Business planning in an ever more complex world
How should business engage in the issues of an ever more complex world? Does it need to?
Every year, the World Environment Center convenes a discussion among global thought leaders from business, government, multi-lateral institutions, non-governmental organizations and universities to examine a major challenge. This year, the challenging topic was “Business Planning for a More Complex World.”
Participating organizations included: Beveridge & Diamond, the Brookings Institution, Coca-Cola FEMSA, DuPont, General Motors, Ingersoll Rand, Intel, Marks & Spencer, Merck Group, Natural Resources Defense Council, Tecnológico de Monterrey, U.S. Department of State, Volkswagen Americas, the World Bank, and the World Resources Institute.
These were the important take-aways from this conversation:
Business needs to accelerate its engagement in social responsibility:
The traditional role of business has been to generate wealth stemming from its core competencies of research and product development, manufacturing and distribution of those products in the marketplace.
Increasingly, sustainability tools and capabilities developed in western markets are deployed in emerging societies and less developed nations where business operates. These tools include stakeholder and materiality assessments, providing access to medicines, training for business partners and communities to use energy and water more efficiently, and expanding access to digital literacy.
While business has been traditionally reluctant to address issues such as income inequality and poverty, these two topics are increasingly prominent on the global agenda. In this evolving situation, companies need to be thinking about participating in the discussion in at least three ways:
1) Develop their own narrative that directly unifies their performance with shareholder and social responsibility priorities;
2) Construct broader business-civil society coalitions with strong governance and transparency processes aimed at strengthening labor standards, working conditions, anti-corruption, literacy and other issues; and
3) Work with governments at all levels to improve infrastructure, enhance employee and community security and expand entrepreneurial opportunities through clear and predictable regulation for investment flows and related issues.
Paris Is Now! Business needs to directly engage with climate negotiators to ensure a market friendly COP21 climate agreement.
While uncertainties remain about specific outcomes of COP21 this December (e.g., agreement on a carbon pricing scheme), there’s a growing sense of inevitability that major agreements will be obtained.
Specific steps that companies can take include:
1) Engage in the national process of developing Intended Nationally Determined Contributions (INDC), a mechanism through which individual nations will establish their own contributions to reducing greenhouse gases across their national priorities;
2) Advocate long-term thinking for investment clarity in the negotiating text;
3) Practice and advocate for a long-term carbon pricing structure for the next several decades; and
4) building the business case for a low carbon economy—based on investment, job creation and economic opportunity—that begins with lower cost, life cycle options (energy efficiency, prevention of deforestation, developing market scale collaboration for renewable).
UN Sustainable Development Goals (SDGs) will establish the new framework for business engagement.
The SDGs, scheduled for adoption in September by the United Nations, include 17 ambitious goals backed up by over 100 concrete targets to be implemented through 2030. They succeed the more focused and fewer Millennium Development Goals that will expire this year.
Pragmatic businesses will tuck in their skepticism about unwieldy and inefficient UN processes and recognize the reality that the SDGs are establishing a common language that will shape the relationship across business, government and civil society for the next few decades, and especially in those emerging markets where business seeks to grow.
1) Recognize that individual SDGs can only be successfully implemented by taking into account what many companies are already doing;
2) Utilize risk, materiality and other methodologies to design their individual road maps to build compatibility with individual SDGs;
3) Build working coalitions across value chains to put forward market-friendly solutions to shape government policy; and
4) Advocate more comprehensive transparency and governance to eliminate “free riders” or those seeking to subvert honest business practices.
These issues represent the expression of a broader societal and political transformation that is underway as shaped and accelerated by increasingly powerful global trends in population growth and urbanization, an expanding middle class, the evolution of technology, and limits imposed by nature.
These issues will prove increasingly disruptive to existing business models and processes while, at the same time, they are likely to stimulate new kinds of innovations in agriculture, power systems, transport, and consumption patterns. Initial experiences of disruption and risk thus create major opportunities for business transformation.
Growing demands for business engagement, products and services is a harbinger of an increased legitimacy in a world proving more receptive to the most adaptive of all global institutions—the global company.