more from you.