Business no longer as usual

Global awareness and understanding of some of the complex challenges facing the world has risen vastly since the year 2000.

At the heart of this is the recognition that the remarkable progress and development seen in the past century have come at environmental and social costs, and that human activity is now threatening the future of the planet.

The setting is, however, not all futile. Along with the challenges come new innovations, technological solutions and opportunities to accelerate a sustainable and inclusive economy.

In the 25 years since the Intergovernmental Panel on Climate Change (IPCC) was established, climate science has communicated a clear message. Climate change is real and human activity is the dominant cause of the global warming observed in the last 50 years. This reality and the social and economic consequences and costs have driven it to the top of the international agenda.

A series of significant natural disasters through the 2000s placed climate change firmly on the public agenda. The occurrence and intensity of extreme weather, from storms and floods to heat waves and drought, has made the threat of climate change more real.

The serious impact of climate change has not been lost on business. While many companies are taking initiatives to reduce their emissions, even moving beyond regulatory requirements, leading companies have also started considering climate impacts on their own operations, products and supply chains.

The pressure on natural resources is unprecedented, from freshwater, land and food production, and from forests to oceans. Rapid and unsustainable rates of resource use and depletion of air, water and soil have focused attention on how economic development and a growing global population can be supported in future.

The economic and social impact of diminishing resources has the potential for huge disruption.

Since the launch of the Millennium Development Goals in 2000 the world has seen a tremendous progress in human development. Although emerging economies will help to reduce income differences, the OECD predicts that by 2060 living standards in these economies will still be only 25-60 per cent of those enjoyed in the US.

Inequality within countries is also a major concern. Millions have been lifted out of desperate poverty. But, income distribution has not followed suit. In 2014, the World Economic Forum ranked income disparity as the second greatest risk facing the world, threatening economic and political systems, social stability and security on a global scale.

In the first decade of the 21st century a range of high profile corporate scandals including Enron, WorldCom and Parmalat, opened the world’s eyes to greed, corruption and business fraud. Record fines have been paid in recent years by financial institutions for criminal behaviour. According to the Financial Times, the total amount of fines and settlements paid by some of the worlds biggest banks, Bank of America, UBS, RBS, JP Morgan, Citigroup, Barclays and Deutche Bank, reached a total of 56,7 billion USD in 20141. With trust in business at an all-time low, this reckless behaviour destroys trust in markets, angers people on the streets, and erodes trust in governments.

Corruption is a way of life in many countries, and the detrimental effects are considerable. According to the World Bank corruption is the greatest obstacle to economic and social development. Besides the huge developmental and economic
costs (estimated at around 1 trillion USD globally2), corruption erodes governance structures and trust, and provides fertile ground for social upheaval and extremism.

Concerted action to tackle corruption has been a feature of the last decade, with the UN Convention Against Corruption becoming effective in 2005 and national legislation around the world getting stricter. Despite these efforts, Transparency
International reports that over 70 countries today suffer from systemic corruption, and that levels of corruption around the world are expected to worsen.

Whereas corruption is now prohibited by law in most countries around the world, there are related grey zones such as tax evasion which are costing governments billions of dollars in lost revenue. One-sixth of multinational companies are currently headquartered in tax havens. Although only a moral issue as of yet, more governments are stepping up efforts to crack down on corporate tax avoidance.

In the face of these significant challenges, technological change has radically transformed our world in the past 15 years, from developments in ICT, nano- and bio-technology to revolutions in energy and engineering. In every aspect of life, technology has made a difference for those who have access to it can afford it.

Technology has also changed how societies interact. The creation of social media platforms around 2004 has connected and mobilised people around the world, driving transparency and even contributing to political change, exemplified by the
events of the Arab Spring.

With huge disruptive potential, communication technology has big implications for business. The rise of the ‘social web’ characterised by user-generated content, citizen journalism, and peer-to-peer advocacy, means transparency and authenticity are more important than ever. Information is freely available and in the digital landscape new trends develop at a lightning pace.

The fact is that technological solutions already exist to tackle many of the world’s sustainability challenges. However, at present, innovations are not commercialised, scaled and distributed at a quick enough rate. Technological innovation can also
raise challenging ethical dimensions, such as the consequences of genetic manipulation, stem cell research and the potentially unforeseen impacts of nanotechnology. The view that technology can solve all of the world’s problems is not shared by all.