Forum Institutional

The world needs a new social contract. Here's why

climate change protest - social contract

Negotiation must be at the heart of a new social contract. Image: Freepik.

Roberto Azevêdo
Director General, World Trade Organisation (WTO)
This article is part of: World Economic Forum Annual Meeting

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  • The world is in crisis and its future at risk unless leaders from business, government and civil society take action.
  • Fragile trust in institutions threatens to further damage society and prevent progress on the biggest challenges we face.
  • We need a new social contract that rebuilds trust – one based on collaboration and accountability.

As the world's preeminent leaders in business, government, and society prepare to gather in-person for the first time in two years at Davos, I ask with great urgency that we reexamine the system that binds us together. Our future is at risk as the construct of our current system could deteriorate completely unless we act now to fundamentally transform the relationship between business, government, civil society, and individuals.

The crucible of the past two years – let alone the past few months – has laid bare the fragility of our world. Spurred by the pandemic and its economic impacts, fissures that existed before have become yawning chasms, tearing at the heart of our society and threatening further progress on our greatest challenges.

Trust in government shrinks as bitter political polarization grows, fueling social discord and economic stagnation. Jobs shift as new technologies disrupt entire industries, wealth gaps stubbornly widen, while a climate catastrophe threatens humanity’s future.

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The newly created jobs in the economy’s most dynamic sectors are out of reach for too many workers, and parents despair for their children’s future. It’s little wonder people are losing faith in institutions because for too many the government and the economy haven’t worked for them – even before the pandemic fractured all of our lives.

Tired of waiting for government to act with the urgency they feel, young people have taken matters into their own hands by taking to the streets with protests of every stripe growing exponentially in number and intensity with the help of social media.

But global problems demand global solutions. Besides, these are structural problems that will require consistent, long-term, and far-reaching strategic action – anything less is insufficient given the enormous scope and scale of what we face. So as leaders of nations, international enterprises, and multinational institutions, we must immediately begin structural reforms that will allow us to repair and heal, and Davos presents a unique opportunity. While this year’s theme “History at a Turning Point: Government Policies and Business Priorities” speaks to the critical need to rebuild trust and collaborate to drive necessary change, the question is how.

A new social contract starts with rebuilding trust

I do not pretend to know all the answers, but I do know it starts with a new social contract – and with the convening power of the World Economic Forum, we can catalyze this effort.

At the heart of a contract is a negotiation, and we cannot begin creating concrete solutions until everyone is at the table. Yet for too long, we’ve operated in silos, excluding businesses from the table, and working on different timelines with different goals.

At the heart of a contract is a negotiation, and we cannot begin creating concrete solutions until everyone is at the table.

Roberto Azevêdo, Executive Vice-President, Chief Corporate Affairs Officer, PepsiCo, Chairman of Board of Directors at The PepsiCo Foundation

It’s time we forge a new relationship – one based on collaboration and accountability – because only then can we begin to rebuild trust and spark inclusive economic growth. Central to this shift is the need for government, civil society and businesses to work together, and better engage the will of the people. Together, they must seek long-term structural solutions, free from the volatile churn of electoral cycles.

As the pandemic, climate change, and ongoing supply chain disruptions repeatedly show, our greatest challenges cannot be solved by the government alone. Businesses are essential to the solution, co-investing in infrastructure, developing breakthrough innovations, and rapidly delivering solutions. Amid the uncertainty of COVID-19 and the fragmented political landscape, polls show businesses emerged as the most trusted institution globally, filling leadership voids with their voices, finances, and resources to bring help and change to communities in need.

A new social contract starts with rebuilding trust, and polls show businesses emerged as the most trusted institution globally.
A new social contract starts with rebuilding trust, and polls show businesses emerged as the most trusted institution globally. Image: Edelman Trust Barometer

But businesses have not always acted responsibly. Protests have compelled companies to adopt better labor practices, minimize their environmental impact, focus on diversity and equity, and take a stand on key political issues.

Citizen activists are driving this change by holding corporations – and government – accountable. But instead of an adversarial relationship, we can expand on the work of activists and socially-responsible businesses and create a collaborative relationship where businesses, governments, and civil society all have a seat at the table.

Governments also have a critical role to play. No meaningful or impactful target will be met unless public policies set a solid and well-conceived foundation for action. Simplistic formulas with electoral appeal will simply aggravate distrust in public institutions.

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Key areas of focus for a new social contract

Constructing a new social contract in our fractured system may seem beyond our reach. But whether through the World Trade Organization, the United Nations, the OECD, or the Forum, we have witnessed countries with strikingly different perspectives and seemingly no common ground come together against all odds to forge generation-defining agreements. Together, we can embark on this journey once more if we focus on three key areas:

  • Collaboration and co-investment from all: Everyone cannot expect their perfect solution. Every side will have to compromise on different points if the deal is to be legitimate, long-lived, and enforceable. None of us have all the answers or the resources, but by acknowledging our own and each other’s strengths and weaknesses we can begin to move forward, restore trust, and build a global economy that works for all of us.
  • Operating with transparency and accountability: We must begin a dialogue between businesses, government, and individuals to create accountability. Greenwashing and marketing hype cannot be tolerated. So as businesses, we must work with stakeholders to continue to prioritize more than the bottom line and demonstrate transparency and accountability in how they serve society. Profits are not sustainable unless society as a whole thrives. On the other hand, inflexible and unrealistic propositions are non-starters, regardless of how desirable or transcendental they may seem. We must meet in the middle.
  • Disarming ourselves: The most effective way to find a solution as a negotiator is by listening. Behind even the most inflammatory language is common ground. So we must disarm ourselves, attacking less and listening more. That is the surest way to rebuild trust.

A new social contract will not be created overnight. It is a process, an ongoing effort to transform our mindset – but one we must begin now. Our present trajectory is unsustainable. For the sake of my five – soon to be six – granddaughters and future generations everywhere, we cannot continue on this path for they will bear the costs of our mistakes or inaction.

Every new relationship begins with a conversation. We have a chance, at Davos, to truly start what may be the most consequential one of our lives.

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