Redesigning growth towards a sustainable future

I had recently the privilege to open a session entitled “The Purpose Driven Business: Lessons from the Pandemic” in the framework of the ASEAN Sustainability E-Summit organized by the Global Reporting Initiative and SM Investments Corporation.

Switzerland is proud to support the meaningful work of the Global Reporting Initiative, in the Philippines and throughout the world. The Swiss embassy is also pleased to team up with SM Supermalls as well as other partners and sponsors for its own empowerment and solidarity project – called Angels for Angels, which we will be launching in just a few days’ time.

When it comes to the key lessons of the pandemic, I personally see mainly two: first, that collaboration between the public sector, the private sector, the civil society and the academe is required. It is desirable, it is doable and it yields results.

Secondly, that for companies, taking care of all their stakeholders, employees, shareholders, clients, providers and communities at large is both a good investment and a sound business model.

This is nothing new, it was all too well known before the pandemic. We were aware of it, but then it was at the back of our minds and it is now right in front of our eyes.

We knew that we need responsible businesses in the 21st century. I recall the Secretary General of the United Nations, Kofi Annan, calling for the creation of a Global Compact. That was in 1999 in Switzerland, at the World Economic Forum (WEF) in Davos. We do not get younger but I remember it well, as I was just about to join the Foreign Services.

Since then many discussions have taken place in the academe, at the WEF and in the public debate. The old capitalism is flawed, we heard. We need to pay attention to the losers of globalization because their frustration fuels populism, or we need a “Great Reset,” as Klaus Schwab called it. We have to reinvent capitalism to build back better or, as the Nobel Prize Joseph Stieglitz put it, “We need a new social contract, a new balance between the market, the state and the civil society.”

I like this idea of a new social contract because this brings Swiss Jean-Jacques Rousseau into the debate. Jean-Jacques Rousseau published “Du contrat social” in 1762 and his book marked history. There were of course other theories around the social contract before him, but his political philosophy is probably the most elaborated and it comes closest to the solutions that we need today. Because of his views on equality, liberty and the sovereignty of the people, of course, they remain valid to this day, but also because the notion of common interest lies at the core of the social contract as he saw it. An act of both alienation and association creates a moral and collective body and the general will, some would say today the rule of law, is the cornerstone of the model.

Rousseau was ahead of his time with his thinking, but not to the point to include the future generations. Would he have done so, he would have landed directly in a psychiatric hospital, I believe. Now, after a few centuries have passed, time has come to include these future generations; to give them a say, to build in some solidarity and equity among generations.

Professors and philosophers have developed models and concepts about this. The UN is heading in this direction, as this is clearly the way forward. This has to be what we now call the new normal. We need to reach a new level of cooperation, a kind of “Cooperation 4.0.” This requires political will, commitment and dedication. It requires both a new mindset and new governance tools. It requires leadership from the public and the private sector.

Last but not least, it requires the new generation of consumers and workers to articulate their expectations and to assume their role of driving force of the transition. I think that they can, I think that they should and I think that they will.

What does this all mean for businesses? It means that while it is important to be responsible, it is not good enough anymore. Businesses now need to show purpose and to project meaning. They need to embrace transparency and accountability.

Of course, companies still need to earn money; no business is sustainable without profits. In other words, they still need a brain and muscles. However, they must realize that the heart is pumping the blood into brain and muscles so if they want to thrive they need to show empathy, they need to show that they care. That they care for the planet and the environment, for the people and communities around them and for the society that they operate in. They must show that they care about their impact on the governance system as well. These are all things that they need to reflect and report on.

Businesses can see this through different perspectives. They can consider it as a compliance issue, because of the growing regulations and, precisely, the reporting obligations that are put in place. They can see it as a risk or as a threat, because they might disappear if they lose their workforce and consumers, or they can welcome an opportunity, because they spot the benefits of a more resilient, a more sustainable and a more inclusive society. Why they do it is secondary, as long as they take the challenges seriously and act accordingly.

This all sounds nice but is it also realistic? Isn’t there a risk of non-action? Yes there is, I am afraid. Unfortunately, as our economies recover and we slowly see light at the end of the tunnel after two years of crisis, the risk is that we might be tempted to go back to normal as soon as it is over, and back to business as usual. Well, let us face it: there is no future with that business model.

This said, I am optimistic that together we can build back better. Together is the key word here, because we all have to depend on one another.

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Alain Gaschen is the Swiss Ambassador to the Philippines since August 2019.