CHANGING TRENDS TO ENSURE SUSTAINABILITY
Corporate Social Responsibility (CSR) emerged a few years ago as a trend to define new business models and the “path” for the private sector to contribute towards social good. Ongoing and emerging research was the catalyst for creating awareness about the need for an alternative to “doing business only for profits”.
CSR is rooted in the model of decreasing environmental impact, building ethical responsibility, transparency in business processes, eliminating racial discrimination (employees, customers, suppliers), philanthropic responsibility and financial responsibility.
In 2011, the concept of “shared value” was defined by Harvard University Professor Michael Porter, as the operating practices and policies to increase companies’ competitiveness while contributing to social and economic development. This approach added value to exploring new trends and an avenue for the private sector to be an active player in addressing environmental, social, and economic inclusion and most importantly, to be part of the company’s institutional strategy.
Susana Carrillo contends that as global challenges become more complex (climate change, access to water, disruption of supply chains, massive migration, increasing poverty, and inequality), it is critical to have an in-depth understanding of the importance of rethinking not only the role of the private sector in society, but also the need for stronger relations and partnerships between the private sector, government, and society.
Emerging research shows the increasing questioning about the inefficiency of “capitalism” and of existing economic models to build sustainable and inclusive societies and prepare them to face global complexities. One of these initiatives was developed by a group of practitioners and thinkers (Mars Inc. and the Said Business School-Oxford University, among others) as an alternative to economic models and private sector operating principles that continuously benefited only a small percentage of the population, contributing to increased disparities rather than actively engaging in building equality and inclusion. The study “Where ESG Fails”, highlights that most corporate leaders view their sustainability efforts as an approach to improve their reputation and attract socially and environmentally aware consumers and investors.
Most investment analysts treat Economic Social and Governance (ESG) factors as a path to decrease regulatory or reputational risks of the companies in their portfolio. However, this alone does not have an impact on “economic-value creation and on social innovation; investments are not maximizing the creation of returns to society. As the study highlights, this dynamic has a direct impact on the value of “capitalism”, as a model that promotes growth and inclusion. As a result, we are witnessing growing questioning and mistrust on the “present economic models” and capitalists’ systems.
A MORE COORDINATED MULTI-STAKEHOLDER ENGAGEMENT
As Mazzucato mentioned in her recent publication “Mission Economy” a radical reset in the level of collaboration between countries, governments, citizens, and the private sector is required. Defining new economic models and establishing the right set of tools between institutions, and partnerships to achieve set objectives is necessary, rather than using the problem-solving approach of “using funds and financial contributions to solve problems”. Working towards the creation of stakeholder coalitions with defined clear roles for governments, the private sector, and civil society is important.
Significant progress was achieved in creating awareness and leveraging the impact of “corporate social responsibility”, “shared value”, and the role of the private sector in creating economic and social value. The increasing complexities the world is facing have also brought into question the validity of the present economic models. This trend will continue as our planet faces constantly emerging challenges to secure stable and peaceful societies because of climate change, health challenges, and access to water and food (in some parts of the world). Stronger partnerships between governments, the private sector, and civil society with active participation of citizens will anchor and leverage the design and successful implementation of emerging economic models.
Interesting Related Article: “Corporate social responsibility improves customer service“