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- Investors, corporate boards, business schools and accounting rules must change to de-emphasize short-term financial performance.
- Governments and business must collaborate to create jobs and restore trust in institutions.
- The theme of the 44th World Economic Forum Annual Meeting is The Reshaping of the World: Consequences for Society, Politics and Business
- For more information, visit http://wef.ch/davos2014
Davos-Klosters, Switzerland, 22 January 2014 – Business leaders gathered in Davos for the 44th World Economic Forum Annual Meeting called for government policy changes to encourage long-term value creation and job creation, and to restore trust between governments, business, and civil society.
The Annual Meeting is taking place from 22 to 25 January under the theme The reshaping of the World: Consequences for Society, Politics and Business. Participating this year are more than 2,500 participants from 100 countries, including 300 public figures, 1,500 business leaders and representatives from civil society, academia, the media and the arts.
“We must change the dialogue from what we do with the money we make to how we make the money,” Indra Nooyi, Chairman and Chief Executive Officer, PepsiCo, USA, said. “There is an ethical way to run a company and be profitable.” Companies should select board members that understand the importance of sustainable growth, and chief executive officers (CEOs) should inculcate long-term vision in the rising generation of corporate leaders, so policy changes last beyond a single CEO’s tenure. Companies should hire and source locally to encourage job creation and build a larger consumer market.
Feike Sijbesma, Chief Executive Officer and Chairman of the Managing Board, Royal DSM, Netherlands, urged companies to lobby governments for policies that reward long-term value creation, saying share prices rarely reward companies for job creation and sustainable environmental policies. “We need systemic change in how companies are valued. If that is not the case, good policy will always depend on the goodwill of a few CEOs,” he said. Such systemic change should include new tax policy that shifts the burden from labour to natural resources.
“You need rules of the game that create incentives for a long-term vision,” Aron Cramer, President and Chief Executive Officer, Business for Social Responsibility (BSR), USA, said. Companies must advocate for new accounting laws and market trading systems. He said: “The question is, do you want to be around for three quarters or three decades?”
The business leaders called for corporations to use their influence on business schools to shift business education away from its emphasis on short-term profits. Business schools should teach case studies of companies such as Kodak and Enron that collapsed because of their failures to invest in the long term or manage their businesses ethically. CEOs must remember that short-term investors may be well-organized and vocal, but they do not represent the companies’ true stakeholders. “Many shareholders depend on a company’s long-term performance,” Nooyi said.
Corporate policies that address environmental and social concern will increase trust in business. “Without that trust, there will be implications for the global economic recovery,” Dennis Nally, Chairman, PricewaterhouseCoopers International, PwC, USA, said.
Richard Goyder, Chief Executive Officer and Managing Director, Wesfarmers, Australia, said this lack of trust has led governments to institute policies that hold back growth, especially by discouraging banks from lending.
The Co-Chairs of the Annual Meeting 2014 are: Aliko Dangote, President and Chief Executive Officer, Dangote Group, Nigeria; Kris Gopalakrishnan, President, Confederation of Indian Industry (CII); Vice-Chairman, Infosys, India; Jiang Jianqing, Chairman of the Board, Industrial and Commercial Bank of China, People’s Republic of China; Joseph Jimenez, Chief Executive Officer, Novartis, Switzerland; Christophe de Margerie, Chairman and Chief Executive Officer, Total, France; Marissa Mayer, Chief Executive Officer, Yahoo, USA and Judith Rodin, President, Rockefeller Foundation, USA.
Notes to Editors
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