The Building Blocks for Transforming Business and Changing the World
23 July 2015 Leave a comment
The UN Global Compact’s 15th anniversary events took place in parallel to the PRME Global Forum this past June 2015 and brought together over 1,000 global leaders from business, government and civil society to take stock of fifteen years of corporate sustainability, and to map out pathways for the future. Dozens of notable outcomes came out of this event and can be explored further on the new Global Compact website.
In the final session of events at the General Assembly Hall at UN Headquarters in New York City, the new report, IMPACT: Transforming Business, Changing the World – The United Nations Global Compact, was launched. The report goes beyond providing an overview of the Global Compact and its many activities and initiatives, which include PRME. It provides a comprehensive analysis of the impact of corporate responsibility built on an analysis of the over 1,500 Global Compact survey respondents, and 210 in-depth interviews. It can be a worthwhile tool to be used with students in management education.
The final part of the report outlines a number of essential building blocks for future transformation of business, looking forward towards 2030. These building blocks are interconnected aspects of what it will take to secure the future we want. They include the following, under three headings, “Sustainability is the ‘Business of Business,’” “Break down barriers, energise positive drivers,” and “New Thinking for a New Reality”:
Sustainability is the ‘Business of Business’
- Mobilising the majority: Getting all companies on board
Most companies still need to be convinced that sustainability is not about philanthropy and public relations, but simply about doing better business. The greatest challenge in the next 15 years will be to penetrate all markets and sectors and to mobilise the majority of companies.
- A new motive: Adapting corporate visions and objectives
The global economy cannot be based on business that builds on high material consumption and impacts negatively on natural capital and societal health. Social deficits and environmental constraints generate economic costs, reduce business productivity, and hamper competitiveness. Business is re-inventing itself to produce shared value while optimising results for shareholders.
- Reboot corporate sustainability: Making sustainability a part of daily business
The urgency to ‘future proof’ business against sustainability risks—pressures on people, natural resources and profitability—is mounting. The objective must be a zero or positive footprint through systematic integration of the Global Compact and the Sustainable Development Goals into core business decisions, processes, activities and culture. The flipside is opportunity. Evaluating current performance through a more sophisticated, next generation-oriented, sustainability lens, is a good starting point.
Break down barriers, energise positive drivers
- Better governance: Aligning regulation with sustainability priorities
For the transition towards a sustainable and inclusive economy to take hold, sustainability must be adopted as a priority across all levels of governance. Smart and well-designed regulatory frameworks must respond to immediate social and planetary needs whilst at the same time laying the ground for long-term prosperity.
- Add value to society: Mobilising capital to enable the transition
Most capital today is invested in companies based on short-term profit maximisation with no consideration for non-financial risks that may impact value in the longer term. The result is that financial markets encourage unsustainable company behaviour. While an increasing volume of assets are managed according to Environmental, Social, and Governance (ESG) criteria, there is a growing gap between commitments, and proper integration into analysis and investment decisions.
- Transformative collaboration: scaling up new practices to achieve impact
We live in an era of interconnected, trans-border problems, too large and complex for any one actor or sector to solve alone. Embracing complexity means recognising the need for cross-sector collaboration. Operating in silos has proven costly and failed to adequately address challenges. Aligning objectives, pooling resources, knowledge, competence and insights from a range of stakeholders—private and public—can deliver new solutions, bring new approaches and opportunities into light, and scale efforts to transform existing structures and practices.
- Awaken the consumer: Catalysing consumer action in partnership with business
The digital revolution is fundamentally changing access to information. Increasingly we are a global community with shared resources. The challenge now is how far we trust information, how reliable it is, and how it can push consumer intention into action. Greater consumer engagement will enable consumers to hold business to account for their offerings, which in turn will help business see the value in delivering sustainable products and services.
New Thinking for a New Reality
- A compelling story: Creating a new narrative of opportunity
The world needs a new language of sustainability that is both transformative and realistic, and that communicates, simplifies and inspires. To set in motion new ways of thinking and new courses of action, we need a compelling narrative focusing on the upside of living within the limits of the planet—emphasising sustainability-centred creativity, ingenuity and entrepreneurship.
- Redefining value: A new perspective of worth and prosperity
Measuring affects what we do, and if measurements are flawed, so are decisions. The current practice of measuring GDP means that we do not capture vital aspects of national wealth and well-being. We need a new holistic measure of wealth and worth, reflecting a broader picture of progress and prosperity, beyond GDP. This implies redefining the purpose of the corporation to deliver value across a broader range of capitals, not just financial profit for the shareholders.
- Visionary leaders: Redefining the notion of leadership
A fundamental shift in the quality of leadership is needed across all domains if we are to bring about positive change. Short-termism fostered by political election cycles, quarterly performance reporting and immediate rewards represents significant barriers for leadership and decisions for the long-term. Leaders across all domains must rise to the challenge and take responsibility for steering the world towards a resilient, stable and equitable future, within the environmental limits of the planet.
- Spreading the messages: Getting the word out
Despite an ever-increasing proportion of the world’s corporations supporting the Global Compact principles, the vast majority are in general unfamiliar with the initiative. This also relates to the public at large and employees within companies. There is a need to further get the message out.
To read the full document click here.