The Business Roundtable, which represents many of the largest US-based companies, surprised a lot of people when it publicly endorsed the idea that, in addition to shareholders, corporations have obligations to a wide range of stakeholders, including employees, customers, suppliers, the communities in which they operate and society at large.

This marked a rhetorical shift for the organization – and the timing couldn’t have been better, coming less than a month before the UN General Assembly, as well as the UN Climate Action Summit, the UN Sustainable Development Goals Summit and the World Economic Forum's Sustainable Development Impact summit.

What is the World Economic Forum’s Sustainable Development Impact summit?

It’s an annual meeting featuring top examples of public-private cooperation and Fourth Industrial Revolution technologies being used to develop the sustainable development agenda.

It runs alongside the United Nations General Assembly, which this year features a one-day climate summit. This is timely given rising public fears – and citizen action – over weather conditions, pollution, ocean health and dwindling wildlife. It also reflects the understanding of the growing business case for action.

The UN’s Strategic Development Goals and the Paris Agreement provide the architecture for resolving many of these challenges. But to achieve this, we need to change the patterns of production, operation and consumption.

The World Economic Forum’s work is key, with the summit offering the opportunity to debate, discuss and engage on these issues at a global policy level.

Most businesses, in the United States and elsewhere, have been aware of these societal obligations for years. While senior executives want their companies to play a larger role in meeting society’s challenges, some are reluctant to go all-in, knowing at the end of the day they’ll be judged on their earnings, not their yearnings.

The truth is they can succeed in both areas, which tend to complement one another. Recent research shows that companies that have a positive impact on society tend to do better financially than those that side-step or downplay their social responsibilities.

Among the best in this regard are Nordic companies – those domiciled in Norway, Sweden, Denmark and Finland.

Boston Consulting Group (BCG) recently analysed the performance of 8,000 public and private companies worldwide on environmental, social and governance (ESG) issues. Companies were then divided into five clusters based on ESG performance.

More than 400 Nordic firms – about 5% of the total – were part of the review, including well-known companies, such as Electrolux, Ericsson, Maersk, Nokia, SAS and Novo Nordisk.

As a group, the 400 Nordic companies scored considerably higher, on average, than the rest of the sample, with 65% ranking in the top quintile on ESG performance. By comparison, 41% of other European companies and just 9% of North American companies made it into the top group.

Total Societal Impact (TSI) of companies by region.

Contrary to the concerns we sometimes hear from corporate executives and governing board members, the Nordic companies’ achievements in the ESG sphere didn’t come at the expense of financial success. In fact, our analysis found the Nordic 400’s market valuations and total shareholder returns were “in line with those of the overall market”, confirming that businesses that align their strategies and operations with society’s needs can do well, while doing good.

But why do Nordic companies in particular have such an outsized impact on society? Why are they, more than many others, taking action to meet the challenges of climate change, income inequality, disease and famine, human rights abuses, and other pressing global concerns?

While there are many answers – investor demands, Nordic culture and government policies, among others – one of the most critical is leadership. As a group, their board members and CEOs are committed to such actions.

For example, we found Nordic CEOs and board members are highly active in many of the international organizations and global initiatives aimed at bettering society, often serving in leadership positions. For example, leaders of 13 large Nordic companies and a global trade group – GSMA, or Groupe Speciale Mobile Association – have formed Nordic CEOs for a Sustainable Future, “focused on promoting new, sustainable business models”. The membership reads like a “who’s who” of the Nordic corporate community.

Mobilising Action for Inclusive Societies

Recent years have witnessed some of the largest protests in human history. People are taking to the streets amid a desire for change, putting pressure on decision-makers for urgent and courageous leadership to find sustainable and inclusive solutions to some of the major challenges ahead of us.

A range of forces are at play. By 2022, some 60% of gross domestic product will be digitized - but current education systems are failing to prepare people for decent work in this future. Based on current trends, it will also take approximately two centuries to close the global economic gender gap. Meanwhile, the world’s richest 1% are on course to control as much as two-thirds of the world’s wealth by 2030.

To tackle these challenges, Mobilising Action for Inclusive Societies is one of the four focus areas at the World Economic Forum's 2019 Sustainable Development Impact summit. A range of sessions will bring stakeholders together to take action that will bolster local entrepreneurship and innovation, while making growth more equitable.

BCG’s experts see the Nordic companies as exemplars not only because they are openly and actively committed to the betterment of society, but also because they’ve built these concerns into their company cultures, their core business practices and their company operations. This includes looking for ways to improve the positive societal impact of existing products or services, as well as leveraging technology and capabilities to venture into new businesses.

This is not to say there aren’t companies in the rest of the world also focused on – and successful at improving – society while still being financially successful. There are many such companies and their numbers are growing each year.

Yet all companies, regardless of where they operate, can learn from and adapt Nordic best practices to their own businesses and political environments. By doing so, they can help solve some of the world’s most pressing problems, while still enhancing their performance.

The Business Roundtable statement acknowledges the societal impact businesses can have. But actions speak louder than words.