The COVID-19 crisis demonstrates the importance of people, planet and transparency in business decisions. Image: Jan Piatkowski/Unsplash
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- One year ago, the World Economic Forum launched a new ‘Davos Manifesto’ in support of stakeholder capitalism.
- The COVID-19 crisis demonstrates the importance of people, planet and transparency in business decisions.
- The Davos Agenda will convene global leaders to discuss how to implement stakeholder capitalism for better business and a better world.
The World Economic Forum last year launched a new “Davos Manifesto” in support of stakeholder capitalism, which says companies should “pay their fair share of taxes, show zero tolerance for corruption, uphold human rights throughout their global supply chains and advocate for a competitive level playing field,” as Founder and Executive Chairman Klaus Schwab explained.
Little could we have known just how relevant this manifesto would be for the year ahead. From 25-29 January 2021, the Davos Agenda will convene leaders from government, business and civil society to discuss the global response to COVID-19, the economy, the climate crisis and social injustice – and why this response must include implementing stakeholder capitalism.
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“Obviously, we should not do away with the basic engines of growth,” said Schwab in October. “We owe most of the social progress of the past to entrepreneurship and to the capacity to create wealth by taking risks and pursuing innovative new business models. We need markets to allocate resources and the production of goods and services efficiently, particularly when it comes to confronting problems like climate change.”
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“But we must rethink what we mean by ‘capital’ in its many iterations, whether financial, environmental, social, or human. Today’s consumers do not want more and better goods and services for a reasonable price. Rather, they increasingly expect companies to contribute to social welfare and the common good,” he said.
Where do we go from here?
Building back better businesses means implementing stakeholder capitalism – here's how.
With support from 140 CEOs and collaboration with Deloitte, EY, KPMG and PwC, the World Economic Forum published "Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation", a set of core ESG (environmental, social and corporate governance) metrics and disclosures for companies.
“Beyond the crisis horizon, more evidence is emerging that companies that follow more narrowly defined ESG standards, on average, outperform the market,” wrote the authors.
The “G” of ESG – “governance” – goes beyond simply following national or international legal and regulatory frameworks.
It also includes setting the company purpose, and a quality governing body that represents the interests of all stakeholders. It includes acting legally – and ethically. And it includes integrating risk management and oversight – critically important in a world in which cybercrime is increasing and maturing – as well as transparent reporting on it.
Over the past year, companies around the world – including many World Economic Forum members and partners – have stepped up to help people in need.
A few examples: Volkswagen Group used company facilities to produce medical respiratory equipment and face shields. Hewlett Packard Enterprise donated $50 million worth of secure wifi connectivity kits to healthcare facilities around the world. UPS committed $3 million in new funding to work with Gavi, the Vaccine Alliance, on strengthening supply chains to ensure vaccines can reach isolated communities. Agility, a global logistics company, designed interactive maps to assist global supply chains and keep cargo moving, ensuring people continued to get what they need. And countless more provided PPE and sanitizers, food and water, and emergency relief to their employees, as well as underprivileged families and vulnerable people in their communities. (There’s a long list on Agenda.)
What is the World Economic Forum doing to manage emerging risks from COVID-19?
Beyond the immediate response to the virus, the past year also inspired companies to take action on social justice by supporting the Black Lives Matter movement and ending systemic racism within their own companies. Forum members and partners donated billions to social justice organizations and launched new initiatives to make their own workplaces more inclusive and equitable.
Now, it’s critical that companies keep up this momentum and continue supporting their stakeholders. According to "Measuring Stakeholder Capitalism", this includes prioritizing dignity and equality (including diversity and inclusion initiatives and pay equality), health and well-being, and training and reskilling for the future.
“If economic recovery defaults to a reboot of pre-COVID-19 activities, societies will have missed an important window of opportunity to transition to a more inclusive and greener growth path,” said chief economists surveyed by the Forum last year.
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First, businesses should do what they can to save the planet: reduce carbon emissions and nature loss, eliminate waste and switch to renewable energy sources.
These changes are good for business. According to a recent Forum report, 15 nature-positive transitions across infrastructure, energy and extractives, and food, land and ocean use could lead to $10.1 trillion in annual business opportunities and 395 million jobs by 2030.
And pandemic or not, consumers want environmental sustainability, too. According to McKinsey, 57% of consumers surveyed during the COVID-19 pandemic “have made significant changes to their lifestyles to lessen their environmental impact,” while more than 60% “report going out of their way to recycle and purchase products in environmentally friendly packaging”.
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“As the visibility of business impacts on the planet grows and expectations of corporate responsibility extend along the value chain, the business risk associated with failing to demonstrate a good understanding of and response to environmental impacts is amplified,” according to "Measuring Stakeholder Capitalism".
What to watch during Davos Agenda
From 25-29 January 2021, join us for special addresses, leadership panels and impact sessions that will address many of the challenges discussed above, including:
- Implementing Stakeholder Capitalism, Tuesday 26 January 08:00-08:45 and 17:15-18:00
- Implementing Stakeholder Capitalism in the Middle East and North Africa, Tuesday 26 January 10:15-11:15 and Thursday 28 January 14:00-15:00
- Henadi Al Saleh, Chair of Agility
- Marc Benioff, Founder, Chair and CEO of Salesforce
- Laurence D. Fink, CEO of BlackRock
- Kristalina Georgieva, Chair and Managing Director of the International Monetary Fund (IMF)
- Tito Mboweni, Minister of Finance of South Africa
- Brian Moynihan, Chair and CEO of Bank of America
- Abdulla bin Touq, Minister of Economy of the United Arab Emirates
You can watch the livestreamed sessions here.
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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