- There is a clear outcry from both the public and private sectors for better collaboration.
- Our interconnected world craves value and collaboration can help get us there.
- The acknowledging and implementing of effective strategies to achieve interconnected growth is needed across the board.
This year’s World Economic Forum (WEF) theme “Working Together, Restoring Trust” gets to the heart of the crucial shift required in how we work and its impact on lives and environments. While working together has always been core to businesses’ success, since 2020, it has evolved from mood music to the main act. There’s a clear rallying cry for collaboration between public and private sectors, from consumers, employees, and employers, to solve pressing problems.
Since 2020 we’ve also seen how powerful collaboration can be with vaccine rollouts and the shift to remote working occurring in record time. However, we also face stark challenges: societal inequality, disintegration of trust across public and private sectors, barriers to achieving climate targets, and anti-global feelings among voters.
Many leaders and organizations I work with agree we need greater global cohesion and an actionable plan. I know how difficult this is as a leader of a business covering a vast and diverse geographical area.
Creating value is key to inclusive growth
In his 2022 letter to CEOs, Larry Fink said, “In today’s globally interconnected world, a company must create value for and be valued by its full range of stakeholders in order to deliver long-term value for its shareholders.” The EY annual survey about environmental, social and governance (ESG) and long-term value strategies bears this out, with the C-suite saying that meeting consumer needs is the top advantage of incorporating ESG into corporate strategy, which means sustained value in the long-term for everyone.
Furthermore, 83% of leaders surveyed say they would like to see mandated reporting of ESG performance measures set against globally consistent standards. The introduction of the WEF-IBC Stakeholder Capitalism Metrics was a turning point in integrating ESG performance into companies’ business strategies and supports working together and restoring trust.
Four Elements of purposeful growth
One core idea paves the path to real solutions: the need for social equity in building long-term value through purposeful growth. What does this mean? How do we as business leaders contribute?
First, purposeful growth is growth that is profitable, sustainable, and aligned to a purpose beyond generating financial returns, which benefits everyone, not just a few. That requires unprecedented business transformation – the WEF priorities for May’s meeting recognizes this. Transformation entails not just clarity of purpose, but a purpose that puts the needs of people – customers, clients, colleagues, communities – at its heart.
Second, how do we achieve purposeful growth? We must be pragmatic and understand the interconnectedness of the four imperative elements of purposeful growth on which I believe leaders and organizations can only take swift and strategic action by working together:
1) Sustainability – agreeing and achieving climate change goals, from net zero to non-financial reporting, and realizing long-term value through investors’ capital allocation decisions today, are the foundations of achieving sustainable and inclusive growth. We need to establish a new market that the financial services industry can help flow capital toward for positive change. Private capital and innovation must integrate with government policy to address the pressing social problem of inequality in climate action outcomes, which in turn will lead to better climate change solutions. However, the annual EY Long-Term Value and Corporate Governance Survey this year found that there’s a tension between board members and C-suite. This is clear as 84% of business leader respondents say stakeholders have a greater expectation that companies will achieve ESG-driven growth. However, 43% of respondents say boards lack the commitment to integrating ESG factors in corporate strategy. This describes a gap between consumer expectations and ESG commitments in company strategy. Consideration of ESG needs to be fully integrated into boards’ business.
2) Technology – responsible and innovative deployment of technology that puts people at the center; attracts investment into technology development; and uses technology as a tool to address a range of challenges starting with social equity in the industry itself, are central tenets for this area. Private and public sector collaboration can support the development of educational and infrastructural environments that will support the digital workforce we will need in the future. The 2022 annual EY European Attractiveness Survey shows that companies rank the level of technology adoption by consumers, citizens and administrations as the most important factor that determines where businesses invest.
3) Trade – understanding the evolution of globalized trade and building its resilience, despite the twin setbacks of regional protectionism (given popularism in the last few election cycles), and supply chain disruption and resource protectionism due to the pandemic, is essential for leaders to be able to assess known unknowns. The impact of the war in Ukraine on global trade will further exacerbate the drive to restore trust and build new connections. Cooperation on a global level can help ensure food, energy and other basics can reach the world’s population, and sustainably by limiting the carbon impact.
4) Trust – trust in institutions is crucial if we’re to put people at the center of rapid change. With “distrust now society’s default emotion” collaboration between public and private entities is essential to help ensure we progress on the path to inclusive capitalism and purposeful growth. Policy must facilitate the right behaviors and business must play a leadership role in looking beyond the needs of shareholders to address societal needs more broadly. Trust is earned when leaders not only set clear ambitions but when they take the actions to deliver on them. Leaders must now put their words into action to build trust.
We are ready for the challenge of change
Multilateral, systemic and global change is not going to be easy. However, I’m hearing a chorus of voices from the private sector that agree on the direction we need to take and how to support our people and fulfil customer needs in a socially and environmentally responsible way. There is also agreement that public-private partnerships are how we’re going to achieve this. Organizations that don’t cohere toward this inclusive growth mission may find themselves left behind, unable to attract talent and investment, comply with new regulations or adopt the technology they need to stay ahead in their industries. The goals are tough but they’re reachable and imperative.
The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.