Companies Urged to Revise Their Approach to Making Profits and Consider Social and Environmental Metrics

Companies are changing their way of thinking, taking a broader long-term view of their business models and how to make them sustainable.

On the second and final day of the World Economic Forum’s inaugural Sustainable Development Impact Summit, in a session on how the private sector can drive the global effort to achieve the Sustainable Development Goals (SDGs) by 2030, business leaders called on enterprises to revise their approach to making profits to consider social and environmental performance.

“The world is being reset around us and the clock is ticking,” declared Jean-Christophe Flatin, President of Mars in the US. “Our customers now expect us to show accountability across the entire value chain. People expect values for money.”

Rather than view this pressure as a burden, corporations should take a positive approach, Flatin argued. “This provides an opportunity for us to reinvent ourselves. It is a humbling duty to reinvent how we do business.” Mars recently launched a long-term sustainability programme.

The key, Flatin explained, is to look at the facts about the benefits of sustainability and to take appropriate action. “This is a business agenda. The data is out there. It is robust. The question is not if but how and how quickly.” Mars, he explained, has had to tackle the issue of what is the right level of profit. This has meant looking beyond the traditional boundaries of the firm.

His advice to businesses: “Embrace the discomfort of measuring the world beyond. New questions and provocations are being brought to the table. Embrace the journey of mapping the value chains beyond the world of your company.”

Think long term

André S. Hoffmann, Vice-Chairman of pharmaceutical group Roche in Switzerland, echoed Flatin’s call for looking at social and environmental performance as well as the financial bottom line. He stressed that top management must set out the values of the company – “principles expressed by the principals.”

Added Hoffmann: “When you take investment decisions, just think long term. It’s an easy thing to say but it is difficult to do. The system needs resetting, and the best way is to think long term. It is not how you spend money that is important; it is how you make it.”

Investing for impact in growth markets does not require a trade-off, maintained Arif M. Naqvi, Founder and Group Chief Executive of the Abraaj Group in the United Arab Emirates. “There is a ‘trade-on’. You don’t have to compromise on investment returns.” The SDGs, Naqvi noted, “are clear action points – every one of them convertible to investment opportunities – and the financial services industry is waking up to that.”

Investing for impact is about partnerships, Naqvi explained. Business leaders and stakeholders are now speaking the same language.

“Convergence is happening despite ourselves,” Navi said. “Convergence is being forced on us.” Young job applicants want to work for responsible companies and, when being interviewed, “they interview us and ask what our company is doing. Every company is going to have to reflect the SDGs. More and more people are thinking the same way. You cannot build a great company without starting with a good company.”

Pressure through peer competition

Reiterating the need for motivating metrics, Kristalina Georgieva, Chief Executive Officer at The World Bank in Washington DC, cited her institution’s annual Doing Business Report as a vital tool.

“It is very important that we create pressure through peer competition for conditions to improve,” Georgieva remarked. “We target our investments to address” the weaknesses in countries, whether in education or infrastructure.

The World Bank has also provided innovative financial instruments including green bonds and pandemic bonds. Georgieva concluded: “We are the first generation to live in this world of converging aspirations and we are the last that can match aspirations with opportunities. We are now at this tipping point where we are getting on with doing it because we have no choice.”

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