We have the perfect conditions to reinvent the economic system – but it takes a dose of daring
It is notorious that, from 2019 to now, the acronym ESG — in English, the adoption of environmental, social and governance criteria when making investment decisions — has left the niche and has been gaining the spotlight, being the subject of debates and having more space in the media. The covid-19 pandemic contributed in part to this tsunami sweeping the business universe, but not only her. The subject has been discussed in recent years at the World Economic Forum, which manages a global task force to promote greater transparency about the exposure of companies to climate risks, and is also present in the letters to investors by Larry Fink, CEO of the BlackRock management company, responsible for dictating market trends with an emphasis on sustainability and decarbonization of asset portfolios.
In the same scenario emerged the concept of capitalism stakeholder (stakeholders) as opposed to the capitalism of shareholder (shareholder) — in August 2019, the CEOs of 181 American companies signed a manifesto indicating that the supremacy of profit above all else was coming to an end and that it should give way to a new capitalism, more centered on the publics with which companies interact — consumers, workers, suppliers, neighboring communities, governments, media, civil society organizations. The “S” of ESG, after all, contemplates the various layers of the social dimension of business.
The World Business Council for Sustainable Development (WBCSD), a network of business councils for sustainability of which the CEBDS is a part, shares this vision and has called on companies to take the step towards reinvention of capitalism. We understand that the world today faces three major pressures: the climate emergency, the loss of biodiversity and growing inequalities — all of which require a shift in mindset and business posture.
The capitalism we need is one that rewards true value creation, not value extraction under the current model, and internalizes social and environmental costs. It will be necessary to build long-term resilience, so that companies can absorb and adapt to all the transformations that are taking place and also contemplate a regenerative approach: it is not enough to just preserve what exists, it is necessary to create strategies that restore the ecosystems from which business depends. In short, the new capitalism is stakeholder-oriented, internalizes impacts, takes the long view, is regenerative and responsible.
WRI Brasil calculated the economic potential of economic recovery measures aligned with climate action and the reduction of socioeconomic inequality. The recovery based on green economy could return Brazil to economic growth over the next ten years, with an additional cumulative increase in gross domestic product (GDP) of R1TP4Q 2.8 trillion by 2030.
The covid-19 pandemic exposed the fragility of the current model and its iniquities. It is likely that, with the status quo shaken by the health crisis and its consequences, we are living in a propitious moment for this reinvention, the type of movement that only appears every 50 years. Now is the time for companies and investors to enter — and lead — the debate not just about whether capitalism needs to change, but how we are going to reinvent it. This requires a dose of boldness and a vision of the future. The time has come to put the “S” – for social, for stakeholder, for succession – at the center of the conversation.
Article originally published on the portal One Planet on 06/16/2021.
