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SDIS21: Better Business - What are the challenges in making business more sustainable?

A worker arranges slabs at IceStone, a manufacturer of recycled glass countertops and surfaces, in New York City, New York, U.S., June 3, 2021. REUTERS/Andrew Kelly - RC21TN90K0J0

Business must apply the lessons learned during the COVID pandemic to the climate crisis. Image: REUTERS/Andrew Kelly

Samantha Sault
Writer, Washington DC and Geneva
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Better Business

This article is part of: Sustainable Development Impact Summit

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  • Even during the pandemic, business continued to work towards more sustainable, inclusive business models and societies.
  • Businesses and investors have committed to common ESG reporting standards and the principles of stakeholder capitalism.
  • We can apply lessons learned from the pandemic to climate change.
  • Amid this context, the Forum hosts is annual Sustainable Development Impact Summit on 20-23 September.

“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,” World Economic Forum Founder and Executive Chairman Klaus Schwab wrote during the height of the pandemic. “But we must rethink what we mean by ‘capital’ in its many iterations, whether financial, environmental, social, or human.”

It's one of just many lessons we've learned over the last year and a half.

In the midst of a global pandemic, a global economic crisis, a global nature crisis, a global movement to end systemic racism and a lot of extreme weather, stakeholder capitalism – and the role of business in achieving a more sustainable and inclusive world – is more important than ever. These will be a key topic at the Forum's virtual Sustainable Development Impact Summit 2021 on 20-23 September.

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This is especially true when it comes to the climate crisis, “the greatest global challenge we face in the coming years,” according to the co-chairs of the Alliance of CEO Climate Leaders, and a challenge that will impact our ability to meet all 17 Sustainable Development Goals (SDGs).

“We need to see commitments increase as part of the global Race to Zero Campaign as we move towards COP26 negotiations in November,” they wrote. “It is vital that the business community takes a clear leadership role, by establishing high ambition in its own areas shaping the practicalities of implementation and advocating for the policies supporting the required transformation of the global economy.”

Still, all stakeholders, including corporations, are taking this on with renewed vigor – and the fact that so many companies stepped up to respond to the pandemic is a sign that we can achieve these goals, Schwab wrote in June.

“Clearly, the will to build a better society does exist,” he continued. “And it will demand private-sector engagement every step of the way.”

Sustainable Development Goals to make business better

While corporations committed to stakeholder capitalism should pay attention to all 17 SDGs, meeting the targets of two in particular will help make business better:

SDG 9: Industry, Innovation and Infrastructure. Targets include promoting inclusive and sustainable industrialization and, by 2030, significantly raising industry’s share of employment and GDP and doubling its share in LDCs. Others include increasing access to financial services for small enterprises, upgrading infrastructure and retrofitting industries to make them sustainable.

SDG 12: Responsible Consumption and Production. Targets include achieving sustainable management and efficient use of natural resources and reducing waste generation and achieving environmentally sound management of chemicals and reducing their release. The goal also encourages companies (especially large ones) to adopt sustainable practices and integrate sustainability information into reporting cycles.

How much progress has been made?

We’ve known companies have been making progress on critical environmental, social and governance (ESG) challenges – and the quality and quantity of ESG reports have doubled since 2017, according to last year’s SDG progress report. However, since the idea of stakeholder capitalism was born in Davos in 1973, “we have lacked the ability to measure” progress across industries, wrote Brian T. Moynihan, Chairman and CEO of Bank of America, for the Forum.

Now, with support from 120 companies, "Measuring Stakeholder Capitalism Towards Common Metrics and Consistent Reporting of Sustainable Value Creation" was published by the Forum in collaboration with Deloitte, EY, KPMG and PwC.

These core ESG metrics and disclosures help companies improve the ways in which they measure and demonstrate their contribution to a more prosperous and fulfilled society and a more sustainable relationship with our planet.

4 pillars of ESG metrics
These four pillars are the principles of the ESG metrics – and the SDGs. Image: World Economic Forum

These metrics are not only good for stakeholders, but also shareholders: “Beyond the crisis horizon, more evidence is emerging that companies that follow more narrowly defined ESG standards, on average, outperform the market,” argued the authors.

COVID-19 pummeled many sectors. “The pandemic hit the manufacturing sector harder than during the 2007-2009 global financial crisis, resulting in a drop in production of 6.8% in 2020,” says the UN Sustainable Development Goals Report 2021. It was “catastrophic” for air travel in particular, with a drop from 4.5 billion passengers globally in 2019 to 1.8 billion in 2020.

The COVID-19 pandemic was catastrophic for manufacturing and air travel.
The COVID-19 pandemic was catastrophic for manufacturing and air travel. Image: UN

But through it all, business has continued to step up – not only helping their employees and communities weather COVID-19, but also taking action on critical issues like systemic racism.

Now, business must take the lessons learned from COVID-19 to address other pressing challenges, especially the climate crisis.

“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.

What are the World Economic Forum and its partners doing to create better business?

  • "Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation" launched in 2020 in collaboration with Deloitte, EY, KPMG and PwC and supported by 140 CEOs. The metrics, progress reports and other resources can be found at www.weforum.org/stakeholdercapitalism.
  • The Alliance of CEO Climate Leaders is a global community of CEOs who continue to set the bar higher and catalyze action across all sectors and engage policymakers to help deliver the transition to a net-zero economy. Founded in 2014 to support the Paris Agreement, the network includes business leaders from diverse sectors and regions who use their position and influence to drive change.
  • All of the Forum’s initiatives and programs are helping business be better, from the Global Water Initiative and Alliance for Clean Air to share best practices and drive a cleaner environment, to the Closing the Gender Gap Accelerators to increase workforce opportunities and work towards gender parity.
  • The Forum’s COVID Action Platform – the first platform of its kind – galvanized the global business community to take collective action, protect livelihoods and facilitate business continuity, and mobilize cooperation and business support for the COVID-19 response.
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What is the World Economic Forum doing to help companies reduce carbon emissions?

What can I do to make business better?

  • Encourage companies (including my own) to adhere to the principles of stakeholder capitalism – and support and recognize companies making progress on the issues I care about.
  • Encourage recycling and environmental stewardship in the workplace – from paper, plastic and e-waste in the office, to larger initiatives to eliminate emissions or harmful chemicals in the supply chain.
  • Work to close gender and diversity gaps in my company by hiring, promoting or mentoring diverse colleagues.
  • Encourage my company to engage in public-private partnerships to achieve the SDGs and fulfill a vision for a more sustainable and inclusive world.
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The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Forum InstitutionalStakeholder CapitalismClimate Action
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