We have a new deal!
Corona has shown us that we can no longer solve the big challenges of our time alone - neither as an individual nation nor as a single company. The Global Risk Report by the World Economic Forum and Marsh McLennan shows that a pandemic is not our only problem. There are three global challenges to be met: first, global climate change and resource consumption; second, wealth distribution; and finally, equal rights for women and minorities.
We have a new deal, which Klaus Schwab called 'stakeholder capitalism' in Davos in 2019. It is the only possible response of the economy to the great problems of our time. And to a revolution that has been gaining momentum for several years and is unstoppable.
It is a revolution from below that – whether as a reaction or out of self-awareness – is being fuelled by the major global political players. In its first 100 days, the Biden administration has made a 180-degree turn from its predecessor's course and rejoined the Paris Climate Agreement. In solidarity with China, more far-reaching activities are being demanded and introduced into law. Europeans are rubbing their eyes in amazement.
Investors have started to follow this line. In 2018, the CEO of Blackrock demanded sustainable activities and corresponding accountability in his annual letter to the management of the invested companies. A year later, 200 of America's most prominent companies agreed to move away from shareholder value. In a 'Statement of the Purpose of a Corporation', they defined that companies must act for the benefit of their employees, the environment and their suppliers.
Now, such pronouncements are first and foremost a declaration of intent and thus good publicity. Beyond that, however, sustainable investments are taking up an ever larger part of the global investment portfolio. More and more people want a reasonable return and to do good with their money at the same time. Alternative investments or impact investments are the rage in the global investment business. Funds are being launched that invest specifically in companies with solutions to sustainability issues - up to and including companies that are explicitly characterised by a high level of commitment, e.g. in Diversity & Inclusion. Several asset management companies have set a date by which their entire investment portfolio will be carbon neutral. Access to financing will therefore depend on the sustainability of the business model in the not too distant future. The Mercer report "Trendsetters: Transformational Investment Practices of Advanced Investors" also shows how investors worldwide - and also in Switzerland - are countering systemic risks with transformative investment strategies.
In addition to changing investment behaviour, pressure is building up elsewhere for companies. For years, there has been a growing global preference for employers with environmental and social responsibility - in the best case even a clearly defined purpose committed to society. And so, the public commitment to sustainability becomes a touchstone from the very subjective perspective of young, well-educated people when choosing their employer. They vote with their feet - at a time when the shortage of skilled workers is only just gaining momentum due to global demographic developments.
What is coming together here is a dynamic that no company can escape. The pressure from consumers, employees, capital markets and legislation is mutually reinforcing and leaves no gaps. Making the economy in general responsible is the right thing to do, but it is also abstract - it is about each individual company now. We have a new deal - even if this has not yet reached everyone.
Outwardly, this deal is an agreement with society to make a contribution to solving the big problems of our time. It goes much further than what we have been calling corporate social responsibility for some time and which is first of all a compulsory exercise in many companies.
On the one hand, it will be measured by how many percentage points of (short-term) profit a company is willing to forego in favour of sustainable business activity. Let's not get it wrong - profit is the basis of economic activity - no company can exist without it. It is a question of the appropriateness of the return in combination with the use of resources and the benefit to society as a whole.
Looking inwards, on the other hand, it will have to be measured by the extent to which a company is sustainable at its core. To what extent sustainability is part of the corporate identity and is reflected in the self-image and behaviour of its employees.
The yardstick for this is how an organisation treats its employees. There is an increasing realisation that the way we deal with people as a resource is essential for solving our major problems. Acting in shared responsibility begins with the people in our companies. Social sustainability is a prerequisite for ecological sustainability. Concretely and succinctly: without money and work, there is no ecological behaviour.
In this respect, the new deal goes deeper than what we saw in companies 10 years ago in terms of dealing with employees. Basic needs include personal integrity and employment free of dependency. What was passed in 2015 as the 'UK Modern Slavery Act' holds companies accountable for their supply chains. Thinking further, there needs to be a deliberate questioning of where new jobs are created, how fairly work is paid and how responsibly jobs are retained or cut. Powerful instruments on the way to a better world.
The basic needs of workers that must be ensured include physical and psychological well-being. Let's not forget that in much of the world, medical care is only provided through the employer. And while more and more danger zones are being defused even in remote corners of the world with a view to workplace safety, we are facing a challenge with mental health that is growing rather than shrinking.
If we continue to think in terms of the sustainable use of human resources, the next step is to pay for work in a way that ensures a carefree existence, even in retirement. This isn’t the case yet for many people, but a necessity in view of the global agenda.
And if we follow Maslow's logic of human needs, the level of self-actualisation follows at the top of his pyramid. Personal development as a task of a company may seem exaggerated, but it is actually a win-win situation for both. Because what we call business transformation today is nothing more than the development of the organisation, which only succeeds if the people in it also develop. Corporate development for individual development is a very crucial part of the new deal.
The foundation of this deal between companies and employees is the equal treatment of all parties involved. Safety, health, fair pay and development is independent of gender, ethnicity, sexual orientation or beliefs. This should be self-evident - but it is far from being universally accepted.
The Corona pandemic has shown us that we cannot solve the big problems of our time alone. But it has also shown us that we can solve them together if we act with joint responsibility. This requires not only awareness but also mutual commitment and consistency in action. We've had it for a while, this new deal - it's time we all did our part.